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Washington Post sale points to a quality future for newspapers

Perhaps the proverbial tipping point in US print journalism has been reached. With the US$250m acquisition this week of The Washington Post by Amazon founder and billionaire Jeff Bezos, the US newspaper…

The internet sent newspapers back to the drawing board. Achifaifa

Perhaps the proverbial tipping point in US print journalism has been reached. With the US$250m acquisition this week of The Washington Post by Amazon founder and billionaire Jeff Bezos, the US newspaper industry will fully accept it fought technology and technology has thankfully won.

When the web emerged back in the early 1990s, newspapers refused to embrace digital technology. The internet remained a mystery to most newsrooms and even when it was visualised in the web browser many rejected it, calling it a passing fad.

When newspapers did begin to accept the online world, it often was a confused, “not in my neighborhood” approach. In fact, the Washington Post itself created a dot.com, but located its offices across the river from its headquarters rather than start with immediate integration of online and print.

Newspapers’ misunderstanding also led them to charge for the hardcopy while giving the content away free on their websites and to Google, Yahoo and host of other news aggregators. And it was an industry that put little or no money into technology and data analysis training.

“Even a valuable product, however, can self-destruct from a faulty business strategy …” legendary investor Warren Buffett has said, noting publishers “ … have offered their paper free on the internet while charging meaningful sums for the physical specimen. How could this lead to anything other than a sharp and steady drop in sales of the printed product?”

In 1994 meanwhile, in a parallel universe, Jeff Bezos saw the web and saw the future. He left his job in finance and began the classic out-of-his-garage venture that became the retail behemoth Amazon.com.

So this week, two decades later, the universes finally merged and the digital Bezos bought the declining Post from the Graham family.

Many traditional newspaper folk in the US say they are shocked by the sale. They fear for the future of journalism and they are worried about a hidden political agenda. But if there is any shock, it is that there is hope – hope, because those with money are investing in newsrooms again.

Last week a local business group led by John Henry, better known as a sports team owner, bought the Boston Globe and other newspapers for a bargain. Buffett’s company Berkshire Hathaway has been scooping up local and community newspapers throughout the nation for the past year. (Buffett has also profited nicely from the Post sale.)

The right-wing billionaire Koch brothers have been considering buying the Tribune papers, a collection of ten daily newspapers including the Chicago Tribune and the Los Angeles Times.

And there is talk that when New York City Mayor Michael Bloomberg gets out of office he may make the Sulzberger family an offer for the New York Times they can’t refuse. Bloomberg, another billionaire, already owns the profitable Bloomberg News.

Until these recent purchases, the primary business model has been one of plunges in news quality and the “harvesting” of profits from what is perceived as a dying industry. In the past decade, nearly a third of editorial print jobs – 18,000 out of 56,000 – have disappeared from newspapers, according to a study released last month.

And it continues. In the past weeks Gannett, owner of USA Today and a host of local papers, laid off dozens more and the Plain Dealer in Cleveland cut a third of its newsroom staff.

The result is that coverage at US newspapers has been reduced to reporters rushing to write quick stories, take photos and fire off blog updates while owners hope for citizen journalists (previously known as unpaid stringers) to fill the gaps. And staffing at state capitols and foreign bureaus is nearly non-existent.

But the purchase of the Post may be the most prominent signal in the turnaround of the news industry in the US. We could be witnessing the evolution of a leaner, more focused digital business model that merges various delivery systems and makes content more targeted and meaningful.

Henry Blodget, whose site Business Insider was bought by Bezos last year, sent out the message of hope last week in what some saw as an overly optimistic column. He said the sustaining digital business model had been found. As evidence of his point, he cited the hundreds of millions of dollars that the New York Times has gained in digital advertising.

Whether Blodget is right, it appears the smart money has waited until the corporations and families have mismanaged the newspapers to fire-sale prices, digital ad revenue has increased substantially and customers have started to pay subscriptions for content on the web.

As Buffett, one of these “smart money” investors, has said:

… Papers delivering comprehensive and reliable information to tightly-bound communities and having a sensible internet strategy will remain viable for a long time. We do not believe that success will come from cutting either the news content or frequency of publication.

So unlike the previous generation of newspaper owners, the new investors see a future in quality. And this might just mean a quality future for newspapers.

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7 Comments sorted by

  1. Peter Ormonde
    Peter Ormonde is a Friend of The Conversation.

    Farmer

    Excellent and interesting piece ... fingers crossed.

    One of the interesting things that has happened in this process of digital change is how the actual asset values of mastheads have been recast. Thirty years back it was the thundering massive presses and the cheapness of the classifieds and ads that whet the appetites of passing investors....rivers of gold. Now largely dried up ... certainly not growing to justify and pay for acquisition. And the behemoth presses are giant paperweights. Nothing…

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  2. Greg Young

    Program Director

    What a private owner such as Bezos, with a presence in both digital and printed worlds, can achieve is to change the mission of the printed newspaper.

    As you point out, most of the content is available online anyway. That medium is best suited for fast turn-aroud, as-it-happened, and interactive news reporting. This is what most printed newspapers seek to do, but badly.

    A potential road forward is to leave that kind of content to the digital channel entirely, and focus the printed paper solely on articles that need to be consumed in print. Longer-form articles with weightier analysis, investigative reports, etc. I'm thinking here of the kind of article printed in Harpers or The Atlantic, as opposed to Time. When the printed paper competes in a different space to the digital world, it will have a chance of a healthy future alongside it.

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  3. Chris Harper

    Engineer

    One of the big challenges to newspapers we see right here.

    Fairfax is facing the dilemma of having to charge for its content, in competition to content being delivered free at the point of consumption by government subsidised organs such as the ABC and The Conversation.

    News Ltd aims its products at a more varied market, trying to attract conservatives as well as progressives, but Fairfax, the ABC and The Conversation are all firmly targeting progressives.

    Fairfax has a real problem. It advocates a political structure which is leading to its own failure in the market.

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  4. Trevor Kerr

    ISTP

    There's a limit to the amount of (ever higher quality) video the ordinary mug can download in a day. Sure, we have an insatiable demand for HD, and the provenders are happy to supply, but "news" breakers must want to tap into the "citizen journalism" pool. High quality, on-the-spot stuff requires fast upload speeds, doesn't it? If that's the case, then KRudd may be thinking about having a cosy chat with Mr Bezos, while thumbing his nose at News.

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  5. Citizen SG

    Citizen

    'They fear for the future of journalism and they are worried about a hidden political agenda...'

    oh, please.... is it that they're worried that the new 'hidden political agenda' will be different to their preferred 'hidden political agenda'?

    we should send them a copy Monday's Australian newspapers if they think they have a problem with 'political agendas' in the US.

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  6. Colin MacGillivray

    Architect, retired, Sarawak

    What will we call an A4 (or A3) very thin flexible sheet of material, which can be rolled or folded, an electronic device which can display a newspaper's content like a Kindle does now?
    It can't be far away. Why would anyone print out the content when it is available on such a device?
    Not a newspaper but a news-------. (Answers on a postcard please, er, no the postal service has gone too.)

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  7. Yoron Hamber

    Thinking

    Don't know what to think? Either you will get a privileged sort of journalism, reminding me of far gone days when only the wealthy bought and read those papers, also coloring those news into some one sided way as the readers colors the journalism, as the view of the paper colors the reader. Or you will get some cheap sort of news in where aliens are sighted constantly, as well as gory happenings, wanting to draw the interest of the 'common man' :) Or both.

    It also depends on how free a Internet…

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