Buffett: Free news unsustainable(bloomberg.com)
bloomberg.com
Buffett: Free news unsustainable
http://www.bloomberg.com/news/2012-05-24/buffett-says-free-news-unsustainable-may-add-more-papers.html
18 comments
Of course he would say that after buying all those newspapers. He actually wants to make money from them, and for that he needs people to believe they need to pay for news.
Free news is unsustainable just like free software is unsustainable.
No. He's not saying that there can't be news out there that's free, he's saying that newspapers releasing free content is unsustainable. I, and many others I believe, agree with him.
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).
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 software us unsustainable for a business. To make it work, you'd need money coming in. So your business would be selling support services not the software itself.
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.
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.
That would be an interesting concept. Open source the entire news process so that everything is completely transparent (information gathering to fact checking to distribution process). Call it the gnnews.
"Free software is unsustainable"? Do you mean all FOSS? Could you expand on that opinion, I haven't seen a whole lot of data out in the web to support this claim.
News is ripe for disruption. News was a better business when it was harder to find out what was happening in the world because of difficulty in transporting information and media. That's all gone now.
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.
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.
This is an interesting perspective. The logical conclusion of this perspective is that the people who currently are paid to be reporters, editors, writers, photographers, etc. add little to no value to the world. Similarly, that news can exist without primary sources to exchange on Twitter of for bloggers to write about.
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.
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.
"The logical conclusion of this perspective is that the people who currently are paid to be reporters, editors, writers, photographers, etc. add little to no value to the world."
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.
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.
When I look at newspapers, there's a lot of stuff in there that is badly written, and there's a whole lot about stuff that doesn't need "proper" journalists: celebrity gossip, how to lose weight, move reviews, etc. Much of this can be offloaded by Twitter, blogs, tumblr, whatever.
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...
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...
People read news to find out what's happening. That's mostly it. If they can find out what's happening without paying for it, they will, even if their source isn't written by a published Harvard graduate who has years of experience and writes like a god.
Not just credibility. There are multiple kinds of journalism. There's observe something and report it....
... 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.
... 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.
Has Buffet heard of Twitter?
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.
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.
'The only thing I think news papers have over citizen journalists is credibility, editorial and writing quality'
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.
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.
You're probably right, but I think the future that you describe is less certain than it seems. For all the abundance and redundance of news and news outlets we underestimate the bottlenecks in the system.
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.
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.
There are two kind of journalism, opinion and report, while it's true everyone is able to give its opinion, reporting facts is a fulltime job. I worked in a newspaper and most people don't get how much work it takes to produces a 2500 characters story.
Dude has a horse in this race.
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.
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.
He has a horse in the race because he thinks he is right, not the other way around. He doesn't have to have a horse in the race.
Several actually. Which means dude probably knows what he is talking about.
"A newspaper typically generates 70–80% of its revenue from advertising."
http://en.wikipedia.org/wiki/Newspaper#Advertising.
The real problem is maintaining the advertising client income when going from paper to electronic print.
The real problem is maintaining the advertising client income when going from paper to electronic print.
Well at least he isn't joking about being greedy when others are scared.
From here, I wonder how many people will realise that they can do without a great deal of what's considered typical news? I was a voracious newspaper reader as a child and watched the nightly news without fail. At present, however, I don't watch TV news, I haven't bought a newspaper in many years and I have deleted bookmarks to every local/general/large news source and try to avoid them beyond that also because they peddle trash day after day chasing mindless pageviews.
"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?
"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?
Correction: free news as a business model is unsustainable - assuming the internet stays the way it is (relatively uncensored).
That is funny, I was thinking today that one way the newpapers might survive was by going free (we just started getting for free a couple local newspapers)
I'm not the type to cling to dying business models, but I actually would consider paying a little money to get in-depth quality analysis of current events or topics I find interesting, just like I'd be willing to spend money on a good book. It's not a necessity and I would treat it as a luxury, but I do believe there is a niche market demand for that kind of content. The current advertising based model of distribution seems like a race for the most eyeballs and consequently a race to the bottom.
