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June 8, 2016, 5:08 p.m.

5 things publishers can learn from how Jeff Bezos is running The Washington Post

“I strongly believe that missionaries make better products. They care more. For a missionary, it’s not just about the business. There has to be a business, and the business has to make sense, but that’s not why you do it. You do it because you have something meaningful that motivates you.”

Editor’s note: Nieman Lab contributor and Northeastern University professor Dan Kennedy has spent the past semester as a Joan Shorenstein Fellow at the Harvard Kennedy School, researching the digital and business strategies of The Washington Post under the ownership of Amazon founder Jeff Bezos. His paper outlining his findings is available on the Shorenstein Center’s website; here’s an excerpt focusing on what other publishers can learn from Bezos’ leadership.

Bob Woodward, the legendary Washington Post reporter who was one-half of the duo that brought down a president, spoke at the First Parish Church in Cambridge last October to promote a new book. The Last of the President’s Men was about Alexander Butterfield, the aide who revealed the existence of the taping system in Richard Nixon’s White House, thus proving that he really was a crook.

Toward the end of the evening, a member of the audience asked Woodward how the media business had changed over the years. Woodward responded by praising Jeff Bezos, the founder and chief executive of the retail and technology behemoth Amazon, who bought the Post in 2013 for $250 million.

“I think he’s helping us as a business,” Woodward said. “It’s a better website. I find things much more authoritative, quite frankly, than The New York Times.” Times partisans would surely disagree, but Woodward is nothing if not a loyal employee. He continued: “Bezos is good news for the newspaper, The Washington Post. I think he has a long-range view, staying in for 15 or 20 years and making sure The Washington Post is one of the surviving news sources in the country.”

Is Bezos on his way to fulfilling Woodward’s hopes? Nearly three years in, there’s no question that he has infused the organization with a significant jolt of journalistic and technological energy. The Post is bigger, better and reaching more people than was the case before he bought the paper from the Graham family. Less clear is whether that is solely a function of Bezos’s enormous financial resources or — even more important — if his ownership offers any lessons for the newspaper business in general, which continues to lose readers and advertising revenue at an alarming rate.

In assessing the Bezos effect, three factors stand out as unique to the Post and are thus not replicable elsewhere: the newspaper’s location, in Washington, which made the Bezos-directed transition from a regional to a national newspaper relatively simple; Bezos’s deep pockets, which give him the ability to provide the Post with “runway,” as he has put it, affording the paper time and resources to figure out a path to sustainability; and Bezos’s position as chief executive of Amazon. Bezos has already made the Post’s national digital edition part of Amazon Prime and the Kindle Fire. And as the media analyst Ken Doctor told me, Bezos may see having “a lead dog in the news industry” as a competitive advantage as Amazon goes up against other technology giants such as Facebook, Apple and Google.

Given those unique characteristics, it is not readily apparent what other newspaper owners could learn from Bezos. Nevertheless, there are areas — some specific, some more attitudinal — from which newspapers could in fact benefit by studying the Bezos model. Here are a few.

There are significant benefits to private ownership.

Before Bezos bought the Post, the Washington Post Company was a publicly traded corporation. As with the Sulzberger family at the New York Times Company, the Grahams had set up their governance structure so that the family controlled a majority of the voting stock. Thus the Grahams were less beholden to Wall Street’s demands for profit than most public companies. Nevertheless, they still had to satisfy shareholders by trying to maximize profits or at least minimize losses.

Indeed, as newspaper after newspaper fell into the hands of publicly traded companies in the 1970s, ’80s, and ’90s, cutting costs in order to rack up ever-higher profits led to diminished journalistic capacity even before the internet-fueled collapse of the past decade. Public ownership can also make it difficult for management to invest in needed innovations. Faced with the question of whether to spend on a faster, more attractive website or to return that money to shareholders, too many newspaper executives choose the latter — and may in fact have to choose the latter in order to meet their fiduciary responsibilities.

Insiders emphasize that Bezos is investing in the Post in a disciplined manner. Although he has increased the number of full-time journalists from about 600 to 700 and has added about 35 engineers, the newsroom is still well below the more than 1,000 who were deployed during the heyday of the Graham era.

