I was in the New York Public Library’s Stephen A. Schwarzman Building when I learned that Jeff Bezos had bought the Washington Post. Looking around the majestic Rose Reading Room, recently renovated with the help of $100 million from Schwarzman, I thought, this is a moment I’m going to remember.
The business model of a traditional newspaper, like that of a library, is crumbling. Both institutions now require the backing of billionaires.
Why would a rich person buy a local newspaper? Many of them clearly think it’s a good idea: Warren Buffett’s BH Media Group already laid out more than $344 million for 29 daily newspapers, Rupert Murdoch has his, David and Charles Koch have toyed with buying several, and now Bezos has spent less than 1 percent of his net worth to buy the newspaper that all of political Washington reads over its cornflakes.
My bet is that Bezos will exploit the opportunities that any great local paper still has. After all, a newspaper with a stable of loyal subscribers is a modestly profitable unregulated monopoly — provided no other paper is struggling in the same area. Driven by habit and interest in their community, subscribers will keep reading comprehensive local news (the mayor, the planning commission, the high school scandal) as well as marriage and death notices. If you can please your audience so that your advertisers have someone to sell to, keep staff costs reasonable and gradually build an effective online paywall, you’ll do fine.
Yes, the Internet has stolen a lot of the revenue from classified advertising, but newspapers are figuring out ways to make up some of those losses. (Ever place a death notice in the New York Times? It’s extraordinarily expensive.)
Local newspapers are now available at bargain-basement rates. The Boston Globe’s pennies-on-the-dollar sale to Boston Red Sox owner John Henry would have been the feel-weird newspaper story of the week if it hadn’t been for Bezos.
It’s true the communications business has changed. Twenty years ago, Americans were accustomed to receiving specific services through special-purpose networks. Television and radio were broadcast across airwaves designated for their use, letters were sent through post offices, phone calls were placed over telephone wires, and newspapers printed on wood pulp were carried to family doorsteps and city street corners.
In such a world, newspapers could build a narrow moat around their businesses. Steady income from advertising and subscriptions allowed for lavish cross-subsidization: Sports scores and business data attracted newspaper buyers and subsidized investigative reporting and opera reviews. The enterprise saw itself as one multifaceted entity.
Now all of the old delivery methods have collapsed into Internet Protocol bits, and though the newspaper has gone digital, it is just another website among many. Advertisers have a host of ways to reach customers online, and have little reason to pay newspapers special tribute — even though a newspaper’s online audience may be far larger than its print subscriber list.
Donald Graham, the Washington Post Co.’s chief executive officer, told his employees this week that revenue had declined seven years in a row.
There are still profits to be made by newspapers, but without investments large enough to intimidate would-be competitors, even the best ones will wither away.
Enter Bezos, an investor with the deep pockets and the logistical acumen to get the Post in fighting shape, to provide a fine local product to more people for less money. Not incidentally, he can cope with the paywall problems and spruce up the Post’s second-rate website.
Plus, Bezos probably has a civic heart. Think of Stephen Schwarzman and the library building. It feels good to put your name on something grand. And in Bezos’s case, his investment should also return a tidy profit.
Susan Crawford, a contributor to Bloomberg View and a professor at the Cardozo School of Law, is the author of “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.”