The Washington Post is looking to become a software provider to other news organisations to develop new revenue streams and raise its profile as a technology company.
The US newspaper, which has accelerated its search for digital revenues since being bought by Amazon chief executive Jeff Bezos for $250m last year, has been approached about licensing the software it has developed to power its website. Potential clients could include the recently launched network of local and regional US newspapers whose subscribers receive free access to the Post’s digital products.
The paper views “the partner programme as not just about content but about us offering technology solutions”, said Shailesh Prakash, chief information officer.
Student newspapers at Columbia, Yale and the University of Maryland already use the Post’s content management software in a trial for how it could be opened up to other professional news services.
Developing a licensing business would be a further step in the Post’s efforts to generate digital profits as its print business shrinks. It also comes as changing media consumption habits and pressure from new competitors are pushing news organisations to invest in beefing up their technological prowess.
The Post is swimming against strong secular currents. Standard & Poor’s estimated in September that US newspapers and magazines would see earnings before interest, tax, depreciation and amortisation decline by mid-to-high single-digit percentages through to at least the end of 2015.
Print advertising revenue was set for further declines, S&P noted, and “digital strategies alone will not halt the overall slide in ebitda for publishers, which must increase subscription and cover prices to try and stabilise revenues”.
“In the short and medium term, print provides the money until digital can become self-sustaining over time,” said Steve Hills, Washington Post president. “In the very long term, the battle is all about digital. We’re taking that Jeff Bezos long view,” he said.
In the past 16 months, Mr Bezos has been injecting money into the Post. It has hired 100 editorial staff, for a net gain of about 60, and launched blogs and digital products, including an app on Amazon’s Fire tablet that offers morning and evening editions. The publisher no longer releases financial information but executives point to traffic growth as evidence that the strategy is working. Unique visitors increased 62 per cent to 45.8m in November from a year ago, according to ComScore.
But it is the technology side of the business that shows the clearest signs of the Amazon founder’s influence. The Post hired 20 engineers in 2014, and now employs 225, split between developers working on its digital initiatives and more traditional IT functions at its printing plant and human resources, sales and advertising departments.
Mr Prakash said he was “borrowing a page out of Amazon” in developing software that both suits the Post’s needs and could be opened up to other users. Amazon Web Services, which provides cloud computing to customers from the CIA to Netflix, has become the ecommerce company’s fastest-growing division.
“Technology is core to our business,” Mr Prakash said of the push to develop more software in-house. “You wouldn’t outsource the business plan or the revenue plant. Why would you outsource technology?”
Number of unique visitors to the Post in November
Attempts to rebrand news organisations as digital technology companies have met with mixed reaction. The New Republic, the 100-year-old political magazine, saw most of its staff quit this month in protest at how its owner, Chris Hughes, a Facebook co-founder, handled the rollout of a new digitally focused strategy.
Martin Baron, the Post’s editor, joined executives on the commercial side in describing the company as “more of a technology organisation” since Mr Bezos bought it. “He understands our technology needs to be at the forefront of what we do,” he said.
Mr Bezos has referred to his investment as giving the Post a “runway” to experiment, freed from the pressures of quarterly financial scrutiny. But the task is still to create a sustainable model for creating and selling journalism.
“We’re a business. He didn’t buy us to run a charity,” Mr Baron said. “Runways don’t go on forever. We’re expected to take off. We are in terms of traffic. I expect that will mean dollars as well at some point.”
How does a media company compete for top engineers?
The Washington Post had been building up its engineering team under its previous owner, the Graham family, whose patriarch Donald Graham sits on Facebook’s board. But the association with Mr Bezos has boosted the newspaper’s ability to attract talented developers, said Mr Prakash.
“As an engineer, Amazon is a mecca for us,” said Mr Prakash, who has been at the company since 2011 and previously worked for Microsoft and Netscape. “Getting Jeff Bezos to introduce me and my people to the right people and technology is a competitive advantage I intend to push very hard.”
Those hires come at a premium, however. The average salary for a software engineer in the Washington, DC area is about $78,000 according to recruitment site Glassdoor, versus $52,000 for a reporter.
Technology companies also often offer stock options. “We don’t have the equity to throw around,” said Mr Prakash.
To better compete, the Post has opened a design and development office in New York. Another outpost in Virginia, not far from the Post’s Washington headquarters but close to a growing community of start-ups, will be up and running by March.
“It’s not just the journalists we have to fight for. I have to prove that we are not a newspaper company — we are a truly scrappy, innovative technology company that builds stuff instead of manages and buys stuff,” he said.
Back to the top of the page
Get alerts on Companies when a new story is published