WaPo’s Platform-as-a-Service strategy is brilliant – and irreplicableChris Sutcliffe 1st October 2018
The Washington Post is a unique media company for a number of reasons. Its close affiliation with Amazon provides it with strong ecommerce potential; its subscription potential was bundled with Amazon Prime long before rebundling was a glint in other media companies’ eyes; and it has always bucked the trends surrounding digital video.
Perhaps more importantly, it is making a significant run at Platform-as-a-Service revenue – and might be the single best-placed media company to do so.
If you’ve ever used Google Drive to collaboratively edit a document, you’ve experienced a PaaS. Chances are that you’ve also recognised the benefits of doing so. But the potential of PaaS is truly realised at a macro level: licensing a platform for developing and publishing apps without also needing to build the infrastructure behind it is freeing for media businesses and allows easier entrance to the market for start-ups.
For companies engaged in the production of journalism (or its backwoods cousin, ‘content’), that can be a god-send. The tricky process of building a back-end is enormously expensive at the best of times – let alone in a year in which the vast majority of legacy publishers are trying to scale back costs through consolidation and the sharing of talent and tech.
Enter Arc Publishing, the PaaS offered by The Washington Post and Amazon. The service – which to date has mostly been licensed to regional titles in the US – was described by Post CIO Shailesh Prakash as a source of incremental revenue that could eventually become a $100 million business for the Post.
First and foremost, it’s important to note that the reason the Post has the ability to launch a product like Arc is its affiliation with Amazon. The two entities have been growing more entwined over the past few years, through bundling and ecommerce efforts, but Arc demonstrates that better than any other endeavour. Though more closely associated with the Post, Arc is powered by Amazon Web Services, and is built on the reams of expertise and user data the ecommerce platform has been accruing since its launch. That’s very apparent when you look at the features that have been added to Arc this year alone, from increased personalisation tech to video asset management to paywall options. Without Amazon in its corner even if it’s nominally separate, the Post is effectively the only major publisher that could offer as fully-featured a product as Arc. In this Nieman Lab write-up of the system, one of its users declares: “they have a lot of tools that can help you grow your site, but in my view the value is in being able to work with their engineering team to implement features relatively quickly.”
That puts the Post in a position that many other newspapers would envy – the position of having a growing revenue stream with the potential to generate tens of millions of incremental dollars that is largely immune from the vagaries that are impacting other areas of traditional newspaper revenue model. To some extent, its subscription side being bolstered by Amazon Prime also afforded it this advantage, but it’s one hell of a trump card to have in your pocket as other titles without such revenue models are struggling to diversify. In the UK, Dennis has similarly swerved with its ecommerce efforts, but it’s an advantage that shouldn’t be downplayed: not every media company has the capability to discover a new revenue strand like this.
It goes without saying, but the news business has found itself especially exposed to falling circulation and advertising revenue. Even the largest global news publishers have had to turn to other means to support themselves. That $100 million in potential revenue from Arc is notable because it is a significant proportion of the figure bandied around for the Post’s total advertising revenue back in 2017. So as total adspend continues to move away from print, the proportion that comes from incidental sources will increase – and not just at the Post.
The Guardian now gets more revenue from consumers than from advertising. More than 900,000 people pay for membership and contributions, accounting for 12% of the publisher’s total revenue. https://t.co/KJu82Rg5mQ
— Sarah Marshall (@SarahMarshall) October 18, 2018
Notably, Arc has so far only been rolled out to a very limited number of other outlets, the vast majority of whom are local and regional titles in the US. However, last month saw Spanish-language newspaper El Pais adopt the system. El Pais, with more than 66 million digital readers, is effectively a test-case for other publishers who might seek to bypass the costs of producing their own CMS and choose to license the PaaS directly from the Post. What’s absolutely clear is that Arc has potential far beyond that limited number of initial partners (and in turn benefits Amazon, which naturally has first-dibs on any ecommerce or affiliate revenue service that the publishers might choose to implement).
The success of Arc leaves other publishers with a tricky position: without Amazon backing and with a limited number of resources, they are faced with the decision to continue development of their own proprietary CMS and platforms, which can be expensive but allows for absolute control. On the other hand, licensing Arc has the benefits of being easier and offering off-the-shelf access to tools and systems in addition to Amazon Web Service’s development options. As ever, it’s a trade off – but for the Post, it’s a growing source of revenue, one that wouldn’t be possible without its close affiliation with Amazon.
Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work across the media, information, technology, communications and entertainment sectors, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.