Jeff Bezos (Finally) Pumps Up the Post with Prime
In a potentially game-changing move, Amazon will begin offering free to dirt-cheap subscriptions to The Washington Post to its tens of millions of Prime members, I’ve learned. The program begins today.
While Amazon has never released the number of its Prime memberships, the latest estimates range from 25 to 40 million. That’s a powerful installed base of customers to expose to the Post offer. The initiative, long in the works, bolsters the Post as a revivified national and global news source, one more competitive to the New York Times, among others. In addition, it opens a new skirmish in the platform wars of 2015, as major platform Amazon puts the Jeff Bezos-owned Post front and center while Facebook Instant Articles, Apple News and Snapchat Discover re-work the mobile presentation of news.
The new offer will be an easy one for Prime members to accept. Those signing up will get the Post’s National Digital Edition — its national and global coverage — free for six months. Then, they’ll be charged $3.99 per month — indefinitely. That’s a $48-a-year price point, and one that could shake up wider digital news pricing.
Since Amazon CEO Jeff Bezos bought the Post two years ago, we’ve speculated on how and when he would hook up the power of Amazon to the Post. The most logical connection: Amazon Prime. What began as a $79-a-year, guaranteed-two-day delivery program has grown into one of the country’s biggest membership plays. The Post will be the sixth major benefit offered Prime memberships, after “free” shipping, movies and TV, music, photo storage and a Kindle lending library. Prime membership now costs $99 per year.
Originally published at Politico Media
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The program can point to a tested precedent. Kindle Fire tablet owners have enjoyed a similar offer since last November. They’ve gotten the six months free, then paid $1 per month for six months, before resolving to the $3.99 price.
How many subscribers has the Post picked up from the Kindle Fire offer, one which now must be considered training wheels for the wider Prime offer? The Washington Post no longer offers any data on its digital subscriber totals. In fact, it has stopped providing those numbers to the Alliance for Audited Media (AAM), to which it still reports print circulation data.
Those numbers may be small, even though the Post is prominently featured on the Kindle Fire’s carousel, given Kindle Fire’s place in the market. After all, Kindle Fire can only hold a flicker to Prime in size. That product is on a strong downward trajectory. Amazon sold 3.3 million tablets in 2014, after selling 9.8 million in 2013, a fifth player in a declining market.
Still, the lessons of that experiment that are being applied here in the wider world of Amazon.
How great an impact does the Post expect? It’s a tricky question. While the Prime membership totals could lead it to salivate, the Post won’t be integrated into Prime, but simply offered by Prime, and we don’t know how long the program may stay in place. So it’s just that, an offer, rather than an experience, and one with a couple of steps of friction that will lead to sign-up. Consequently, guessing what percentage of Prime members may convert to subscription — and become paying subscribers — is difficult.
Audience Growth, Not Revenue
In the Prime foray, we see the wider Bezos strategy now playing out more clearly. Unsurprisingly, it is a profoundly Amazonian strategy: Build the customer base for years; reap the profits later. It is, we should note, also the driving philosophy of the Big Three of the digital news world, Vice, Buzzfeed and Vox Media.
“Growth is the fundamental goal,” Steve Hills recently told me. Hills is the Post’s president, who just last week announced his end-of-the-year departure after 28 years at the paper.
At the same time, it’s important to characterize the Post strategy as a potential in-between one.
It’s not a free strategy, like the one pursued by The Big Three and by the Guardian, in its worldwide push for audience. It’s a low-price strategy, aimed at balancing the acquisition of lower-priced national subscribers against maintaining higher priced local DC-area ones.
Consider the $48 national price point the Post hopes to stabilize upon. As an All-Access (web, smartphone, tablet), digital-only price, it compares to about $348 a year for the Wall Street Journal or $455 a year for the New York Times, or the Post’s current $195 a year price for full Post digital access. Both the Times and the Journal have put increasing weight on reader pricing, and this Post initiative intends to disrupt that model. Will the Times, Journal and others feel the need to price differently?
In fact, I’d heard the story, maybe an apocryphal one, that years ago, long before his Post purchase, Bezos had informally met with several newspaper publishers. Hearing the financial woes of the business, he asked why they didn’t consider radically dropping their annual subscription prices – then including print – to under-$100 price points. His idea: build a new mass market of paying readers. Then price up, and offer more goods and services, editorial and other, over time. Whether the story is true or not, it appears that Bezos now tests this Amazon-like idea with the Post.
The Prime push can be seen as just the latest phase in this strategy.
Overall, the audience-building has propelled the Post to within 90% of the New York Times’ monthly U.S. unique visitor count (“Is the Washington Post closing in on The New York Times?”). When Jeff Bezos bought the paper from the Graham family, it could count only two-thirds of the traffic of the Times.
The Post has built that audience both through multiple distribution deals, like its Kindle Fire one, and through its growing national network. More than 300 newspapers, mostly U.S. ones, have now partnered with the network. That means that more than 10 million subscribers to newspapers have seen a new offer recently: Click here to get free access to WashingtonPost.com, and maybe as many as 300,000 to 400,000 of them have.
The national network strategy and the Post’s pumped-up newsroom strategy have worked in tandem.
Under Bezos, the Post has shored up and strengthened its newsroom, under editor Marty Baron. The biggest thrust: a more muscular approach to national news. It is national news that can claim the interest of a far bigger audience than the Post’s DC-area hometown coverage. Further it is national news that supplies this Prime initiative.
“The Bogeyman of Cannibalization”
Note that the mobile (smartphone and tablet) readers will get the “national digital edition” of the Post. Translation: All the national and global content, but little to none of the local news. That strategy offers a twofer. It leverages the newsroom investment that Bezos has made and offers some protection from converting higher-paying subscribers to lower-paying ones.
“We don’t worry much about the bogeyman of cannibalization,” Steve Hills told me.
DC-area subscribers of the Post may pay about $455 for a full-priced seven-day print subscription (with All-Access built in) or $195 for a digital-only one. If a DC-area reader paying those prices sees the Prime offer and wants to switch, the Post could have a big problem on its hands.
To combat it, the Post will deploy two strategies. First, the new Prime offer is good only for non-Post subscribers. How long a Post subscriber would have to lapse before being eligible for the Prime deal? The Post, understandably, won’t say.
Secondly, by limiting its Prime offer to national content only, it builds in a disincentive for locals to figure out a way to go cheap.
Interestingly, while the those accessing the Post via Prime via mobile will only get the National Digital Edition, Prime subscribers will get full access to the web itself through WashingtonPost.com – which includes the full Post report, including local news. The Post may further restrict Prime subscriber web access in the future, but for now, consider this an initiative of its time – embracing mobile as the primary means of access.
How will the new subscriptions be sold? Amazon – not the Post – will do the selling. How will Amazon market the new benefit to its Prime members?
“This is a limited time offer,” an Amazon spokesperson told me, not further elucidating how long it may be available or how it will be marketed.
We’ll see whether and how soon it pops up on the Amazon Prime benefit page, and in messaging on the site or via email or text message.
Though Bezos owns the Post and serves as CEO of Amazon, it’s important to note that the companies are legally independent of each other. Consequently, relationships must be contractual, serving the interests of both. As Hills put its, “It’s got to be a deal that makes sense.” As benefit No. 6 of Prime and now one big priority of the Post, we’ll have to see how that mutual benefit plays out.