Why *Not* Jeff Bezos? The Fall and Rise of Newspapers

August 6, 2013, 2:44 pm

337843ef-5a30-48aa-a8f7-ee569952eaddBy chance, I was checking Twitter only a few minutes after Donald Graham announced that his family had sold The Washington Post to Jeff Bezos, the founder of Amazon. I spent the next 45 minutes or so glued to my iPhone5, following the ensuing Tweets. Some were from nervous WaPo journalists clearly eager to show that they were on board with the new boss.  What a graphic example of how much the dissemination, and nature, of news has changed since the Post broke the Watergate story forty years ago.

Can you imagine how differently Nixon’s demise might have played out in a Twitterized environment? How low the mighty have fallen — but is it, as so many observers assume, the advent of the Internet that destroyed newspapers? I don’t think so. Nevertheless, multiple stories have popped up overnight, asking some version of the question: can Jeff Bezos save journalism? Some folks, like Farhad Manjoo of Slate, would be happy if Bezos could just save The Washington Post.

The working assumption of optimists is that an industry wrecked by the Internet can be saved by a successful Internet mogul. But why does journalism — or one great paper — require saving in the first place? I am not a historian in this field, but were I to write the history of the fall of journalism, it would look like this:

  • Back in the 1980s it became an article of faith that everything that deserved to exist should prove it by generating huge profits. Does your newspaper make a 4% return for investors? Well, why not 8%? While we’re at it, why not 20%? In fact, let’s sell the building and “borrow” from the union pension fund to pay off our balloon loan. (Don’t forget to pay a fat dividend for investors at the end of the year!)
  • Following this theory, the idea emerged that a great paper could leverage its reputation (and its value) by diversifying into a number of different, sometimes only thinly related, enterprises. These would also generate profits for the investors.  If you don’t believe me, look at how many separate publications and business are, and are not, being packaged up with The Washington Post. But many of these little side interests actually became additional liabilities. According to Nieman Journalism Lab, what ultimately put the financial nail in the coffin of the Post corporation was the steep losses of Kaplan “University”, its online education business.
  • People blame the Internet, and the loss of ad revenue that supporting a good news enterprise required, for the fall of journalism. I think this is only part of the story. For one thing, long before the rise of the webz as a free news source, companies like Knight-Ridder and The Washington Post Company were buying up profitable local papers and newsweeklies. They would then proceed to kill them dead by firing staff instituting efficiencies, so that local coverage became thin, and filling their pages with generic national newswire stories that local papers “bought” from the parent corporation. This transformed once lively newspapers into bland, unreadable products that a few older people subscribed to in order to keep up with the only local news in them: obituaries.
  • Newspapers, like everything else — industrial manufacturers, homes, securitized mortgages — were overvalued properties plumped up by a new generation of Wall Street dealmakers who were busy inflating the value of everything and devising new ways to help everyone go into debt. Newspapers were purchased for fabulous sums on loans securitized by the property itself. Following the sale, the purchased paper, its assets and its revenues were now collateral for the loan. As in all corporate takeovers, even as the newspaper became less valuable under the burden of this enormous debt, the original sum of money was gone, paid out to the heirs of a former newspaper family. As an example of this kind of overvaluation, The New York Times bought The Boston Globe for $1.1 billion in 1993, one of the highest prices ever paid for a newspaper, from descendants of the founders. Last week the paper was sold to John W. Henry, owner of the Boston Red Sox, for a fire sale price of $70 million. My question is: was it ever worth $1.1 billion in the first place? Probably not. Meanwhile, who has that money? The Jordans and the Taylors, none of whom have been in journalism since 2001, but who have their portfolios nicely padded with boondoggle profits that include New York Times stock. 

