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Newspapers Should Be More Like Amazon: What Jeff Bezos can teach The Washington Post

August 12, 2013

BY Julius Genachowski and Steven Waldman

What’s intriguing about Jeff Bezos, who purchased The Washington Post this week, is not that he’s a digital guy or that he has a lot of money—though both certainly help—but that ever since he founded Amazon, he’s specialized in the long view. The company lost money for nine years, and Bezos continues to prioritize long-term investment over near-term profit. That’s how great, enduring companies are created or transformed—by building a strong infrastructure, products, brand, and deep relationships with customers. And to their credit, Amazon shareholders are rewarding this strategy and vision. They know there will be time enough to see returns on these investments, returns that will reflect the massive value Bezos is building.

By contrast, too many news companies have been paralyzed by the tyranny of short-term horizons. Media executives under-invested in digital not because they were stupid but because it was actually more rational for them to focus on slowing the decline of their traditional revenue lines—more rational, that is, in the short run. In the long run, of course, that thinking is suicidal. At way too many newspapers, we’ve seen a decline in the quantity and quality of journalism—the kind of reporting that keeps in check government officials and others with power, the kind of journalism that’s as vital to the health of our democracy as it ever was. One indirect measure: the number of newsroom jobs dropped from 52,600 in 2007 to 38,000 in 2012, according to the American Society of News Editors (and yes, reporters usually are required for quality journalism).

 As bleak as the industry sometimes seems, the news media can be profitable—but only if companies better serve their customers, transform their business models, and alter their financial time-horizons. That includes having the kind of patience that Bezos demonstrates at Amazon. Outlets that cuts back on basic services—especially reporting—will improve their near-term quarterly profit, but squander the future.

At Amazon, Bezos didn’t just “crack the digital code” in a technological sense; he understood how the Internet changed the economics of serving consumers. And while he looked at the long run, he also pursued the long tail. Amazon mastered the capacity to provide products and services not only for the big sellers but the smaller ones, and not only for buyers who want to buy the biggest selling products but also consumers with unique interests. He did this, for instance, by deploying technology to improve the economics of low-volume sales. With infinite shelf space, he built a business that offers everything to everyone, something you couldn’t do in a store, even a big box retailer.

Implicit in the mastery of the long-tail strategy is the idea that a big company can serve each customer with precision, in part by deploying sophisticated data analytics and in part by using technology to efficiently deliver good service to small numbers of people. That is an anathema to some in “mass media,” but news outlets need to embrace that approach if they’re to serve readers with enough value to regain relevance. For instance, when a newspaper writes a series about local schools, it provides the same information to every reader. When a newspaper creates a searchable database about the quality of local schools, and gives each reader the ability to select the variables they care most about, then the paper is tailoring the reporting to each reader. One database creates a thousand stories. Read more in The New Republic.

From → Commentary

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