retail news in context, analysis with attitude

The Washington Post this morning reports that Amazon.com founder/CEO Jeff Bezos and his private investment company, Nash Holdings, have completed their $250 million purchase of the Washington Post, "officially ending 80 years of local control of the newspaper by the Graham family."

The story goes on to say that Bezos "has vowed to continue the newspaper’s long history of independent journalism. His technical and marketing savvy, long-term outlook and lack of an apparent ideological agenda made him an attractive steward for the paper, Post Co. chief executive Donald E. Graham said in August, when an agreement in principle was first disclosed." And, he "has the deep pockets to sustain an enterprise that has been buffeted for years by declining readership and advertising, especially in the printed Post."

At the same time, Forbes.com has an interesting column by Benjy Boxer that speculates about why Bezos might have bought a bastion of old-world media:

"According to Bezos, the Kindle is currently sold at cost.  If you take the expected annual operating income from the media sold on each Kindle ($51.26), Amazon could generate $24mm of incremental operating income from the distribution of the Kindle Fire to Washington Post readers. Because of this and cost savings, I believe the next logical step is for the Washington Post to announce it’ll give away Kindles to its readers."

In addition to revenue generated by media sold on each Kindle, there also could be a significant savings in terms of raw materials that no longer would have to be bought to print the Post: "If you take the raw materials savings and add it to the increase in valuation of Bezos’ ownership of Amazon, Jeff Bezos could capture $618mm of incremental value for himself if he transitions every daily reader from the Post to a Kindle user. This ignores the potentially monumental shift Bezos could instigate by changing the at-home-delivery model for all major US Newspapers. If the Washington Post were to eliminate paper delivery, it could serve as an example for other papers to follow suit and lead to even greater sales of Amazon’s Kindle devices."
KC's View:
I think we probably are a long way from the Post going completely digital ... but probably not as long a way as some might think. Simply giving away to Kindles seems like a radical move ... but Bezos has specialized in the game-changing move that nobody expects. And this certainly would be a game changer.

The reality is, I think, that for Bezos and now for the Washington Post, everything is on the table. The goal is to be effective, relevant and efficient ... whatever it takes. No such thing as a dumb suggestion.