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Newspapers have been on their deathbed. But Jeff Bezos may have just thrown them a lifeline.
The Amazon (NASDAQ: AMZN) founder is buying the Washington Post newspaper for $250 million. It’s a move that could revolutionize the decaying industry.
Newspapers have struggled to stay afloat in this digital age. Hundreds of them have either been shuttered or forced to cut staff amid slipping ad revenue.
As a journalist, I’ve witnessed the decline of the newspaper industry first hand. Most of the papers I’ve written for were operating on skeleton staffs. At one paper, the owner refused to accept a paycheck so that he wouldn’t have to make cuts. Several of my newspaper jobs didn’t pay a livable wage … which is why I now work for an online publisher.
Put simply, newspapers haven’t figured out how to consistently make money online without marginalizing their print editions.
If anyone can crack the code, however, it’s Bezos.
Bezos built his Amazon empire using e-commerce technology to track visitors to the site, analyze their information, then offer those users recommendations of more products they might like to buy based on that information. E-commerce is something newspapers simply don’t do right now. If Bezos is able to implement the technology at the Washington Post, it could completely change the user experience.
Let me give you an example of my online user experience with newspapers these days. I’m a huge Boston Red Sox fan. I regularly consume information about my beloved team. And the Boston Globe offers the best Red Sox coverage.
Because I live in Vermont and don’t have a subscription to the print edition of the Globe, I get most of my Red Sox coverage by visiting their website. I’ve been visiting the Globe’s website for more than a decade now. During the season, I probably visit the site almost once a day. And yet the site has never recognized me as a regular visitor. Every time I go to Boston.com, I have to click on the “Sports” icon at the top to get to any Red Sox coverage.
It’s not exactly a hassle – especially since the content is free. But it’s always struck me as a lost opportunity…
The Globe has never tried to sell me anything based on my affinity for the Red Sox (Game tickets? Player jerseys? Cracker Jacks?), and has never charged me a dime for visiting the site.
This isn’t unique to the Globe – it’s true of most newspaper websites. The Washington Post, the New York Times, the Charlottesville (Va.) Daily (I’m originally from Virginia) – none of them charge me or try and sell me anything.
Bezos could change that approach. By applying the same principles that made Amazon the biggest e-commerce company in the world, Bezos could make the Post pioneers of a new frontier in the newspaper industry.
For example, if I were a Redskins fan who visited the Post site for all the latest coverage of my favorite football team, e-commerce technology could personalize the home page based on that interest.
That kind of targeted coverage would make newspapers more attractive to advertisers – and possibly breathe new life into an industry searching for answers.
If nothing else, Bezos brings 21st-century thinking to a 20th-century industry. And he’s doing so at a very low cost. The $250 million he paid to buy the Washington Post amounts to roughly 1% of his net worth. If his Post experiment fails, he won’t be hurting financially. Since it’s not a big gamble, he’ll be able to take some big risks.
Should he succeed, an industry that has been left for dead could get a second life.
Bezos isn’t the only investor snapping up newspapers at bargain prices. Last week, my colleague Ian Wyatt told his Income & Prosperity readers about Warren Buffett’s buying spree. You can read more about this in Another Cheap, Hated Investment Buffett is Buying.
With billionaires buying up newspapers, it may be a sign of a deep value investment with major profit opportunity.