{"id":20634,"date":"2016-11-18T17:57:40","date_gmt":"2016-11-18T22:57:40","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/digital-news-and-the-washington-post\/"},"modified":"2016-11-18T17:57:40","modified_gmt":"2016-11-18T22:57:40","slug":"digital-news-and-the-washington-post","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/digital-news-and-the-washington-post\/","title":{"rendered":"Digital News and The Washington Post"},"content":{"rendered":"

The Problem<\/em><\/p>\n

The print newspaper business has been in an uninterrupted decline for the past 26 years. Last year circulation of U.S. dailies dropped 7%, and advertising revenues dropped 8%.2<\/sup> Even the most prestigious institutions are hurting. Between 2013 and 2015 the Wall Street Journal <\/em>lost 400,000 print subscribers while the New York Times<\/em> lost 200,000.3<\/sup><\/p>\n

Digital to the Rescue?<\/em><\/p>\n

Initially online readership sounded like opportunity. Reductions in materials, production, and delivery costs could only increase profitability, right? Unfortunately, no. Low marginal costs and competition for online readers quickly resulted in a race to the bottom. Pressured by an economic recession and rising cable and internet costs budget-conscious consumers gladly switched to free online news sources, but proved unwilling to pay for online content.<\/p>\n

As consumers moved online declining print subscriptions create a death spiral for editors: reduced subscription numbers led to decreased subscription and <\/em>advertising revenue, necessitating budget cuts and eventually a reduction in the journalism offered. While newspapers were busy dealing with the print subscription crisis, Craigslist exploded in popularity and another 40% of advertising revenues made an abrupt exit.3<\/sup><\/p>\n

What about online ads?<\/em><\/p>\n

Despite optimism about the potential for sales of targeted online advertisements that revenue stream has yet to really pan out. Although the share of digital advertising is growing, total advertising revenues have been declining by almost 10% a year since 2007.1<\/sup><\/p>\n

Enter Jeff Bezos<\/em><\/p>\n

In a collapsing industry one man apparently sees opportunity. In October 2013 Amazon CEO Jeff Bezos purchased The Washington Post <\/em>for $250 million4<\/sup>,<\/em> and in typical Bezos fashion began pouring investment into the company\u2019s future. His strategic plan has consisted of three simultaneous lines of effort:<\/p>\n

    \n
  1. The Newsroom<\/li>\n<\/ol>\n

    Total newsroom staff is up from 600 to 700 (second only to The<\/em> New York Times<\/em>), with reports of up to 50 additional full time hires.<\/em>4,5 <\/sup>\u00a0For context, that is roughly 26 times as many reporters as the average U.S. daily.2 <\/sup><\/p>\n

      \n
    1. Digital Delivery Technology<\/li>\n<\/ol>\n

      Amazon\u2019s influence in the Post\u2019s<\/em> new content delivery technology is obvious. Upgraded content hosting platforms deliver pages faster, while finely tuned recommendation engines keep readers online longer by tracking interests and suggesting other relevant content.5 <\/sup>To do this the Post\u2019s <\/em>technology team created a platform known as \u201cArc\u201d that \u201cLearn[s] rapidly about news readers in the same way Amazon has learned about buyers of goods.\u201d4<\/sup> The real genius? The Washington Post <\/em>offers Arc to competitors for free: other newspapers get valuable data on their reader\u2019s preferences, and the Post <\/em>gets reader data across the entire industry. \u00a0<\/em><\/p>\n

        \n
      1. Strategic Growth<\/li>\n<\/ol>\n

        The Post<\/em> is a privately held company, but declining print circulation and free access to a remarkable number of ad-free articles online makes strong profit margins are hard to imagine.3,6 \u00a0<\/sup>Instead, the Washington Post<\/em> has elected to pursue growth. According to general manager Steve Hills: \u201cGrowth is the fundamental goal.\u201d5 <\/sup><\/p>\n

