The Price of News: The Post Deal

August 7, 2013

I have been following the flood of information about Jeff Bezos’ apparent purchase of the The Washington Post. I use the word “apparent” because it is not clear if Mr. Bezos or Nash Holdings LLC bought the newspaper. For the purpose of this Beyond Search item, let’s assume that a Bezos-controlled entity has the keys to the Lego kit with millions of blocks that the Washington Post represents. Building a profitable newspapers may be like taking the brightly colored blocks and assembling them in just the right way to build a cash machine.

Can Jeff Bezos build a money machine from the many Lego blocks that make up the Washington Post? Image from Lego Corp. at http://goo.gl/QG0xU2.

The obvious point is that Mr. Bezos, an Internet business superstar, sees riches where others see union hassles, declining advertising revenues, and “real” journalism about the most exciting place in the swampy area bordering on the Potomac.

Reuters’ take on the deal was interesting. The story “Amazon’s Bezos Pays Hefty Price for Washington Post.” Thomson Reuters rarely overpays for its acquisitions, so I interpreted the headline as a suggestion that Mr. Bezos’ financial skills are not up to Thomson Reuters’ standards. Both Thomson Reuters and Amazon have cost control challenges, and it is not clear which organization is better positioned for the economic storms which are forming on the horizon.

The Reuters’ story states:

The multibillionaire founder of online retailer Amazon.com Inc may have paid more than four times the price that the financial results of the Washington Post suggests it is worth.

Before the Reuters’ era, Thomson Corp. sold most of its newspaper properties. I wonder if some of the Thomson Corp. era executives are asking, “Why didn’t we meet with this fellow?” Too late now I suppose.

The other interesting angle on the Washington Post deal appeared in “Bezos Brings Promise of Innovation to Washington Post.” (Note: this link may go dead due to the pay wall stuff at the venerable newspaper.) The headline uses an interesting word “promise”. There is no guarantee that Amazon’s WalMart approach will work with “real” journalism. The write up says:

No baggage — and deep pockets — means room to try new things. Might Mr. Bezos apply tech industry concepts like frictionless payments, e-commerce integration, recommendation engines, data analytics or improved concepts for mobile reading?

I don’t know much about “real” journalism or newspapers, but I thought the Washington Post has been pushing the boundaries of new media for a long time. There was a big thinker from a blue chip consulting firm. There were deals for semantic technology like the experiment with the now gone-silent, Paul Allen-funded Evri. There are apps and Facebook pages. What’s missing, of course, are readers who buy the newspaper for the “information” and the advertisements. When I lived in the Washington, DC area, we subscribed to the Washington Post, followed the off hours antics of Sonny Jurgensen, and checked movie times for the movies.

Perhaps the Washington Post can become a giant of Amazonian proportions in the world of digital media? I have watched many newspapers’ experiment with online to know that there are a limited number of Lego blocks. Snapping these together in innovative ways is possible. But like the Lego block creations like the life sized model of the X-Wing fighter of Star Wars fame, finding solutions can be expensive, time consuming, and of uncertain value.

Mr. Bezos or whoever the owner of the Washington Post is may be embarking on a Lego-style process. The results are interesting. Will there be enough Lego fans to appreciate the end result? Hobbies can be fun. Making a hobby into a profitable business can be difficult. At a time when Amazon needs to pay attention to its cost controls, keeping the Washington Post purchase separate from Amazon may be a good thing. I assume Mr. Bezos and his capable team have the bandwidth to tackle a very large Lego kit which might dwarf the 23-ton, five million brick X Wing fighter project.

Stephen E Arnold, August 7, 2013

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Stephen E. Arnold monitors search, content processing, text mining and related topics from his high-tech nerve center in rural Kentucky. He tries to winnow the goose feathers from the giblets. He works with colleagues worldwide to make this Web log useful to those who want to go "beyond search". Contact him at sa [at] arnoldit.com. His Web site with additional information about search is arnoldit.com.