D. Eadward Tree is not impressed. The pseudonymous publishing industry pundit, known for his wit and wisdom as Chief Arborist of the Dead Tree Edition blog, is put off by comments from Amazon CEO and soon-to-be Washington Post owner Jeff Bezos regarding his philosophy for running a newspaper.
Bezos said in an interview this week that he intends to put the Post‘s readers first, and stated his skepticism for “any mission that has advertisers at its centerpiece.”
“The last time I looked, the vast majority of American newspapers’ revenue came not from readers but from another type of customer – advertisers,” Tree writes.
As a former newspaperman myself, my instinct is to agree with Tree. Advertisers pay the bills—therefore, on the business side, they’re the ones who need to be catered to (assuming that Church and State wall is strictly policed). That’s why publishers from The New York Times Co. to Atlantic Media are introducing innovative new ad strategies, such as the Times’ Ricochet project, which guarantees an advertiser’s display ad appears with linked content.
But what if Tree is wrong, and Bezos is right? At some point, we in media have to face the music—or in this case, the hard evidence at hand. Conventional wisdom states that newspapers must focus on advertisers, but in the digital era, focusing one’s business plan around advertising has proved to be a disaster. Ad revenue has plummeted, even at the most innovative of media outfits—the New York Times reported late last year that its parent company’s print and digital advertising revenues were shrinking. The only positive trend on the balance sheet was revenue growth from digital subscriptions—those pesky readers Bezos talks about.
At Amazon, Bezos has proven a master of building customer loyalty and brand affection. People trust Amazon and its pledge to make things right for consumers in the face of problems. As newspapers increasingly turn to digital subscriptions to make up for lost ad revenue, this is exactly what is needed to build and maintain loyalty. Smart digital tools, customization, product bundling, a variety of purchase options (by the article, by the day, by the month, etc.)—these are kind of things Bezos knows about, and the kind of thing that could save newspapers.
Relying on advertisers sure aint it. For newspapers, focusing on advertisers is a dead end. It’s not that ads will not continue to be important, but it just might be a better strategy to build the readership first, and then sell ads to that coveted base of paying readers. I don’t know if this is what Bezos has in mind, but I do know the newspaper industry is in desperate need of a new plan. It may be time to ditch the conventional wisdom.