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Probing the Post's potential

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A passerby views the front page of the Washington Post on Tuesday, a day after it was announced Amazon.com founder  Jeff Bezos bought the paper for $250 million.

EVAN VUCCI / THE ASSOCIATED PRESS Enlarge Image

A passerby views the front page of the Washington Post on Tuesday, a day after it was announced Amazon.com founder Jeff Bezos bought the paper for $250 million.

SAN FRANCISCO -- Jeff Bezos has already transformed one traditional print business -- books -- into a digital one. The experience provides a blueprint for how the billionaire technology executive is now poised to overhaul newspapers following his $250-million acquisition of the Washington Post.

Since Bezos founded Amazon.com Inc. in 1995, he has forced the publishing industry to embrace e-books and digital reading devices. He has also made the Seattle-based company a leader in online advertising and collecting consumer data over the web. Those strategies have helped vault Amazon into the world's largest e-commerce provider with a market capitalization of $138 billion.

Bezos, 49, will bring that background to bear as he plunges into the newspaper industry with his deal Monday to buy the Post. The Graham family, which had owned the newspaper since 1933, decided to sell amid a steep decline in print advertising and as audiences shifted to reading news online.

"It's clear Bezos has a very deep and rich history in publishing," said Dan Kurnos, an analyst at Benchmark Co.

In a letter Monday to Post employees, Bezos laid out the challenges ahead for newspapers, saying the "Internet is transforming almost every element of the news business." Bezos, who is buying the Post as an individual and unaffiliated with Amazon, added "we will need to invent, which means we will need to experiment."

For Bezos, experimentation is nothing new. Over the years, the chief executive officer has pushed Amazon into everything from streaming video to delivering groceries.

Bezos has also used his personal fortune -- his net worth stands at $27.9 billion, according to the Bloomberg Billionaires Index -- to invest prolifically outside Amazon through his investment fund, Bezos Expeditions. The fund has backed young companies such as Twitter, taxi service Uber Technologies, the 3D printing company MakerBot Industries and robot firm Rethink Robotics.

"He invests in things where information technology can disrupt existing models," said Rodney Brooks, the Massachusetts Institute of Technology professor behind Rethink Robotics.

Chief among Bezos' experiments that have paid off is how Amazon has pushed the publishing industry toward a digital business model. Amazon began selling e-books in 2007 and unveiled the Kindle e-reading device that same year. By 2011, Amazon said its books for Kindle readers surpassed its print sales.

Many e-books now sell for prices close to those of print ones, a lesson the newspaper industry would do well to heed. The Kindle version of A Game of Thrones by George R.R. Martin sells for $9.99 on Amazon.com, compared with $13.36 for the paperback. Another book by Martin, A Feast for Crows, sells for more on the Kindle -- $9.99, versus $6.58 for the print version.

Amazon provides other strategies to Bezos for his move to newspapers. As print publications search for a way to stem ad-revenue declines, Amazon has increased online ad sales, which are estimated to rise 40 per cent to about $835 million in 2013 from the year prior, according to Emarketer Inc.

Amazon also has a trove of consumer data, from reading and shopping habits to credit card information. The company was a pioneer in targeting products to customers based on previous purchases -- techniques that could benefit the newspaper industry.

 

-- Bloomberg News

Republished from the Winnipeg Free Press print edition August 7, 2013 B8

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