Exploring the Amazon

NOT long after Jeff Bezos, the founder of Amazon, said he would pay $250m of his own money for the chronically loss-making Washington Post, in August 2013, he sat next to the newspaper’s editorial-page editor, Fred Hiatt, at a dinner. It was a perfect opportunity to influence the Post’s line, but Mr Bezos reportedly preferred to talk about other things on his mind, such as exploring the dark side of the moon.

Technology, not journalism, is Mr Bezos’s passion. So far he has been the sort of proprietor newshounds dream of, with a light touch on editorial matters and a willingness to finance experimentation and bear losses. After years of shrinking ambitions and cost-cutting under its old owners, the Graham family, Posties are experiencing a period of expansion and excitement under Mr Bezos. As other American papers have continued to cut staff, the Post has hired more than 100 newsroom employees since the takeover was announced.

In its revamp, the Post is following some of Amazon’s tactics. Much as Mr Bezos has made his e-commerce firm concentrate on building scale first, and worrying about profits later, he is making his newspaper concentrate first on building a broader national and international audience. Its website’s traffic in America has doubled since he announced the takeover, to 51m unique visitors in April. It is promoting its journalism more assiduously on social networks, is offering readers curated content from elsewhere on the internet, and is making its web pages load faster.

The Post has introduced a “partner” programme, in which it offers free access to its articles for subscribers of other papers such as the Dallas Morning News, if they sign in with their e-mail addresses. Logged-in readers like these are more valuable to a paper and its advertisers than anonymous ones, because the ads can be tailored to match whatever is known about their interests. So far more than 270 papers have signed on. This resembles how Amazon achieves dominance in its markets by gathering data on customers, the better to sell them stuff. Some newspaper bosses are cautious. “It’s a Trojan horse,” says one, who thinks publishers are unwise to share their subscriber lists with the Post and its advertisers. Another initiative is to study and predict reader behaviour, so as to offer each website visitor a tailored landing-page, as is the case at a certain e-commerce site.

Mr Bezos has been actively involved in a new app, code-named Rainbow, which presents Post articles in a glossy, magazine-like format. It now comes bundled with most versions of Amazon’s Kindle e-reader, and will be available on smartphones soon. Here too, the Post is putting scale before profit: the Kindle version is free for the first six months and $1 for the next six (the cost is higher on other devices). This move runs counter to the trend at many other papers, which are concentrating on getting readers to pay a full price for their product, on the assumption that ad revenues are in unstoppable decline.

Some insiders are banking on Amazon bundling the Post into its Prime subscription, which offers unlimited free delivery plus online video for a fixed annual fee. “Everyone is expecting it, and we will be disappointed if it does not happen,” says a veteran Post writer—apparently unworried by the risk that making the paper a freebie, in effect, could devalue it in readers’ eyes.

In a parallel of sorts with the cloud-computing service that Amazon sells to businesses, the Post is also trying to become a technology provider to the news industry. It is hiring dozens of engineers to build new products, and developing a new content-management system for text articles and video, which it will try to license to others. It has already developed its own ad-server and pay-meter technologies, says Shailesh Prakash, the Post’s chief information officer. Given the strained finances of most papers, however, this may not prove to be a source of vast profits.

Contrary to all the grand traditions of journalistic indiscretion, the Post has “adopted a little bit of the Amazon way of not talking about future plans,” says Steve Hills, the paper’s president and general manager. And abandoning the news business’s spendthrift ways, it has also let a bit of Mr Bezos’s frugality rub off on it: earlier this year the Post angered many veteran staff by cutting pension benefits promised to them under the Grahams’ ownership.

There are several headline challenges ahead. The future of the Post is digital, but the bulk of revenues still come from print advertising, and its print circulation continues to shrink. It still breaks original stories of national importance, as you would expect for the paper that uncovered the Watergate scandal. But some say the Post has become less relevant even within Washington, because there is now so much other news and comment available online. The Post’s cautious tone can get drowned out by more opinionated voices.

A severe contest

This is where journalism is quite different from e-commerce: it is a lot harder to monopolise the market in ideas than to dominate the selling of books and baubles. The Post is in a business where competition for attention, and advertising, is far stronger than that Amazon faced when it was establishing itself. Other digital firms, including Facebook and Google, continue to disrupt the news business. Facebook is striking deals with newspapers in which it posts their articles directly on its platform in return for a cut of advertising revenues.

However, there are few better placed to navigate the Post through its difficult transformation than one of the web’s original disrupters. Under Mr Bezos there is no pressure to find emergency fixes, and no need to keep reporting financial figures, which gives Posties some comfort. What investors see as Amazon’s weakness—a chronic disregard for profits as Mr Bezos chases growth—may be the Post’s biggest source of strength for the foreseeable future. Few newspapers can count themselves so lucky.