What Can the Washington Post Expect From Its New Owner Jeff Bezos?
In a letter to his new employees at The Washington Post, Amazon founder Jeff Bezos wrote, “Journalism plays a critical role in a free society and The Washington Post—as the hometown paper of the capital city of the United States—is especially important.”
That "critical role" is now even less likely to happen in print. In an interview with the German paper Berliner-Zeitung just last year, Bezos described newspapers as a luxury item headed for extinction:
"There is one thing I’m certain about: there won’t be printed newspapers in twenty years. Maybe as luxury items in some hotels that want to offer them as an extravagant service. Printed papers won’t be normal in twenty years."
Even “free society” is a loaded term for an oligarch like Bezos. In an investigation of “the Amazon Effect” in The Nation last year, Andy Ross, the veteran bookseller behind Cody’s Books in Berkeley—until online competition forced his store to close—told the magazine:
“Monopolies are always problematic in a free society, and they are more so when we are dealing with the dissemination of ideas, which is what book publishing is about,” he told me. “In the realm of electronic publishing, Amazon until recently controlled about 90 percent of the market, a monopoly by almost anyone’s definition . . . Amazon simply has too much power in the marketplace. And when their business interest conflicts with the public interest, the public interest suffers.”
It’s still unclear how the public interest will be served by Bezos' investment in the flailing media company, except to keep the storied paper afloat for now. (In May, the Washington Post Company reported “an 85 percent drop in first-quarter net income on Friday on weakness in its education and newspaper businesses.”)
What Bezos gets out of the deal is more obvious, according to Buzzfeed: "A powerful man desired more power, and decided that the media offered a fairly cheap and fast way to acquire said power," profit margins be damned. That is, unless he finds a way to work the Washington Post into the Amazon ecosystem.
In BusinessWeek, Brad Stone envisions one possible scenario:
Though he’s buying the Post independently, it might ultimately serve as another strategic asset in Amazon’s ecosystem of Kindle tablets and e-readers, which compete against similar products made by Google and Apple.
In the SEC filing for the $250 million deal, the purchaser is listed as Nash Holdings LLC, a (very recent!) Delaware entity first incorporated this past Friday. That may provide some insulation for Bezos, although that the guarantor of the purchase is Explore Holdings LLC, another name for Bezos Expeditions, the tech mogul's personal investment company. (Paul Dauber, who is listed as the manager of Explore Holdings LLC and listed in the Washington Post sale agreement has shown up in previous SEC filings as the attorney-in-fact for Jeff Bezos.)
A 135-year-old newspaper sticks out in Bezos Expeditions' collection of curiosities, except perhaps as a symbol of another industry to disrupt. His portfolio includes investment in Uber, Airbnb, Twitter, the space-flight company Blue Origins, and the 3D-printing startup MakerBot, among others. The only news-oriented investment so far has been a much smaller sum in our caps lock friendly compatriots at Business Insider.
Based on letters to shareholders and previous reports in the press—a chunk of which Bezos now owns—here’s what The Washington Post can expect from its new owner:
He's not a big believer in paywalls:
“On the Web, people don’t pay for news and it’s too late for that to change."
Unless, of course, it's through a tablet subscription!
"We [Amazon] realized that people are willing to pay for newspaper subscriptions on tablets. In the near future, every household will have multiple tablets. That’s going to be the default and will provide momentum for newspapers, too."
Bezos doesn’t always make his ultimate intentions known:
Back then, Bezos was cultivating friendly relations with publishers and trying to make his e-commerce company profitable. In 1999, when Businessweek asked him whether he would ever move from the business of selling books into the business of making them, Bezos demurred: “We’re really, really good at exactly one thing, which is helping customers discover things that they might want to buy online. And that’s enough.”
He has a long-standing fetish for online commerce:
Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas. We see substantial opportunity in the large markets we are targeting. This strategy is not without risk: it requires serious investment and crisp execution against established franchise leaders.
John Sargent, the plain-spoken chief executive of Macmillan Publishing, was the first to get on a plane to Seattle to inform Amazon of the decision and to threaten to withhold Macmillan’s books if Amazon did not agree to the new pricing model. Bezos and his colleagues reacted angrily by removing options to buy Macmillan’s books directly from Amazon. Amazon eventually relented, and e-book prices on bestsellers jumped from $9.99 to $12.99 or higher. (The publishers’ move has triggered ongoing antitrust investigations in Europe and Washington, D.C., over whether book publishers and Apple illegally colluded to raise e-book prices.)
Slate, which got left out of today's deal, recently reported that Bezos is a shrewd manipulator, especially when it comes to the U.S. tax code:
As its business expanded, Amazon’s CEO Jeff Bezos treated this anomaly as an inherited right and deployed the classic techniques of rent-seeking to protect his advantage. He spent millions of dollars per year on lobbyists, deployed an army of lawyers, and cultivated political allies with large campaign contributions. Diffuse and vulnerable, the mom-and-pop shops disrupted by Amazon lacked the capacity to make their case effectively. Nor was there any customer constituency for tax collection, even though the same consumers paid indirectly through diminished public services.
At the state level, Amazon became a litigious bully, an instance of the modern corporation powerful enough to dictate terms to impoverished sovereigns. When challenged over the collection of taxes, it warned that it could take thousands of jobs elsewhere. As California teetered near bankruptcy a few years ago, Amazon cut ties with local affiliates and threatened to fund a public referendum to overturn the legislature’s decision to make it pay tax. Its strategy devolved into simply delaying the inevitable for as long as possible. When a state looked likely to win in court, Amazon would negotiate and agree to collect taxes, provided that it didn’t have to start for a few more years.
He has, on at least one occasion, been willing to fall on his sword:
This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our "solution" to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission.
With deep apology to our customers,
Jeff Bezos
Founder & CEO
Amazon.com
Chances are he will have at least one conversation with Katherine Weymouth:
Many of the entrepreneurs funded by Bezos Expeditions say they have had at least one conversation with Bezos himself. “He invests in things where information technology can disrupt existing models,” says Rodney Brooks, the MIT robotics professor behind Rethink Robotics, which aims to put inexpensive robots on manufacturing assembly lines. “He’s certainly not hands-on but he has been a good person to talk to when various conundrums come up. When we go ask him questions, it’s worth listening to his answers.”
He’s not a big fan of anyone who gets in the way of almighty innovation:
I am emphasizing the self-service nature of these platforms because it’s important for a reason I think is somewhat non-obvious: even well-meaning gatekeepers slow innovation. When a platform is self-service, even the improbable ideas can get tried, because there’s no expert gatekeeper ready to say “that will never work!” And guess what – many of those improbable ideas do work, and society is the beneficiary of that diversity
Bezos, an avid reader of the site, is making his first investment in the company through his personal investment arm Bezos Expeditions and brings the startup’s total funding to $18.3 million, Business Insider said.
To contact the author of this post, please email nitasha@gawker.com.
[Image by Jim Cooke]
