Posts tagged business models

In towns and cities where there is a strong sense of community, there is no more important institution than the local paper. The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.

By 2017, there will be no printed metro newspapers, no local network TV stations, and few printed magazines. Weekly newspapers and video will be thriving. Tablets will be common and cheap. WiFi and WiMax will be everywhere. What do these and other predictions mean for the newspaper industry?

E-books have no supply — if I buy one, it doesn’t reduce how many remain, because theoretically infinite copies remain. No cost to reprint. No cost to remake. It just… sits out there, attempting to be the very embodiment of the Long Tail.

This is what the audience sees and believes.

It matters little what the e-book actually costs.

It only matters what the audience thinks they should cost.

The future of content on the web – content that gets discovered, creates value, and builds audiences – is not cheap text cranked out by content farms. It’s high quality, editorial and entertainment created by experienced journalists and passionate bloggers. The future is a social media world, where humans are the arbiters of quality, and search algorithms reward sharing and human readability.

The Internet means publishers should no longer be confined to the limits of in-office staff, nor should they be forced to burn fuel to put reporters on the ground around the world. Creative talent lives everywhere; it can and should work from wherever it lives. And any quality publisher should have access to it. Though we may live far apart, the web can bring freelancers together into a community whose value far exceeds the sum of its members. This is the freelance revolution.

The delineation between “media company” and any other enterprise is no longer relevant; we embrace the notion that any entity – brand, nonprofit, news organization, or individual – can be a quality publisher. We believe the business model that “saves journalism” is myriad: Commerce, sponsorship, paid content, and philanthropy will sustain the craft and maintain journalistic integrity, so long as motives and authors are transparent.

The ongoing death of newspapers is not about changes in journalism, or the need for them. It is about a business model that has ceased to be relevant in the face of present technology. It used to be a poorly kept secret, but amid a vast array of competing histories, it’s been forgotten like last year’s canceled NBC sitcoms: What made newspapers successful was never the news. Newspapers provided vital services in people’s lives: their connections with their hometown, the notices of local events, the daily topics of conversation, the latest thoughts hovering over Snoopy’s head as he snored atop his doghouse. Many of these services were syndicated, and those that were not - like the classified ads - were intensely well managed. The front page, and the headlines therein, were merely the container…

…The Internet commandeered the services that newspapers once championed and delivered each of these services on an a la carte basis. In an earlier era, it made sense to bundle these services in a single package - the newspaper - and deliver it fully assembled. Today, the Web itself is the package, and each of the services now competes against other similar services in separate, often healthy, markets. And this is as it should be - this is not somehow wrong…

…There is no rational business model that can be formed around solely the production of news, just as many artists will attest that there is no stable business model around just an artist producing art that does not involve dying first. News must be bundled with a service. And that’s a problem, because the Web model is to unbundle everything, reduce every service to its basic and fundamental form, and present it to you as a site or, more recently, as an app. If you ask southern California venture capitalists what types of investments they’re searching for, they’ll tell you they’re looking for that one thing - not six things bundled together, not three existing things that complement one another. One disruptive thing.

And that thing tends to omit the word “news.

The Pew Project for Excellence in Journalism generated gasps when it reported that newspapers are losing $7 in print advertising for every $1 of digital revenue that they gain. But the situation is even worse. In fact, publishers since 2005 have lost $26.7 billion in print advertising revenues while gaining only $1.2 billion in new digital revenue. Thus, the true ratio of print loss to digital gain is 22 to 1, not the 7 to 1 reported by Pew in March.