There’s been a lot of action in the big-time daily newspaper business recently, culminating in the recent announcement that Amazon founder Jeff Bezons just bought the Washington Post Company for a fraction of its one-time value, a mere $250-million.
As you probably are aware, the newspaper business has not been great in the past five years.
One of the biggest factors is the gatekeeper factor.
Daily newspapers had a near monopoly in reaching a reliable, well-educated and upper income group of Americans every day.
As one publisher once put it, if I could sell you the news of the day, the sports scores, the gossip and news of the bargains, have it on your doorstep by six every morning and all for about fifty cents, wouldn’t that be a great bargain?
That was then.
Today, it’s on both my cell phone and my iPad every morning when I wake up. Or my computer when I fire it up to check my mail. In multiple places from multiple sources.
Three things have combined to severely reduce if not eliminate the economic viability of the traditional daily newspaper.
The first is, of course, the lack of necessity of having the paper with your morning coffee.
If, however, that was the only problem, newspapers would be raking in the dollars because newsprint, ink, printing and distribution are a huge part of the cost basis and the tablet along with the internet as a distribution medium should make the newspaper wildly profitable.
If only it were that easy.
The other two things are the removal of classified advertising as a revenue source and the newspaper industry’s inability to convince advertisers that an ad on an iPad is as effective as a full, half or quarter page in the print edition.
The advent of craigslist.org and backpage.com and a host of local sites—all of which are more efficient and either free or almost free—has simply gutted the classified advertising business. Anybody who has ever sold a car on cragslist with a free ad and remembers the $60 or $120 they used to spend in the daily paper can attest to that.
The problem is that gathering news costs lots of money. You need bureaus, reporters and editors who, at the upper end of the business cost a lot of money. And there has to be a formula to recover those costs and make a profit on the internet if you want anybody to bother. As great a communications medium as the internet is, if you put garbage into it, you’ll get garbage out of it.
So here comes Jeff Bezos. The mainstream media is lauding him because they have a political agenda. He’s a left of center guy who likes Barack Obama. They’re all in trouble and they’ll feel a lot better if it were he who solved their problems as opposed to Rupurt Murdoch or the Koch Brothers.
Well folks, if he can save the newspaper business, I’ll be in the front row of his admirers because, whoever he supports politically, he will have done this nation as big a service as Ben Bradlee did when he directed the Washington Post’s coverage of Watergate and helped boot a thoroughly deserving Richard Nixon out of office. (“When the President does it, it’s legal.”)
This is a guy who took technology and revolutionized the book publishing business with an unheard of distribution medium (the e-book). It did not happen overnight. It took years of losses and experimentation for Amazon to become profitable. And the e-book didn’t come along until Bezos revolutionized the distribution business.
If Bezos can turn that laser focus to the newspaper business, I would expect positive results. And I don’t care about his politics because whatever he does will be duplicated by people on the other side. I think he’s a creative guy who can find a solution for the industry’s problems. And he’s not the only one.
All of that said, I would observe that many people have stopped reading mainstream newspaper content because they can clearly see the agenda and they don’t like it.
Whether that has had the same effect on the bottom line as the removal of traditional advertising revenue via the creative destruction of the internet, we really don’t know. But we do know that fewer people of all ages are reading newspapers for whatever the reason. And the fewer eyeballs, the fewer dollars are spent trying to capture them.
That’s the fundamental problem Bezos is going to have to solve.
If he does, than maybe it will stay solved for the next 50 years. Or maybe not. Because very few people could have predicted the iPad in 1974, when the first personal computer was featured on the front cover of Popular Electronics and who knows what the technology of distribution will be in 2063.
This is going to be interesting and, believe it or not, very apolitical. Speeding freight trains take no prisoners and neither will the advances in technology that people like Bezos may help foment.
Somebody will solve the problems and this guy has a track record. As a guy who got his first newspaper job on a lead based newspaper (that is, a newspaper whose type was set on a linotype machine) I’m wishing him the best of luck and I don’t care how much he supports Barack Obama.
Liberal Presidents come and go but newspapers (or whatever they will become) should last forever.
Photo credit: niallkennedy (Creative Commons)