Here's Buffett's actual letter - http://dataomaha.com/documents/warren-buffetts-letter-to-pub...
What about ad-supported news, is that sustainable?
Paid news is unsustainable.
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.
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.
Reliable reports of news from a trusted source continue to have market value (quality info has rarely been free), and people continue to pay for them. Also good journalists often produce articles on trending topics which sometimes take weeks to complete and a lot of research. These things can be done by anyone, but they are hardly worthless and require investing time and money - producing good journalism takes a huge amount of time and effort, and the ignorance of crowds and free spread of rumours is hardly a fair substitute.
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.
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.
This is true, but assembling news is peanuts compared to assembling operating systems in terms of time necessary.
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.
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 find myself inclined to pay for news because just about all of the freely available opinion dressed up as news and/or analysis is complete tosh, and aggregators only get you so far. To wit, I fork over my hard earned for a copy of the FT 6 days a week, and would gladly do so to access HN.
I would also more than happily pay for hacker news, but since it's free and user submitted I think it is a different case.
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.)
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.)
Bronwen Clune attempted something like that a few years ago with a company called Norg Media http://www.crunchbase.com/company/norg-media - there have been others too, of course, but no one has managed to get particularly far.
It would require a lot of development time I think and I really think it's a great idea, especially to get there (in the public eye anyway) first, but I am only 2 months or so away from finishing a project my team is working on, seeing how quickly ideas expire on the internet it will be taken or obsolete by the time I have the free time.
Well, that's what most of us here believe obviously. But are you betting against the Oracle of Omaha?
The Oracle of Omaha doesn't bet on tech because he knows he doesn't understand it. His money has been made by only investing in businesses he fully understands.
I think he would think of "free news" differently if he had a better understanding of technology.
I think he would think of "free news" differently if he had a better understanding of technology.
News is only free because the newspapers got into a war for eyeballs on the Internet. It is only now after they've had their businesses decimated that they realize that free content wasn't such a wise move on their part. There certainly isn't anything about free news that makes it a competitive advantage. If anything, it actually hurts them economically because they're giving away their product for nothing. No one sane runs a business on driving an increase in traffic.
People haven't paid for the content of newspapers since newspapers moved to an ad-supported business model a century ago. The newsstand and subscription costs were for printing and distribution, not for content.
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.
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.
But that's exactly what is interesting about his investment in newspapers. He generally stays away from stuff he doesn't understand. If he's betting on something that seems so obviously dead because of competition with tech, then I'd like to believe there's something valuable there.
A better understanding of technology? Or how advertising is bundled online?
[deleted]
There is value in aggregation, and more specifically curation.
This is essentially what paper news does at the moment, and people are willing to pay for it.
This is essentially what paper news does at the moment, and people are willing to pay for it.
True. And there are very many free print newspapers too that attest to your point on bundling.
A quick question to everyone who is asserting that aggregation, social media, and citizen journalism makes traditional, for-pay news outmoded:
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...
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...
I hate to be so cynical on Hacker News, but I think it has some bearing on the business opportunities, so here goes.
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.
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.
> the Christian Science Monitor would try to do the right thing
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?
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?
The Christian Science Monitor is a pretty high quality and reasonably unbiased newspaper greatly held back by a rather unfortunate name and association. Certainly on topics of US Politics they are the among most most unbiased, and have a stated policy of never endorsing any candidate or party.
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).
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).
I used to read its international coverage online, and never detected much bias. When I started reading it, I was also taken aback by the name, but it doesn't appear to be heavily influenced by its parent organization.
One of Buffett's mantras is stick to what you know.
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.
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.
There has never been much money in selling news, the value is in controlling public perception, which is unbelievably valuable, and which is why the owners of the largest newspapers and news agencies don't care if they run at razor thin margins or (as is often the case) losses, it is all about controlling the information channel.
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.
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.