Photo: T.J. Kirkpatrick/Bloomberg/Getty

Good journalism is expensive to produce, and Bezos doesn't have the cheap currency at the Post that Amazon's soaring stock provided.

By John Cassidy
September 19, 2013

At $250 million, Jeff Bezos’s purchase of the Washington Post, which is due to be completed next month, isn’t the year’s biggest deal, but it’s perhaps the most fascinating: New media meets old media. Visiting D.C. at the start of September, the Amazon boss told the Post’s staff that their position was far from hopeless and that he was committed to high-quality journalism. As a former newspaperman, I’m hoping he can assure the Post’s future, but I’m reminded of an old saying of Warren Buffett’s: “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”

Bezos’s record demands respect. He spotted the potential of online commerce early, he created a business that its customers love, he squelched potential competitors, and he expanded into new areas, such as e-readers and web hosting. For years, the rap on Amazon was that it would never make a dime. In 2010 and 2011, however, it generated almost $1.8 billion in after-tax profits, before embarking on another big expansion that has pushed it into a small loss. However, even the most talented entrepreneur is hostage to his or her environment. When Bezos quit Wall Street in 1994 and moved to the West Coast at the start of the online revolution, he ensured that he was in the right place at the right time. In purchasing the Post, he entered much more hostile terrain, where many of the advantages he enjoyed at Amazon are lacking.

One of them is the first-mover edge. In the mid-’90s, Amazon didn’t have Internet retailing to itself: Several booksellers were already online. But in building a national distribution system, with hundreds of thousands of titles instantly available, Bezos established a new business model and quickly got out ahead. The Post is in the opposite situation. On its home turf, it is under siege from interlopers such as Politico. At the national level, the New York Times and the Wall Street Journal have established dominant positions online. How can the Post compete?

During his visit, Bezos said he would apply the same three principles that he had relied on at Amazon: “Put the customer first, invent, and be patient.” But when he was asked for specifics, his ideas were less than revolutionary. One was making it easier to subscribe to the Post; another was providing a “daily ritual bundle” of news that readers would be willing to pay for. Signing up for the Post isn’t exactly hard today: You have to fill in a one-page form, enter your credit card details, and press a button. And as Timothy B. Lee, a Post technology reporter, pointed out, social media is challenging the very idea of reading a daily bundle of articles from the same provider. Guided by their Facebook or Twitter feed, many people now consume news one story at a time.

Bezos could possibly use Amazon to promote the Post, perhaps by loading an app for the newspaper on Kindles or by featuring it in the Amazon bookstore. But forcing products on customers rarely works. And, in any case, Amazon is a public company, with its own stockholders to think about. It has little incentive to do favors for old-media dinosaurs. The Post will probably have to make it alone.

Bezos’s best bet may be building on the success of its Wonkblog and going “narrow and deep” in areas where the paper has traditionally been strong, such as national politics, foreign policy, investigative reporting, arts criticism, and local news and sports. As the Times and the Journal have demonstrated, readers will pay for online subscriptions if they think they are getting a top-of-the line product. (The Times has more than 600,000 digital subscribers; the Journal has almost 900,000.) But good journalism is notoriously expensive to produce, and at the Post Bezos doesn’t have the cheap currency that Amazon’s soaring stock price provided. To sum up, he’s in the same spot as other newspaper publishers. And that’s not a great place to be.

John Cassidy is a Fortune contributor and a New Yorker staff writer.

This story is from the October 07, 2013 issue of Fortune.

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