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Monday, August 5, 2013

So, Does Anyone Have Any Thoughts On Why Amazon's Bezos Would Buy The Washington Post?

Updates

Later, 8:45 CDT: I had not read the story, just the headline when I posted my thoughts below. I see a lot of folks are asking the same question, suggesting that there will be no print media in 20 years (or sooner). That's why the important question is: what business is Amazon in? Or what business is Mr Bezos most familiar with? Certainly not print media. No, he didn't buy this for the ad revenue.
 
Original Post

John Henry buys The Boston Globe for $70 million.

Mr Bezos, for $250 million buys: the Washington Post, The Express newspaper, The Gazette newspapers, Southern Maryland newspapers, Fairfax County Times, El Tiemp Latino, and Greatre Washington Publication.

This was a personal acquisition and not bought by Amazon.com.

So what gives?

All the reasons that you can think of, be sure to include this one: although Amazon.com now sells almost everything through its website, it started out as a bookseller, and I assume book sales make up much of the company's revenue.

I assume the books are, for the most part, being bought by people who read books.

Likewise, I assume that most folks who subscribe to newspapers also read them. And my hunch is that the demographics tend to favor middle income and high middle income subscribers. 

Mr Bezos, gives a lot of books away for free every month through his Amazon Vine program -- he wants folks to read the books, and then post a review at Amazon to create a buzz about the books.  I assume that's a relatively small number of amateur reviewers who belong to the Vine program.

With his $250 million he just got a pretty good mailing list.

Amazon's market cap is $137.52 billion. Again, this was a personal acquisition and not an Amazon deal, but Bezos is probably worth a significant percentage of Amazon's market cap. So let's just say that $0.52 billion was gone tomorrow -- would anyone even notice? Probably not. And for half that amount Bezos just got the mailing addresses of all those subscribers to:
  • the Washington Post,  
  • The Express newspaper,  
  • The Gazette newspapers,  
  • Southern Maryland newspapers, 
  • Fairfax County Times,  
  • El Tiemp Latino, and  
  • Greatre Washington Publication.
Notice how many of those publications have an "s" in their name (as in plural). Also note one newspaper that probably caters to Spanish readers.

I have trouble believing Mr Bezos is in the newspaper business for the ad revenue. I think he just got a list of folks who like to read. Even if everyone of those subscribers canceled their subscriptions, he still has their mailing addresses and knows they like to read. And they like to have things delivered to their homes. And they are literate. And probably discerning. And probably with some money to spend.

Oh, one more thing. He just got a list of folks who like to have things (not just books) delivered to their doors, something Amazon does very, very well.

Also, all those newspapers have a distribution system, including warehouses, trucks, and drivers; one wonders if there are opportunities for cost savings combining what Amazon already does and what these newspapers do in distribution.

Is Bezos in the newspaper business, or a logistics business? This might be a good case study for Harvard Business School this autumn.

Even though it's a personal acquisition, and not part of Amazon, Mr Bezos can certainly "lease" his new business to Amazon.

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