Still, Bezos, as the sole owner, does not have to answer to shareholders or anyone else, and has the ability to invest as he sees fit. It’s a significant advantage at a time when there is no blueprint for running a newspaper successfully and when the emphasis needs to be on experimentation and long-term thinking.

There is value in getting big.

At Amazon, an early imperative was to “Get Big Fast.” That has been true at the Post as well, even as paid print circulation has continued to decline. According to the analytics firm comScore, the Post moved ahead of The New York Times in web traffic in October 2015, attracting 66.9 unique visitors compared to 65.8 million for the Times — a 59 percent increase for the Post over the previous year. The Post’s digital presence has continued to grow since then.

Throughout the news business, though, attempts to monetize online traffic by offering free content paid for by advertising have proved disappointing. The very ubiquity of digital advertising has driven down its value. Indeed, Nicco Mele, the former senior vice president and deputy publisher of the Los Angeles Times and the incoming director of the Shorenstein Center, recently said that a print ad reaching 500,000 people costs around $50,000, whereas a programmatic ad served up by Google reaching the same number of people on the same newspaper’s website might bring in no more than $20. “Models built on scale make zero sense to me,” Mele said, “because I just don’t see any future there.”

So why is the Post pursuing a massive digital audience? For one thing, by opening the top of the customer-engagement funnel as wide as possible, the Post has given itself a larger audience to try to move to the bottom of the funnel — the point at which increasingly engaged visitors are converted into paying subscribers to the Post’s website and apps. In addition, as challenging as the digital advertising environment may be, it’s easier to succeed with a large audience than with a small one. Finally, by building the Post’s brand and reputation, Bezos will be in a better position to take advantage of revenue opportunities that may not currently exist.

Bezos himself has put it this way: “We have historically made a relatively large amount of money per reader on a relatively small number of readers. And we need instead to make a relatively small amount of money per reader on a much larger number of readers.”

The front page of The Washington Post the day after Bezos' purchase, on display outside the Newseum. (AP/Evan Vucci).

Do not pursue change for change’s sake.

Bezos, to his credit, retained Martin Baron as the Post’s executive editor and Shailesh Prakash as the chief information officer and vice president of technology. Baron is a major asset both internally and externally: he is an outstanding editor whose increasingly high profile has made him an important part of the Post’s brand.

Baron’s reputation grew substantially because of his and Bezos’s very public and principled advocacy on behalf of Jason Rezaian, a Post reporter who was detained by the Iranian government for 18 months before his release in January of this year. Another, larger factor was Spotlight, the Academy Award-winning movie that tells the story of how The Boston Globe, then under Baron’s watch, revealed that the pedophile priest crisis within the Catholic Church was far more widespread than had been previously known.

Prakash’s retention was perhaps more surprising given Bezos’s own technology background. In fact, not only did Bezos keep Prakash, but they appear to have developed a good working relationship. The national digital app for tablets, a colorful, magazine-like product that has no home page, grew out of conversations between Bezos and Prakash.

Bezos was also the impetus behind one of the most important tech improvements: a dramatic increase in the speed of the Post’s digital products. After a reader complained to Bezos that it took too long for one of the mobile apps to load, Bezos told Prakash that he needed to do better. “We looked at the problem and I told Jeff I thought we could improve the load time to maybe two seconds. He wrote back and said, ‘It needs to be milliseconds,’” Prakash said in an interview with The Wall Street Journal. “He has become our ultimate beta tester.”

Technology is central to the mission.

The Post these days sometimes seems like a technology company as much as it does a news organization, although the focus is on how technology can serve journalism rather than the other way around. The Post’s website and mobile apps are a pleasure to use; the apps have been designed to serve different audiences depending on whether they are traditional Post readers or are instead interested in a more viral product offered at a lower price and that omits local news.

Technology is used internally in the service of continuing to build the digital audience. Bandito allows editors to publish articles with up to five different headlines, photos and story treatments, with an algorithm deciding which one readers find the most engaging. Loxodo includes tools that allow Prakash to track what he and Bezos call “lead measures” — how readers perceive the quality of Post journalism compared to that offered by other news organizations, as well as the speed, quality and quantity of mobile alerts.

