Our colleague Doug Barney takes up a very interesting position regarding Jeff Bezos' personal acquisition of The Washington Post. In particular, Doug believes that Bezos is aiming to serve as the anti-Eric Schmidt/Google, relative to Bezos' belief that good content should be paid for and Google's belief that content (good, bad or otherwise) should just be scooped up for free (regardless of origination costs to those it scoops the content links up from), repackaged and sent back out the door in exchange for ad revenue. Google's billions of dollars in revenue and profits and The Washington Post's most recent operating loss of $53 million on its traditional media business certainly stand in stark contrast to one another in terms of business models.
Tackling the whole Google thing is a noble goal (we're not actually convinced it's noble), but is it really even remotely anything Bezos is concerned with? We ourselves seriously doubt it. Instead we believe that Bezos is especially driven by unique and significant old media challenges, and that what he is really after with The Washington Post is to totally disrupt old media and finally set it on a course that he has probably long sat around wishing old media would take (probably with a “God damn it/Gosh darn it” or two thrown in).
This sort of challenge is not dissimilar to spending hundreds of millions of dollars to get a private rocket successfully and reliably into space and back, or even to embedding an atomic clock into the side of a mountain - simply owning a hyper modern mechanical watch (an URWERK or DeBethune, say) isn't good enough - Bezos has to have a $42 million atomic clock! To which we say, if he can afford it - and whatever his motivations are, God bless him, that is what America is all about!
Image via Forbes
In tackling these challenges, Bezos isn't chasing or tilting after windmills (or various Googles). He sees a real and unique challenge that needs to be overcome and goes out to overcome it. For us, old media is exactly such a challenge - one made all the bigger and more challenging since in reality old media still remains a hugely pervasive thing, whether national, international or hyper-local. There is, simply, a huge opportunity to completely disrupt old media and re-engineer it for today's and tomorrow's worlds and to turn old media into a hugely successful new media ad business.
A hugely successful "new old media" business doesn't preclude having an ongoing Google lurking around. Just as Amazon and Google co-exist in enormously successful ways, so too can Google and an evolved or completely revolutionized traditional media ultimately co-exist in highly profitable ways. In any case, this is what we believe brings Bezos to the game.
We've covered the deal details elsewhere, but interestingly, $250 million isn't a whole lot of money in this case. In fact, those dollars probably look to Bezos like a very modest initial investment towards building something of eventually immense value. We can also assume that Bezos will invest additional huge numbers of dollars - none of it under the scrutiny of Amazon shareholders - to bring old school media into the 21st century. We will get to what Bezos will do a bit further down in our story.
Tradition is Already Disrupted - or Corrupted
It is enormously interesting to us that - although most major newspapers continue to do a stellar job providing all sorts of in-depth content on a vast array of subjects, all of which is covered using the traditional underpinnings of "fact-first journalism" sans opinion - it is politics and hugely inappropriate opinion intruding into political coverage, and what now sadly passes for journalism, that ends up defining traditional media. The New York Times is therefore made up of a far left leaning collection of idiots and the Wall Street Journal is made up of a collection of far right leaning wing nuts. The Washington Post has many more far left idiots than it does far right wing nuts, but it is nevertheless defined by them as well.
Political coverage probably takes up less than 15 percent of all coverage in these and every other general newspaper on the planet on a total weekly basis, yet it is what defines them. All of this is further wrapped up in a cloak of traditional media ethics. These ethics are what make these newspapers "traditional, old school" media. Yet today media ethics, especially around that defining element of politics, is all an ugly illusion - though some newspapers (and TV news stations) are much guiltier than others in their illusion-casting.
Our point is that mainstream media is already hopelessly disrupted from its "old media defining" traditions. We ourselves believe it is in most cases hopelessly corrupted in comparison to what most of these media voices used to be - trusted and impartial voices that brought readers the trusted facts and provided a foundation for informed people to make their own smart decisions. Hah!
We note all of this to underscore that Jeff Bezos' task is not to preserve old media or old media ethics. We believe that Bezos has set himself the challenge to completely take apart old media and get rid of it.
