By now, the ink has dried on Jeff Bezos’ acquisition of the Washington Post and commentators have dissected the deal from a multitude of different angles. Yet, I still can’t contain my excitement about what this could potentially mean for the news industry.
Billionaires have always lusted after media properties, and this trend hasn’t slowed even as the business has run off the rails. Witness Aaron Kushner’s purchase of the Orange County Register or Chris Hughes’ attempt to revitalize The New Republic. While I’m sure there is an element of ego at play in Bezos’ desire for the Post, there is also something inherently different about it.
The big change is the potential this has to redefine our understanding of the value of content.
Price vs. Value
Right now, there is a vast disconnect between the price tag of news organizations and the value of the content they produce. Anyone who kicks the tires at these places would be wise to run the other way. The business of aggregating audiences and selling them to advertisers is essentially over. Others (Google) sell advertising more efficiently, target audiences more effectively and offer better measurement of advertising’s impact. (News companies aren’t even at the table when it comes to mobile ads.) The proliferation of platforms from YouTube to Twitter allows advertisers to disintermediate the press and go straight to their customers. This is confirmed by the red tide of year-on-year advertising declines across almost all news organizations.
While all this is evident and well-established, it obscures the value that content offers. News still has tremendous power, possibly more than ever before. People spend more time with news than they did a decade ago — not surprising when it’s more easily accessible over tablets and smartphones. News can move markets or sink a political career. And on social media, sharing news has become one of the most effective ways to make a statement about personal identity.
This evolution has placed news in a fresh context and opened up new possibilities. But the current business model, the one the Post and so many others have been struggling with for more than a decade, doesn’t recognize that kind of value. For the Post ad sales team, a good day is still when the local Macy’s wants to promote a Labor Day sale. It has little to do with the actual value of the individual content itself.
Context Is King
But the Bezos purchase could open up new avenues for valuing content. Simply put, news can have tremendous value when it is delivered to the relevant audience at the right moment. Very few news organizations actually build a model around this. But those that do reap the rewards. A stock-market trader who reacts quickly to a Bloomberg headline can make out handsomely. That’s partly why subscribers are willing to pay upwards of $2,000 a month for a terminal.
Not everyone can be in the fast-moving financial news business. But there are many opportunities to deliver news content so that it can empower a consumer’s decision, whether it’s learning about crime rates in a neighborhood before buying a house or making travel plans.
It is difficult to imagine how this might all come together in a way that can reverse the fortunes of the news business. I believe that in the future news will be packaged into experiences, interactions and transactions which are difficult to imagine currently.
While Bezos is fresh to the news business, it’s clear that during his near-20 years of designing Amazon.com he has thought deeply about the value of presenting people with relevant information at an opportune moment. By now, regular Amazon shoppers are hip to the fact that the company knows more about their shopping preferences than they themselves might. While that can be an eerie experience, it does help us consider how a major content producer (the Post) might make those interactions more meaningful.
Customized for the Customer
It’s no stretch to think how content produced by a reputable outlet could find its way into that shopping environment, not just informing a customer about a potential purchase, but perhaps enriching their understanding about a topic of interest — Middle East politics if a person purchased an Amos Oz novel, or health care for someone who might be suffering from an illness.
When you understand the broader environment in which your customer operates, as Bezos does, you have the ability to serve this person content that has value to him or her. This is potentially a much more effective way of extracting value than bundling news together and throwing it on someone’s doorstep or cataloging it on a homepage.
Hope can be a foolish thing to hold onto in the news business. The 20 years I spent at newspapers might make me overeager to see the bright side in a purchase that could easily turn out to be just another billionaire’s folly, like building a 10,000-year clock. Others, looking at the massive losses Amazon has racked up over the years now joke that Bezos is running two of the biggest non-profits in the country.
But there was a revealing passage in his letter to Post employees. He wrote: “Our touchstone will be readers, understanding what they care about — government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports — and working backwards from there.”
Certainly, he could show up tomorrow and swing an ax in the Post newsroom to bring down costs. But old newshounds like myself might take heart in an owner who believes that understanding customers and what’s important to them — and delivering it — could be the path to a brighter future for the business.
No Change? Jeff Bezos Will Turn the Washington Post Upside Down by Janet Asteroff
What Could Jeff Bezos Want With the Washington Post? by Dan Pacheco
Poll: Which Tech Billionaire Will Buy the Next Newspaper by Mark Glaser
Storify: Jeff Bezos Shocks the World, Buys Washington Post by Zach C. Cohen
Gabriel Kahn is a professor at USC Annenberg School of Journalism. He co-directs the Media, Economics and Entrepreneurship program and writes often about media business models.