The Cyberbrains

Research and contemplation in new media

The Amazon Model

Amazon logoReading Jeremy’s last post about what newspapers could learn from Starbucks made me remember an article I read not too long ago about Amazon.com and its founder Jeff Bezos. What newspaper’s really need in a day when investors demands for more and more profit are forcing wholesale staff cuts is a man like Bezos who can hold investors off and even encourage them to support a product in development.

From the first day I bought a book from Amazon.com back in 1998 (Wow, I’m that old?!?) I admired the company. It wasn’t just the wide variety of books and eventually everything else it offered either. It was the little things, such as the free coffee mug on my birthday (even though I don’t drink coffee) or the free bookmark with every order. It was remembering what I searched for and recommending other products I might like. It was allowing me to write lists of my favorite things I could compare and contrast with others who had similar interests. I can’t tell you how many lists I combed through looking for a good fantasy book to read last summary, and the consensus choice on most of those lists (George R.R. Martin’s A Game of Thrones) did not disappoint.

I already suspected this, but USA Today on July 30 confirmed it. Most of these ideas were the brainchild of Amazon founder Jeff Bezos. What I was surprised to find out, however, was that Bezos was able to talk investors through a $ 2 billion loss in the company’s first six years. I’m sure those investors are glad they stuck by him, now that Amazon trades at more than $86 a share. What Bezos did and what I sincerely wish someone would do in the newspaper industry is convince shareholders that quarterly dividends are not the only thing they should focus on. Instead he assured them that with sustained investment and response to customer feedback that he would create a dot-com juggernaut that would make them all rich, and probably more importantly, give customers a quality shopping alternative with competitive prices.

Newspapers, it seems to me, have followed the exact opposite model. When the fat years of 32 % margins seemed impossible because the Internet was rapidly gobbling up their audience, publishers and owners panicked. Instead of assuring stockholders they could adapt to the Internet and offering even better products online with just a small capital investment, they decided to try to preserve those bloated margins by cutting staff and quality. As a general manager for Freedom Communications, I saw firsthand how a company known for its commitment to liberty took a backseat to the bottom line when outside investors joined the fold. What amazed me too is that Freedom had some really good ideas about how to use the Internet, but at least in my purview, it was never seen as more than a novelty. I know Freedom has since implemented some of those ideas (see what the weekly I started for them in Hesperia, Calif. is doing, but I wonder if it’s too little too late.

I’m not alone in calling for reinvestment, especially online. Esther Thorson, acting dean of the Missouri School of Journalism and my boss (I’m one of her research assistants) made a clear case for the need to invest in quality in a 35-year study she did in conjunction with the business school. I love how she prefaces the study: “There’s no epiphany here.” In other words, newspapers should have known this all along, but I think what the industry lacked was a man like Bezos who had the charisma to, as he said, “kerfluffle” Wall Street.

I’m hopeful that research like Dr. Thorson’s and even some of the advances we are making with citizen journalism can signal to owners, publishers, and investors that newspapers are not dead. They remain best equipped to provide news and information to their communities, better than bloggers, Google or YouTube. To adapt, however, they need to start listening to their audiences and ignoring those clamoring for more profits, because there are only so many cuts they can make before becoming an afterthought.

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September 7, 2007 - Posted by | From The Cyberbrains

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