Could Jeff Bezos do worse than this? I doubt it, and he might do better. One view of the sale going around on Facebook (with Twitter, another crucial contemporary way of getting news) is that Bezos’ labor policies at Amazon are so horrendous that we can’t expect anything good. Currently a German union is getting into it with Amazon, and there are murky accusations that the company has employed neo-Nazi thugs to intimidate workers. Presumably there are bad practices in Amazon’s US warehouses as well, which I cannot find because if you Google “Amazon” and “Labor policies” you get a long, delightful list of books on labor policy.

I would like to point out that, under current conditions, newspaper labor policies are already pretty bad without Jeff Bezos, and even prior to the 1980s, journalism was never a bastion of social justiceAccording to the Bureau of Labor Statistics, median pay for a full-time journalist in the United States is $36K, there are fewer than 60,000 jobs, and employment the field are projected to be on the decline through 2020.

So if I could talk to Jeff Bezos, what would I say?

  • Currently newspapers have byzantine payment systems. If you are not a subscriber to the New York Times, you get X number of visits before you have to pay for articles, and frequently paying for an article you want very much means finding your credit card, logging in, blah, blah, blah. This means I give up.  Amazon could just kick you through to your Amazon account, and in two clicks you would have the article delivered to your inbox.
  • Major newspapers also have absurd pricing schemes for single articles. Buying an archived article from The New York Times costs $3.95; as far as I can tell, The Washington Post doesn’t charge anything. What about .99? Why not charge people a dime to share something on Facebook? Why not have those of us who want to tweet links to articles pay the small monthly fee that many of us pay to Netflix every month for the privilege of doing so? For those of you who think all this should be free, let me ask you: how much do you pay for your cable and cell phone every month? Why is it ok to pay for some media and not others?
  • More importantly, what if Jeff Bezos has decided he has enough money and what he really cares about is promoting a more intelligent, better written form of news coverage in the nation’s capital? What if he is willing to spend money to achieve that? Mark Leibovich’s This Town: Two Parties and a Funeral-Plus, Plenty of Valet Parking!-in America’s Gilded Capital (Blue Rider Press, 2013) characterizes the current state of political journalism as “Suck-up City,” in which politicians, lobbyists and the nation’s media are all sitting in each other’s pockets. In Suck-up City, journalists want to be wealthy, successful celebrities like everyone else, and if that means playing nice with their powerful sources at the expense of readers, so be it.

Perhaps the most disturbing thing about the coverage, however, is that editorial boards of newspapers have clearly not quite grappled with the extent to which the newspaper industry torpedoed itself. Families like the Grahams sold their papers for monumentally high prices to corporate raiders who, they must have known, would tear them to bits and sell them for parts. On a smaller scale, hopeful pieces about how an Internet wizard might make newspapers profitable miss an important point: like many educators, journalists and publishers have failed to be innovators in electronic media until very recently. The attitude was, and is: if you can print it on paper, you can do the same thing on a screen for cheap.

The point of a successful Internet operation is to let the new media teach you how to do something differently and better: journalism has only begun to get that. As with on-line education, doing good journalism electronically and doing it well might mean spending more money, not less, producing a fundamentally different product, and figuring out how to profit from different consumption habits. This is the realization that publishers are, at long last, understanding as they are finally producing Internet editions that are more than the newspaper + blogs.

There is no reason why meaningful adaptation to an electronic environment could not have occurred earlier from within the industry, except that it didn’t because corporate owners were too busy firing people and lining their own pockets. These are the same selfish reasons that no one will come to grips with the price of education: many things that are worthwhile, by their very nature, are not profitable. When you try to squeeze profits from them, you destroy them.

There are some things — like universities and newspapers — that are worth more than money. They should be cultivated for their own sake and for the sake of a healthy, well-informed public, not for the sake of profits. Preserving newspapers in the United States would have required investing money at a moment when  most newspaper heirs, investment bankers, international media conglomerates and the other profiteers wanted to cash out and live the good life.  That advertising dollars diminished at the same time may be true, but it is also true that lots of wealthy people emptied the tanks first and made newspapers vulnerable to the advertising market.

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