Much of the media world has been waiting with bated breath since Jeff Bezos bought the Washington Post for $250 million last year, eager to see some sign of the Amazon founder and CEO’s hand at work. The first tangible evidence appeared on Tuesday, when the newspaper announced a major national subscription partnership that will offer free digital access to readers of other newspapers in major U.S. cities.
While this may not be as dramatic as shutting down the printing presses to go web-only, or offering everyone a free Kindle with their subscription, it’s still a fairly dramatic departure from the approach taken not just by the Washington Post but by most newspapers with traditional management.
The partnership — which will see the Post provide free digital access to subscribers of newspapers like The Dallas Morning News, the Minneapolis Star Tribune and the Pittsburgh Post-Gazette — allows the Post to (theoretically at least) build a broader online readership outside of its core subscription area. As the Nieman Journalism Lab notes, the Post effectively ceded the national newspaper market to the New York Times by not launching a national edition, but the partnership could give it a way of achieving the same thing at much lower cost.
One possible model at work here is simply to buy the best content from everyone else, at cut-rate prices, relying on the willingness of outside sources to price discriminate and shed some marginal IP rights for some marginal revenue. Before the rest of the world is fully aware of what is going on, suddenly you have one of the best news web sites.
But wait, doesn’t this article say the Post is giving free access to its content to other newspapers? Here is where Coasean contracting, and symmetry of externalities, enters the picture. WaPo giving free access to the Minneapolis Star-Tribune, or vice versa, end up being pretty much the same thing (over time, with renegotiations) in a world of Coasean contracting. WaPo will end up becoming the hub and the others will be feeder spokes, with Wapo paying a fraction of the cost for the content it receives from each one. (And I suspect there will be no easy “cross-access” of say the Minneapolis paper to the Pittsburgh paper, and so on, to limit the evolution of a rival hub.) Furthermore, at least in the short run, the marketing work is being done by other newspapers, not by WaPo.
Over time the WaPo web site can buy bits of content from Le Monde and FAZ (translated by software programs, of course), The Guardian, The (London) Times, various local U.S. papers, London Review of Books, Boston Review, and who knows where else? Probably only a few outlets, such as WSJ and NYT, will refuse to sell content to them at cut-rate prices. If there is low marginal cost there will be price discrimination, so why not be the one buying on the low part of the demand curve and avoiding most of the costs?
Plus hire a few blogs while you are at it, see how that goes, and maybe over time reel in a few hundred of them. Why not? We’ve already seen some moves in this direction, with The Monkey Cage and Volokh Conspiracy.
How about some music streaming while we are at it?
How about calling it…”Amazon for News”? And for other stuff too. By the way, this hypothesis helps explain why Bezos doesn’t feel any great need to shake up the current WaPo newsroom.
In this model there is a cannibalization effect and the price and value of content end up falling. Does that sound familiar?
Never underestimate how smart really smart people are.
For a further explication of what I take to be the Bezos business model, see my old MR post, “Luring Alex to Lunch,” still one of my favorites and a meditation on whether or not you should produce and write all of your own content. (We don’t, and our model is sustainable.) And thus, sometimes, I manage to lure Alex to lunch. Here is how Alex feels about lunch. That hasn’t changed.