Posted by Tom Foremski - March 9, 2014
Updated with a post from Frédéric Filloux writing on Monday Note.
Marc Andreessen is famous as an extremely successful investor in Silicon Valley startups and that means he knows a thing or two about a thing or two but probably not the business of news. His recent analysis of the news media business has not impressed those in the news business.
Frédéric Filloux, writing on Monday Note takes apart Andreessen’s understanding of the news market.
The scalability that works for Google Maps or WhatsApp doesn’t work as well for the notion of relevant information, one that is more tightly connected to language, proximity and culture.
Second, he overestimates the addressable news market’s fragmentation. I live in France, a 66 million people country with a high standard of living and good fixed and mobile internet access. In spite of these factors, it remains a small market for the super-low-yield digital news business that brings few euros per year and per user (except for a minuscule subscriber base.)
I remained stunned by the inability of good journalistic products, created by smart people, to find a sustainable business models after years of trying.
I completely agree with his position on philanthropy supporting journalism.
Saying investigative or public-interest journalism could/should rely on philanthropy is the same as admitting it’s economically unsustainable.
Ryan Chittum at the Columbia Journalism Review wrote that Andreessen “has some outlandish predictions about the future of the journalism business.”
He picks apart Andreessen’s claim that the news industry will grow by 10 times to as much as 100 times over the next 20 years.
Sorry, but those numbers are crazy town… The US newspaper business alone is about a $35 billion-a-year industry. Add in cable news channels, local newscasts, network news shows, magazines, digital-only sites, and radio and you’re surely up to at least $50 billion.
Is the news going to become a $5 trillion industry? No. That would be one-third of the US economy. All advertising spending in the US comes to about $170 billion a year, and only a small portion of ad money goes to news organizations.
Rick Edmonds over at Poynter also took aim. Pointing out some large errors in Andreessen’s post, such as the claim about large scale demise of newspapers.
“…very few American papers of any size have closed in the last decade and most of those have been the weaker title in two newspaper towns. Add in Newsweek, if you like (though it has been reconfigured and plans to return to print this month) or some international titles like FT Deutschland.
What would be truer would be to say that nearly all American newspapers, and many abroad, have been significantly shrinking in revenues and news effort during the last decade.
The news business doesn’t scale in the same way a software business scales. Andreessen understands software but he doesn’t get news.
The media industry is in the path of a basket of disruptive media technologies. Disruptive technologies disrupt. That's why they are called disruptive — not because it's an edgy term.
There's not much that most of the media industry can do about it. The media industry will be disrupted and built up again from first principles.Tweet this story Follow @tomforemski