Hyper-modern Amazon Techniques
What will Bezos replace it all with? It will be with highly organized and well-curated non-print content that will clearly define and aggregate all sorts of diverse audiences and that will lead to the ability to finely target every one of these audience segments with ads. The fallacy of "paid content" in the newspaper business (or the magazine business and so on) is that paying for content brings in the necessary revenue to effectively run a business and to make a hefty profit in the process. The media world doesn't work that way. If you cannot sell advertisements, you are dead in the water.
Google doesn't steal traditional content and prevent media outlets from their turn at selling ads. In fact, Google ultimately steers people to the content sites. If Google is able to grab its own ad revenue for doing so, great. But at the end of the day, the reader still ends up at the content site and it is up to the content site to sell the ads. This is where old media has utterly failed, and it has failed not because Google is stealing its lunch but because it is too ignorant overall relative to understanding how to transition from old print models to, well, Amazon's and Google's models.
Keep in mind - it is critical to understand this - Amazon doesn't sell content. It sells "things." A book is not content; it is a thing that happens to contain content. A Kindle book is not content - it is also a thing that contains content, albeit in electronic form. Amazon knows how to sell these things - it knows how to find the buyers who place great value on these things, it knows how to entice them to buy (the Kindle is a great example of this), it knows how to upsell them, and it knows how to "side sell" them - get them to buy numerous other things (music - streaming or otherwise, garden tools, smartphones, appliances, and on and on and on).
Just as Amazon now knows how to get these audience segments in hand and communicate smartly with them, Bezos' job is to now apply Amazon's long-learned yet hyper-modern techniques to aggregate newspaper readers, have these readers acquire content - whether that is free content (which doesn't pay the bills) or paid content (which partially pays some of the bills) - and in the process of getting those readers to acquire content THE TRICK will be to also ensure it is able to target every last one of them for numerous diverse ads - and in turn use ads to entice, upsell and side sell for the advertisers.
The other side of the Amazon equation is an all-encompassing knowledge of how to understand and predict reader desires and wants. In order to get readers to acquire content the new Washington Post will have to have a keen awareness and understanding of its readers. Further, it needs to develop a "sustainable diverse" readership and it needs to cater to that diverse readership. It cannot simply be left wing, right wing or pseudo-nonpartisan (we're using politics here strictly as an example).
It must be all three of these things and it must deliver exactly what the reader wants in exactly the proportion the reader wants it - say, for example, historically a reader has been reading 50 percent right wing, 25 percent left wing and 25 percent in the middle political content - well, the algorithms (not editors!) need to deliver exactly this while still leaving room for some level of discovery of new things.
We didn't say this challenge would be simple - it is entirely complex. It is a massively large, real-time, big data problem in fact. But guess what? Bezos and Amazon both know how to deal with this as well since they are both on the cutting edges of the technologies here! Among them key technologies include personalization, cloud computing and real time analytics.
Finally, anyone who thinks Bezos will look to "recapture the old glory" is just a crazy person. Bezos is interested in new glory. Yes, he will want the Pulitzer Prize winning content and authors - but he knows a Pulitzer Prize winner doesn't make the business any money. Rather Bezos keenly understands that a thriving and highly profitable business is the prerequisite for creating the necessary resource-rich environments to develop and have many writers become Pulitzer Prize winners.
There is much, much more to build on here but we'll leave it at this. Just remember you heard it here first - it isn't about paid content, it's about getting paid as well as Google does for selling ads at a different point in the value chain (i.e. post Google) - this is Bezos' new business he is now in.
We would be hugely surprised if there weren't also a few political motivations for Bezos personally buying up The Washington Post. For one thing there is the huge gorilla running around Washington, D.C. carrying an Internet tax banner. Surely the Washington Post now opens up all sorts of avenues for certain types of influential opinions to find their way out the door and into the offices of every political person - major, mid-level or pure political hack - in Washington.
This is a huge issue both for Bezos and Amazon - eventually when a new hyper-modern Post begins to sell a huge number of ads that take people to Internet places to buy stuff, it would be a lot better if those Internet taxes were non-existent or extremely limited. Bezos doesn't have to sit at a Washington Post desk to guide editorial opinions or to pen opinion pieces. Home sweet home in Seattle is just as good a place to do so.
We're looking forward to one hell of a new media ride here!
TechZone360 Senior Editor
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