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Amazon founder to apply his 'customer-centric' model to industry

Can Amazon’s Bezos save the newspaper business?

by Matea Gold and Cecilia Kang

The Washington Post

Amazon.com founder Jeffrey Bezos’ purchase of The Washington Post promises not just an ownership change for the 135-year-old institution but a potential transformation of the fusty mechanics of the newspaper business.

It remains to be seen whether the experiences of an Internet behemoth can be successfully applied to a legacy newspaper — and whether Amazon-style customer targeting would be palatable at a news organization.

But if Bezos applies the kind of innovations to the Post that have propelled Amazon under his stewardship, he could radically up-end traditional assumptions about how the paper delivers its journalism, generates ad revenue and interacts with its readers.

Technology analysts said that the kind of predictive analytics perfected by Amazon could be used to provide Post subscribers with personalized news feeds based on where they live and what they have read before. People browsing the Post’s website or tablet app could be served up ads tailored to their past purchases, and then could buy products with a single click, media industry experts said. Reader voices could be integrated into online story-telling, with the community voting on the most valuable comments.

“The biggest impact will be a lessening of the reliance on the old model,” said Brad Stone, author of “The Everything Store: Jeff Bezos and the Age of Amazon,” a book set to be released in October. “He fearlessly goes and disrupts his own businesses.”

Whether Bezos can effectively reboot the newspaper industry for the digital age — a goal that has eluded scores of media veterans and Wall Street investors — remains an open question.

Still, there is no question he comes to the task from a distinct point of view. At the heart of Bezos’ approach is an obsession with the customer’s experience — a philosophy that drove Amazon’s pioneering advances in targeting consumers and delivering goods.

“We intend to build the world’s most customer-centric company,” he wrote to shareholders in 1999, as the young company was just expanding beyond online book-selling into music and videos.

“One thing Bezos has understood is the relationship with the customer is everything. You satisfy that customer, then you sell them more stuff,” said media analyst Ken Doctor.

Bezos could figure out how to “take the friction out of the buying process” at newspapers, as Doctor put it, changing how readers subscribe for news, what they receive and when.

But he will also have to exercise some caution in reinventing Post practices, Doctor said, adding: “Do any of these things tread on the public’s belief that the editors are simply trying to get them accurate, true stories? That’s the bedrock principle, and you don’t want to violate that principle.”

Bezos has said he will not be running the Post’s day-to-day operations and has yet to indicate how he might remake the newspaper. “I don’t want to imply that I have a worked-out plan,” he told the Post in an interview Monday. “This will be uncharted terrain, and it will require experimentation.”

Martin Baron, executive editor of the Post, told the newsroom staff in a meeting Tuesday that he anticipates Bezos will challenge basic assumptions about the newspaper business, just as he has with in other industries. “Certainly, my hope and expectation is that he will come with some ideas — some big ideas,” said Baron, who noted he has not yet spoken with the new owner.

It remains unclear what relationship — if any — Amazon will have with the Post, which will be owned solely by Bezos. But some of the core technology on which the Internet company has built its success could dramatically change the paper’s operations, boosting online advertising and cutting costs.

Amazon knows its customers better than nearly any other retailer or media firm, analysts say. With software developed a decade ago and built in-house, the company has perfected the practice of tracking users on their site, analyzing that information and then serving up recommendations of more products to sell to them.

That information — particularly what users actually buy online — is more valuable than data gathered from Google searches and “likes” on Facebook, marketing experts say. And it’s the sort of technology the Post could use to better understand its readers.

If someone is only interested in Washington Nationals coverage and education policy news, for example, Amazon technology could easily deliver a customized home page built around those topics.

With more data about the paper’s readers, its advertisers could better target consumers and be willing to pay a premium for those ads, said Tim Bajarin, head of technology research and consulting firm Creative Strategies.

“Everything is about personalization, and what Jeff has learned about customization of consumers’ personal needs can easily translate into the personal needs of an individual reader of a newspaper,” Bajarin said. “That would be a revolution for the Post.”

Advertising has been a small but fast-growing part of Amazon’s business. Some analysts estimate it generated $609.9 million in digital advertising in 2012, up 45.5 percent from the previous year. The Post could help boost that.

But the paper, whose financial struggles have long hamstrung its ability to experiment, is poised to be the bigger beneficiary of any alliance. In Amazon, it has a potential partner that runs one of the biggest cloud server networks in the United States — infrastructure that could allow the Post to invest more in editorial content and other initiatives.

“Using Amazon’s cloud network, its software tools — these are all rounding errors in terms of costs for Amazon, but really meaningful to the bottom line of a company like the Post,” said Carl Howe, director of consumer research at Yankee Group.

But Bezos — called the “ultimate disrupter” in a Fortune profile late last year — could institute changes at the Post that might be painful for the entire industry, analysts said.

As Amazon barrels into a new venture, it often leaves damaged businesses in its wake and small bookstores, music stores, and even big box electronics firms have shuttered with the growth of online retail, critics say.

“This is a highly disruptive innovator who knows how to change things at a paper like the Post, but it will take time and it won’t be easy,” said Michael Levin, an analyst at Consumer Intelligence Research Partners.

One move Bezos might take at the outset is to end the paper’s new online subscription program, which limits how many stories readers can access without paying for a subscription, according to Stone, a journalist who has covered Amazon for more than 14 years.

“What is less customer-focused than a paywall?” he asked. “You’re making it harder for people to read your story at the same time that there’s an abundance of competition.”

For all the opportunities the Post offers for experimentation, the Internet pioneer’s decision to purchase the paper startled longtime Bezos watchers. In recent years, he has stressed the value of “self-service” platforms such as Amazon Web Services and Kindle Direct Publishing that skirt traditional gatekeepers like legacy media. “Even well-meaning gatekeepers slow innovation,” Bezos wrote to shareholders in 2012.

“That’s one of the reasons the acquisition of the Post was a surprise,” Stone said. “But he is also willing to experiment — and willing to fail.”