Everyone who pays attention to the newspaper business had their attention captured last week by Amazon CEO Jeff Bezos’s purchase of the Washington Post. And many observers are quite optimistic about the future of the Post in Bezos’s hands.
However, Jeff Jarvis sounds a cautionary note. Jarvis points out that the mere figure of Bezos–local retailers’ biggest nemesis–might easily scare local advertisers away from the Post, sapping a significant source of the paper’s revenue.
Jarvis makes a valuable point, but he doesn’t consider the possibility raised by Tim Carmody at Nieman Lab: that Bezos may not be interested in revenue at all. Bezos has the funds to allow the Post to remain unprofitable for a long time, and if his eye is on a legacy rather than on profits, he may be content to allow the newspaper to continue losing advertising money for now.
Bezos’s history with Amazon, and in particular with the Kindle, gives support to this possibility. Like the Post, Amazon is not a profitable business for its investors; although, unlike the Post, it is a growing one. Yet Amazon actually takes a loss on each Fire sold, effectively using a (relatively) cheap tablet as a loss leader for Amazon content.
When Bezos decided to move into manufacturing devices, he sidestepped the usual revenue model for that business–selling devices–and instead turned it into a marketing tactic for his key business in retail. Although it may look like it, Amazon is not a retail business with a division that makes tablets. Amazon’s seemingly-bifurcated business model is in fact driven by one imperative, and one revenue stream: sell content, and keep readers in the Amazon ecosystem.
This marketing strategy suggests that Bezos might well be drawn to something like the approach taken by Forbes: leveraging the power of a legacy media brand to support a massive network of non- or lightly edited blogs, with the goal of keeping readers in the brand ecosystem and creating revenue later. It’s very debatable whether such a goal is sustainable, but it’s the essence of successful Web brands at this point, from Amazon to Forbes, and it wouldn’t be surprising if Bezos was drawn to it.
As Jarvis rightly claims, any discussion about how Bezos might handle the Post is entirely speculative at this point. And it’s likely that he’ll be a very hands-off owner. Still, if his innovative approach to the Kindle Fire informs his decisions about the paper at all, we can infer that though the advertising wing of the Post may face a struggle, the content wing should actually see growth.