Originally published by Sramana Mitra on LinkedIn: What Is Jeff Bezos Doing With The Washington Post?
A few days back, I read an extensive analysis of the Washington Post under Jeff Bezos titled The Bezos Effect: How Amazon's Founder Is Reinventing The Washington Post - and What Lessons It Might Hold for the Beleaguered Newspaper Business.
In October 2013, Jeff Bezos bought the Washington Post for $250 million. The company doesn't monetize well its large audience, not because they're doing something particularly bad but rather, because their industry is experiencing a colossal market failure. Readers don't want to pay to consume their content. Advertising rates have dwindled. The two pillars of a newspaper business - advertising and subscription - are both floundering.
According to the article, Bezos is actually investing in the company, helping them expand their newsroom. He is also not holding their feet to the fire to monetize or become profitable in a hurry. He is willing to play the same long game that he plays at Amazon: Grow. Profits can wait.
One of the nuggets I gathered from the article is that Bezos wants the Post to capture a set of core digital subscribers who will be paying to access their content. Clearly, he wants a freemium play, and one that honors the capitalistic tenet of paying to access value.
I don't think it will work.
What may work, and I also found the seeds of this strategy in the story, is that the Post becomes a high quality content operation back-office for Amazon. Apparently, Amazon Prime is offering a free subscription to the digital Post. (Although I am a Prime subscriber, I haven't noticed.) I don't know the terms of the deal, but it is fair to assume that some amount of royalty payment is changing hands. If more people engage with the content and begin to notice, then perhaps there is justification in this deal and the associated royalty exchange.
If so, then the newspaper will be sustained by trickles from Amazon, not just Bezos.
Bezos claims to have wanted to do this deal because he wants to save an important instrument of democracy. It's great that he feels that way and has stepped in.
The alternative, in another decade, is that most media will be dead.