Buffett: Free news unsustainable
bloomberg.com
bloomberg.com
News has always been free. The newspaper was a package deal, largely paid for by advertising, and consumers only forked over a little bit of money for the convenience.
And now that raw news has been disintermediated, there's even less reason to pay for "news".
Newspapers have already lost other things of value in their "package deal" (personal ads etcetera) because they couldn't be bothered to really go online. And most of them have completely sacrificed their credibility as watchdogs for political and commercial gain.
News has zero market value. News happens.
Newspapers are an outdated concept, and it's valuable parts have already been monetized by others.
The internet has of course disrupted a lot of the news industry (for the better), and printed papers will soon be gone, but that doesn't make quality news and analysis any less valuable.
And lots of people like to write operating systems for free. That's because interesting work has a non-monetary reward built in.
Lots of bloggers write well researched and very interesting topics essentially for free.
I agree the ignorance of crowds and the free spread of rumors is not substitute for quality information and analysis, but I don't necessarily agree a monolithic newspaper is the only way to get it.
Newspapers were all about owning the distribution channel. Now that is gone, so the newspapers themselves will go.
I think he would think of "free news" differently if he had a better understanding of technology.
On the internet, the cost of printing and distribution have collapsed, so it makes sense that readers should be able to access it for free. The problem is that advertising revenues have also fallen dramatically, which means newspapers are feeling pressure to start charging readers to produce the content.
The idea of charging for content is actually a throwback to the early days of newspapers, which were similar to websites and blogs in that they were extremely diverse in quality and viewpoint and publications wore their agendas and ideologies on their sleeves.
The professionalization of the news media followed the transition from subscription-supported content to ad-supported content, in large part because advertisers want content that is balanced and innocuous enough not to alienate large swaths of potential customers.
I don't know how the business of the news is going to shake out, but my hunch is that the people who figure out how to make money from online media won't be the people who figured out how to make money from print media.
Just as the proliferation of movable type destroyed some professions (scribes) and invented other professions (writers, publishers), the proliferation of the internet is also going to destroy some professions and create others.
One thing, though: I wouldn't bet against good writing over the long term.
This is essentially what paper news does at the moment, and people are willing to pay for it.
Perhaps there should be a general news site where the users submit the news articles themselves, it would probably be faster than the ACTUAL news companies who have to send out a reported, as opposed to a civilian on the streets witnessing it happen.
(Of course, then the news corporations would leech off the site.)
Has Buffet heard of Twitter?
News aggregators like Huffington Post?
The only thing I think news papers have over citizen journalists is credibility, editorial and writing quality. Decent news analysis can be derived from prominent bloggers.
I wouldn't want to be in the business of any kind of content creation in the long term. Copyright as a concept is going to be fundamentally challenged in the next few generations.
Newspapers are just whistling past the graveyard right now.
Seriously? The guy is a genius. I'm guessing 'yes'.
The only thing I think news papers have over citizen journalists is credibility, editorial and writing quality.
Is that all? Sounds like if you can convince people those things are valuable, they might be willing to pay for it.
I wouldn't want to be in the business of any kind of content creation in the long term.
If by 'content creation' you mean content shoveling, then yes, I agree. But I'm bullish on synthesizing streams of data into cohesive narratives.
Those are pretty big competitive advantages. In fact, I'd say those are the three main factors people use when choosing where to get their news from.
... but there's also long, hard, investigative journalism which means tracking multiple complex stories for sometimes years, issuing freedom of information requests, developing contacts in key places etc.
Admittedly journalists have become weaker watchdogs than ever before, perhaps because the media business has made it difficult to tell real hard stories from random shock-value crap by giving everything a shock value edge to keep selling... And perhaps this is what needs to be fixed.
As a counterpoint, I'd suggest that:
1) Most people are not able to obsessively follow everyone on Twitter, and filter through the tweets for the most relevant news. For the first job of a news organ is to filter out the noise.
2) News aggregators must aggregate something. Take the homepage of HuffPo, for instance. Most of the articles posted there are written by people on the HuffPo payroll. Most of the others link to sites where someone was paid to write the article, like the Washington Post. None are direct links to a tweet.
