low-cost information and high-cost news. The information β classifieds, stocks, sports scores, weather, entertainment listings, recipes, horoscopes, coupons, police blotters, obits β was widely popular and cheap and easy to produce. The news was less popular, more expensive to produce, and often risky. managed dedicated server For certain kinds of investigative stories, newspapers could bankroll salaried employees who spent months pursuing trails that went nowhere. Sometimes following a burglary leads to a cover-up that leads to impeachment; most times, it doesn’t. But newspapers don’t know which is which unless they spend money digging. Despite the uncertainty, newspapers worked as a business because they had a monopoly on the low-cost information. As long as there was no other place for their audience to go to for classifieds and all the rest, readers and advertisers kept paying for the ink, indirectly subsidizing the serious stuff.
Then the Internet came along and killed that monopoly. It set low-cost information free, and by lowering the cost of publication, it allowed bloggers to replicate a portion of the newspapers’ newsgathering efforts. But not all of it: No one has yet been able to find a way to profitably produce the kind of risky, expensive investigative and foreign reporting that newspapers like the Post now invest in. Yes, there are websites β Slate included β that do some version of this. But in general, if newspapers go away, we’ll have less deep reporting than we used to. That’s the problem Bezos can potentially solve.
Bezos is a maven of finding new ways to sell old things. When the first Kindle came out, he brilliantly bundled cellular coverage into the price, letting you forget about the data charge while you downloaded lots of books. Later, he released a low-priced Kindle that was subsidized by ads on the lock screen; when that version turned out to be popular, ads became the default on every e-ink Kindle.
Or look at Amazon Prime, which is nothing but a way to bulk-sell shipping charges. By hooking you with a $79 free-shipping subscription, Bezos wins either way. He gets your money even if you never shop at Amazon again. More likely, your “free” shipping deal subtly alters your psychology β thanks only to this business model, you’ll remember Amazon every time you think of something you want to buy. I was recently looking back at my Amazon order history. Before 2006, the year I first signed up for Prime, I placed less than 10 orders per year at the site. Prime completely changed my shopping habits. In my first year with the service, I placed 46 orders. This year my household is on track to quadruple that.
Bezos is also a master of finding ways to sell every one of his innovations multiple times. What did he do after building a world-class warehouse and shipping network? He leased it out to other retailers, letting anyone list their wares on Amazon’s site and even ship from its warehouses. Amazon only gets a commission on these third-party sales, but since the warehouses and shipping infrastructure were already built, that commission is quite profitable. And it’s growing rapidly, with third-party sales now surging faster than the rest of Amazon’s sales.
Bezos did a similar thing with his servers. To run its own business, Amazon had to create an accessible server infrastructure that could be used by developers across the company. As Bezos told Wired in 2011, after building it, “we realized, ‘Whoa, everybody who wants to build web-scale applications is going to need this.’ We figured with a little bit of extra work we could make it available to everybody. We’re going to make it anyway β let’s sell it.”
None of this directly applies to the newspaper business, but these ideas give you a sense of what true business-model innovation looks like. It’s not just figuring out how to build a paywall. For the newspaper industry, finding a new way to make money will involve taking a deeper look at all its assets: its staff’s talents, the data its readers generate, the trucks that deliver its newsprint, its access to sources β and figuring out how to monetize them in ways that haven’t been tried before. The news business presents special restrictions on some of these experiments; Bezos would have to steer away from any business model that calls into question the Post’s integrity. But that’s obvious, and there’s room to innovate within the bounds of journalistic ethics.
At least, I hope there is, and that Bezos spends some time searching for those innovations. I know he’s got a demanding day job. But newspapers are just as important as same-day shipping. He’s given the Post a new lease on life. But what would really help is a couple of billion-dollar ideas.
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