5 reasons why Amazon’s Jeff Bezos bought The Washington Post

The news that Amazon’s founder and CEO bought The Washington Post for US$250-million sent shockwaves simultaneously through the media and tech industries today.

Old media isn’t exactly going gangbusters. Just a few days ago The Boston Globe sold to Red Sox owner John W Henry for US$70-million, a fraction of the US$1.1-billion the New York Times paid for it in 1993. No, actually if you take into account the Globe’s pension obligations, which apparently sits around US$110-million, it sold for negative US$40-million.

So then, is Bezos out of his mind? Maybe. It’s not like Amazon.com Inc paid for the Post. Bezos bought the newspaper with his own money — acquiring an old media company would probably be a hard sell to Amazon’s future-facing board.

Zooming out however, we begin to see some clues as to why Amazon’s boss fancy’s himself an old media company.

Ecommerce

Amazon’s all about ecommerce, right? What would happen if a newspaper became an ecommerce platform? Imagine reading about Apple’s latest iPhone and seeing Amazon’s familiar one click Ordering embedded in the article.

How many Kindles have now been sold? How about bundling a digital version of the Post with every Kindle sold. Oh, and even add a physical copy subscription for Amazon Prime members.

Add in the fact that Prime members get Instant Video and that The Post already produces video and suddenly the idea that the idea that Amazon could start broadcasting doesn’t seem all that inconceivable. Watch out CNN. But what benefit would the ecommerce giant get from this?

Advertising

The answer lies in advertising, something that Amazon’s dabbled with (see the Kindle advertising edition) but hasn’t really managed to go full tilt at like Google and Facebook. As Business Insider points out, news “is the digital equivalent of a high-traffic intersection”. As people get the information they want, they’re reasonably likely to do a little shopping along the way. With a good video product, commercials between segments could also be used as a push for its more traditional ecommerce platforms. It already has masses of data on its customers, so it’s not inconceivable to imagine a future of targeted interactive video ads telling exactly what you should buy now on Amazon.

If Amazon applies its knowledge in this area to a newspaper like The Post, then maybe it can succeed where other papers have failed in the digital era. “Newspapers have been complete retards in learning anything about their audiences,” says veteran Silicon Valley player Alan Mutter. “Amazon is a master at this.”

Reputation

But it could also be about reputation. Think about it, Bezos is already a media investor, having bought a stake in Business Insider. Buying the Post means he’ll be able to attract big names to publish digital first. Mutter certainly thinks that’s a good thing. He reckons it “may be the best news the news industry has had in a long time, because it finally puts a true digital native at the helm of a newspaper company”.

There’s another point to consider when it comes to reputation however. If Bezos brings the Washington Post into the Amazon fold, as we’ve suggested he might, would you trust a newspaper that’s motivated by ecommerce?

Or maybe all of this IS just charity

After all, Bezos does have a history of whimsical acquisitions. This is, after all, the guy led an expedition to 14 000 feet below the ocean’s surface to retrieve the F-1 engines that propelled Earth’s first astronauts to the moon. Clearly then, Bezos has a sense of history and when it comes to the US media, there aren’t many organisations with a bigger sense of history than the Post. It was founded 135 years ago, its reporters dominated coverage of the Watergate Scandal.

Who wouldn’t want to own a newspaper that brought down a presidency?

If Bezos is willing to dive to the depths of the ocean and chase dream projects like fusion energy then why the hell wouldn’t he buy a major newspaper title just for kicks?

Long term-thinking

We might buy that line of thinking, but for one thing. Those big dream projects Bezos invests in may have a sense of whimsy in them, but he clearly also believes he stands to gain a lot from them in the long term. In that respect he’s a bit like another mega tech entrepreneur with a private space company.

This guy

Remember, Bezos bought the Post with his own money, not Amazon’s. That means he has time to play around with it for a while and figure a long-term vision for the paper’s future without having shareholders breathing down his neck. If Bezos has the guts to imagine what Elon Musk would do if he bought a newspaper and follows the same path, then who knows where its future could take it?

While that long vision may not be the most immediately exciting thing to happen to the Post, it probably will be the version of events in which it’s most likely to survive.

According to Mutter, Bezos “is uniquely equipped to bring unprecedented innovation and fresh energy to an industry whose managers run their businesses like the people of Cuba treat their 1953 Plymouths: tinkering with them just enough to keep running”. Let’s hope, for innovation’s sake, that he’s right.

Additional reporting by Martin Carstens.