Of course, few newspapers other the Post and the Times can afford to invest deeply in tech development. As it happens, Prakash has a vision of licensing Post products to other newspapers — as it is already doing with Arc, a suite of content-management tools the paper developed.

“I would love it if the platform we built for the Post was powering a lot of other media organizations,” Prakash told me. “That would definitely break down the silos for content-sharing, a lot of the silos for analytics, for personalization. The larger the scale the better you can do in some of those scenarios. But those are still aspirational at this point.”

Although it’s too soon to tell what that would look like, the work being carried out at the Post today could eventually lead to a ecosystem of daily newspapers across the country with the Post in the lead.

Embrace change even when you can’t control it.

The Post is publishing all of its content as Facebook Instant Articles and is providing its journalism to Apple News and as part of Google AMP (Accelerated Mobile Pages) as well. Though using such third-party platforms runs counter to the goal of selling more digital subscriptions and deprives the paper of customer data, Post executives believe they have to be where their audience is.

Prakash told me that he and Bezos have spoken in terms of a “barbell” approach. At one end is the customer-engagement funnel whose purpose is to convert casual visitors into paying subscribers. At the other end is Facebook and other forms of distributed media. With a billion and a half unique visitors dropping in on Facebook every day, Prakash believes there is no choice but to take part.

The Post is making efforts to move readers from one side of the barbell to the other. For instance, people who read Post articles on Facebook receive offers to subscribe to one of the Post’s 60 newsletters on topics such as the day’s headlines, politics, opinion, science and entertainment. Arriving by email, with advertising, the newsletters link to various Post stories related to the topic.

Of course, emailed newsletters are hardly an innovation. But the Post’s efforts are unusually comprehensive and employ sophisticated algorithms to determine which newsletters might strike your interests.

As a technologist himself, Shailesh Prakash has a unique perspective on what Bezos has meant to the Post.

“The money has helped us, of course. I wouldn’t deny it,” he said. “But I don’t think that’s the main thing Jeff has brought. And I don’t just say that because he’s my boss. I truly believe that. Of course he’s helped with money. He’s helped me hire people, he’s helped Marty hire people, and so on. But it’s not like it’s open-check season where we can do anything we want.

“So what has he really done? I personally think that the biggest thing Jeff has done is to set the right tone for our culture — which is one of experimentation, which is one of encouragement, which is one of ‘find the positive surprises and double down.’ We believe we have an owner who respects the past but at the same time wants us to be innovative.”

As you walk through the Post’s bright and shiny new headquarters in downtown Washington, you encounter inspirational quotes from a number of the paper’s legendary figures, past and present. One is from Jeff Bezos. It reads, “I strongly believe that missionaries make better products. They care more. For a missionary, it’s not just about the business. There has to be a business, and the business has to make sense, but that’s not why you do it. You do it because you have something meaningful that motivates you.”

Bezos is smart and tough. In considering his stewardship of The Washington Post, it’s important to maintain a sense of realism. No doubt he wants the Post to succeed, but that success has to come on his terms. Ultimately, that means it has to succeed as a profitable business. Still, we should take him at his word that saving a great newspaper is more important to him than turning around the fortunes of “a snack-food company,” as he has put it. Bezos is someone who cares about his reputation and has spoken eloquently about the role of journalism in a democratic society. As he said at the dedication of the new headquarters this past January, “This needs to be a sustainable business because that’s healthy for the mission.”

No newspaper executive has figured out a way to prosper during the twenty-year era of the commercial internet. As is the case with the Post, news organizations need to be willing to experiment, to abandon experiments that aren’t working, and to keep embracing new ideas in the hopes that some of them will prove to be not only journalistically sound but an enhancement to the bottom line as well.

Dan Kennedy is an associate professor in the School of Journalism at Northeastern University. He was a Joan Shorenstein Fellow in spring 2016 at the Harvard Kennedy School’s Shorenstein Center on Media, Politics, and Public Policy.

POSTED     June 8, 2016, 5:08 p.m.
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