Newspaper world watches for new owner’s overhaul of Post
SAN FRANCISCO — Jeff Bezos has already transformed one traditional print business — books — into a digital one. The experience provides a blueprint for how the billionaire technology executive is now poised to overhaul newspapers following his $ 250- million acquisition of the Washington Post.
Since Bezos founded Amazon. com Inc. in 1995, he has forced the publishing industry to embrace ebooks and digital reading devices. He has also made the Seattle- based company a leader in online advertising and collecting consumer data over the web. Those strategies have helped vault Amazon into the world’s largest ecommerce provider and one of the top Internet companies with a market capitalization of $ 138 billion.
Bezos, 49, will bring that background to bear as he plunges into the newspaper industry with his deal Monday to buy the Post. The Graham family, which had owned the newspaper since 1933, decided to sell amid a steep decline in print advertising and as audiences shifted to reading news online.
“It’s clear that Bezos has a very deep and rich history in publishing, particularly since books were Amazon’s bread and butter and still are,” said Dan Kurnos, an analyst at Benchmark Co. “He’s got a lot of experience.”
Washington Post Co. shares climbed 6.2 per cent to $ 604.18 at 9: 51 a. m. in New York, the highest intraday level since 2008. The stock had gained 56 per cent this year through Monday.
In a letter Monday to Post employees, Bezos laid out the challenges ahead for newspapers, saying the “Internet is transforming almost every element of the news business.” Bezos, who is buying the Post as an individual and unaffiliated with Amazon, added that “we will need to invent, which means we will need to experiment.”
Drew Herdener, a spokesman for Amazon, didn’t return calls seeking comment.
For Bezos, experimentation is nothing new. Over the years, the chief executive officer has pushed Amazon into everything from streaming video to hosting Web services and delivering groceries.
Bezos has also used his personal fortune — his net worth stands at $ 27.9 billion, according to the Bloomberg Billionaires Index — to invest prolifically outside Amazon through his investment fund, Bezos Expeditions. The fund has backed young companies such as Twitter Inc., taxi service Uber Technologies Inc., the 3D printing company MakerBot Industries LLC and robot firm Rethink Robotics Inc.
“He invests in things where information technology can disrupt existing models,” said Rodney Brooks, the Massachusetts Institute of Technology professor behind Rethink Robotics.
Chief among Bezos’s experiments that have paid off is how Amazon has pushed the publishing industry toward a digital business model. Amazon began selling ebooks in 2007 and unveiled the Kindle e- reading device that same year. By 2011, Amazon said its books for Kindle readers surpassed its print sales.
Many ebooks now sell for prices close to those of print ones, a lesson the newspaper industry would do well to heed. The Kindle version of A Game of Thrones by George R. R. Martin sells for $ 9.99 on Amazon. com, compared with $ 13.36 for the paperback.
Amazon has used demand from customers to push down prices of print books. At the same time, when Bezos introduced the Kindle, he offered the most popular books at prices close to paperback books, setting the bar for digital content for years to come. “He’s managed to get ebook pricing pretty close to print pricing,” said Kurnos. “If he can do that in newspapers, then ultimately it’s a sustainable cash flow model.”
Amazon provides other strategies to Bezos for his move into newspapers. As print publications search for a way to stem ad- revenue declines, Amazon has increased online advertising sales, which are estimated to rise 40 per cent to about $ 835 million in 2013 from the year prior, according to Emarketer Inc.