3) Credibility is not an afterthought for most people. We expect our news outlets to at least make an attempt to be credible and/or publicize their biases.
4) Prominent bloggers don't typically interview local officials. Local officials matter, but they are not sexy and often must be visited in person for interviews. The general point here is that very few people will cover some important parts of the news for free, because doing it sucks.
They do add value - the problem is they aren't getting the revenue generated by their work. It's being siphoned off by the cut/paste/add some commentary aggregators. "Old" news will continue to exist, but with smaller budgets and less resources to do "real" reporting.
Then we're left with all the rest, which might actually be interesting news and articles. There's probably too many reporters for this, though, if we exclude everything else.
I think I'm going somewhere with this...
If you trace the actual information items back to the source, you'll find that there aren't that many sources and there's a limited number of people who get the information from the original source and do some basic checks in terms of corroboration.
If the organisations that work the sources stop giving that information away for free and manage to reduce or slow down copying just a tiny bit, they have tremendous leverage. The general news business could look a little bit more like the financial news business.
What if Watergate happened today? Who would break that story? Who would follow the leads? Who would protect the informants?
Before you answer "Wikileaks", keep in mind that one of their top informants is currently being held in military prison under borderline inhumane conditions, and their leader is currently being extradited to face trumped up charges of sexual assault. Meanwhile Bob Woodward has a book deal and is spending his retirement on the sunday morning talk circuit...
If Watergate happened today, (1) the New York Times would assign a reporter like Judith Miller to present the administration's viewpoint almost verbatim, (2) the Economist would rehash conventional DC wisdom from across the Atlantic while largely misunderstanding the context, (3) Stratfor would hyperventilate and try to panic us into buying expensive whitepapers full of worst-case geopolitical scenarios, (4) Mother Jones would write an amazingly depressing exposé that nobody can bear to read, (5) the Christian Science Monitor would try to do the right thing, but find itself hamstrung by limited personnel, and (6) two thousand local papers would plagiarize the same wildly inaccurate article off the AP wire. Oh, and for every reporter who tried to discover the truth, 10 would take a statement from each side and imply that the truth must be somewhere in the middle.
Seriously, I would pay real money for accurate news and competent analysis. I've tried, I really have. But the available options are just awful. Editors want to move product, reporters want to finish 500 words by 5pm, and readers want to confirm their worldviews.
As a non-American, I was a bit taken aback to see the Christian Science Monitor mentioned. Are they a news source? Do they have a history of "trying to do the right thing", as you put it?
While being owned by the Christian Science church they do a good job of being independent and avoiding any mention of doctrine. I truly believe that if the same newspaper was published without any connections to any church it would rank much higher in world opinion, but most people tend to dismiss it due to the name.
(full disclosure: Grew up christian scientist, long since lapsed, but still have friends who believe, and I hold no animosity towards the church).
"Find out what Miranda Kerr called her new baby! Related news: Gallery of 43 photos we've stolen off the net that we know you can't resist looking through."
Put a paywall in front of all content, and people may start to realise and make a choice.
Is the next generation growing up buying newspapers?
This is somewhat less obvious today with the competition from many other open channels of information, but newspapers used to be absolute kingmakers. In the time around World War I they were even used by arms manufacturers in collusion with finance and state actors to drive the arms race in the run-up to the war.
Incidentally, Press+ is trivially easy to disable. It's a third-party client script that counts how many times you've visited the site in the past month and prompts you to pay once you've reached the limit.
The real problem is maintaining the advertising client income when going from paper to electronic print.
He stated that he won't invest in tech companies as he doesn't know them.
I'm sure there was a man that knew horse and carriages, and didn't know anything about cars.
I think that "free news" (whatever that ends up being) will win in the end; newspapers giving away the keys to the castle won't make them win (not that I think anything will).
Free news might be sustainable if a similar model can be found. Donation-driven news articles perhaps? Or more specifically, how about donation-driven investigative reporting?
I think that might work but probably wouldn't make anybody rich.
EDIT: I should say, he has an interest in moving the market, especially at a time when FB is dominating the online newscycle. I don't think he lacks credibility, I think he lacks a goal here. He's trolling.
Google is 90%+ ad-supported.
The analysis was more about Facebook's valuation rather than its sustainability.