        A huge part of the growth strategy revolves around offering free content. To introduce The<\/em> Washington Post <\/em>to new readers Hills has created industry partnerships that provide the Post\u2019s <\/em>online content to readers of over 300 local newspapers for free. Local newspapers get an additional perk to offer subscribers, and the Post <\/em>directs a wider audience of news junkies to its website.5<\/sup> I assume the free articles appearing in my Apple News feed serve the same purpose.<\/p>\n

        So what is the long game? <\/em><\/p>\n

        There are two distinct routes to [increased?] profitability that could explain the current strategy of providing so much free content. The first closely replicates the Amazon Prime business model. You start by offering a convenient service at a price people cannot resist. Over time the subscriber base grows and becomes dependent on your platform. A growing readership allows the cost of producing articles to be spread over an increasingly cost-efficient number of readers. Once appropriate thresholds of readership and dependence are reached the Post<\/em> could conceivably charge a very modest sum, keep the majority of readers, and start to make a profit.<\/p>\n

        The other option is to keep the content free forever, gradually build reader profiles based on the articles they choose, and sell that information to other companies. Although consumer information gleaned from readership preferences is probably less valuable than the information contained in your free mail account, there are over 1 billion English speaking newspaper readers in the world and knowing what interests 200 million of them is probably worth something.<\/p>\n

        One objective has certainly been achieved. In 2015 the Washington Post <\/em>overtook the New York Times<\/em> in total online readers. The last publicly reported figures claimed 76 million individual visitors in December of 2015.4<\/sup> In describing his business philosophy Jeff Bezos offers a clue to the future: \u201cThere are two kinds of companies: those that try to charge more and those that work to charge less. We will be the second.\u201d7<\/sup>\u00a0<\/strong><\/p>\n

        795 words<\/p>\n

         <\/p>\n

        Sources:<\/p>\n

          \n
        1. Pew Project for Excellence in Journalism, Pew Research Center. \u201cState of the News Media 2004.\u201d Accessed 15 Nov 2016. http:\/\/www.stateofthemedia.org\/2004\/newspapers-intro\/audience\/<\/li>\n
        2. Barthel, Michael. \u201cNewspapers: Fact Sheet.\u201d Pew Research Center for Journalism and Media. Published 15 June 2016. Accessed 14 Nov 2016. http:\/\/www.journalism.org\/2016\/06\/15\/newspapers-fact-sheet\/#more-data<\/li>\n
        3. Kennedy, Dan. \u201cPrint Is Dying, Digital Is No Savior: The Long, Ugly Decline of The Newspaper Business Continues Apace.\u201d WGBH News. Published 26 Jan 2016. Accessed 16 Nov 2016. http:\/\/news.wgbh.org\/2016\/01\/26\/local-news\/print-dying-digital-no-savior-long-ugly-decline-newspaper-business-continues<\/li>\n
        4. Lever, Rob. \u201cBezos Transforms Washington Post in Digital Age.\u201d Physics.com. Published 30 Jan 2016. Accessed 16 Nov 2016. http:\/\/phys.org\/news\/2016-01-bezos-washington-digital-age.html<\/li>\n
        5. Doctor, Ken. \u201cIs The Washington Post Closing in on the New York Times?\u201d Politico Media. Published 6 Aug 2015. Accessed 15 Nov 2016. http:\/\/www.politico.com\/media\/story\/2015\/08\/is-the-washington-post-closing-in-on-the-times-004045<\/li>\n
        6. capitolcommunicator. \u201cWashington Post Circulation Drops 37% since 2009.\u201d Published 4 Oct 2015. Accessed 15 Nov 2016. http:\/\/www.capitolcommunicator.com\/washington-post-circulation-drops-37-percent-since-2009-states-dcrtv\/<\/li>\n
        7. Anders, George. \u201cJeff Bezos\u2019s Top 10 Leadership Lessons.\u201d Forbes. Published 4 April 2012. Accessed 17 Nov 2016. http:\/\/www.forbes.com\/sites\/georgeanders\/2012\/04\/04\/bezos-tips\/#4f0a1d347947<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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