What Marc Andreessen got right and got wrong in his future of news manifesto
When the history of journalism's turnaround is written some years hence, I think 2013 and 2014 will go down as years when Internet billionaires, the new Carnegies and Rockefellers, stepped into the fray in a big way -- Jeff Bezos, Pierre Omidyar (and let's not forget more traditional rich guys John Henry and Warren Buffett).
His essay last week on where news is headed, well summarized in a Wired piece and readable itself, projects exponential growth in market demand. Andreessen sees solid Internet businesses with strong financial backing coming into their own even as legacy platforms continue to falter.
Much of his analysis is persuasive if not totally original. He is surely right that rebundling of news is booming. New aggregation sites with a social media twist, led by BuzzFeed, are working ingenious variations on the first wave like The Huffington Post. Google, Facebook and Yahoo -- the biggest of the digital bigs -- are redoubling efforts to build a branded news presence of their own.
And I can't quarrel with three concise paragraphs capturing how newspapers and magazines have been battleship-slow turning themselves around:
There are some artifacts and ideas in the journalism business that arguably are counterproductive to the growth of both quality journalism and quality businesses. It’s why some organizations are finding it so hard to move forward.
An obvious one is the bloated cost structure left over from the news industry’s monopoly/oligopoly days. Nobody promised every news outfit a shiny headquarters tower, big expense accounts, and lots of secretaries!
Unions and pensions are another holdover. Both were useful once, but now impose a structural rigidity in a rapidly changing environment. They make it hard to respond to a changing financial environment and to nimbler competition. The better model for incentivizing employees is sharing equity in the company.
Andreessen's final section, advocating the standard right stuff -- including vision, nimbleness, experimentation and an entrepreneurial mindset -- is stylish, canny and upbeat.
The best approach is to think like a 100% owner of your company with long-term time horizon. Then you work backward to the present and see what makes sense and what remains. Versus, here is what we have now, how do we carry it forward?
So the theory is solid. But the facts and numbers? Not so much.
Andreessen casually asserts "the demise of scads of newspapers." Assuming he hangs with a Silicon Valley crowd, who endlessly repeat the dying industry meme, the mistake is understandable. But 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. And they face more of the same in the near term until they can generate enough digital and other revenue to cover continuing print advertising losses.
A second of Andreessen's assertions had my jaw dropping:
The total global expense budget of all investigative journalism is tiny — in the neighborhood of tens of millions of dollars annually.
How's that? ProPublica alone has a budget north of $10 million, the great majority of it directly applied to investigative reporting. The Texas Tribune, The Center for Investigative Reporting and The Center for Public Integrity all operate on a similar scale. And that's not counting the New York Times, the Guardian and another 1,350 or so American dailies.
Andreessen may be thinking only of very high-end investigations like the WikiLeaks and Snowden disclosures. But surely the Bergen Record and The Wall Street Journal exposes on the Christie administration bridge traffic debacle qualifies. While local broadcast fare, helping the little guy straighten out problems with shoddy contractors and unresponsive bureaucrats, is not my favorite, I'd count it too as investigative reporting,
Andreessen would be right to say it does not take billions and billions of dollars to do the world's investigative reporting. But the total is certainly hundreds of millions, not tens.
A major order-of-magnitude issue also afflicts Andreessen's central contention -- that the news industry can grow 10 times to 100 times its current size over the next 20 years.
He is talking about the whole world, a potential market, he says, of 5 billion people. Give them all a smart phone and an iPad, and consumption will rise. And the new era of news has ample room for many aggregators, many tech innovators and many vendors -- all turning profits.
But I cannot get to 10 times, let alone 100, unless 240-hour days are right around the corner. There is only so much time, and only so much time for consuming news, even with double screening. And part of the news industry's problem is competition for that time from non-news entertainment content and diversions like games and Facebooking.
The Wired piece and several contributors to its comment chain say that for venture capitalists like Andreessen market opportunities are never just big, they are huge. By his own description, he is "more bullish (on the business) than almost anyone I know."
In sum, Andreessen's interest is a plus just by itself. His ideas are useful. He makes a good case that the news business will soon clearly be recognized as expanding not contracting. But apply a generous discount to Andreessen's measuring-the-market numbers before you take them to the bank.
We've asked Andressen through his company Andresseen Horowitz if he'd like to write a post for us on his views. Although we haven't heard back, that invitation remains open.