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).

Now comes Marc Andreessen, Netscape founder and venture capitalist, with a take on the future of the business that is wildly optimistic, dare we say, irrationally exuberant.

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 TribuneThe 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.

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  • http://imscrapidmailer-review.com/ Lê Thanh Bình

    I spent almost a decade in the leadership of the contingent workers movement between the mid-1990s and the mid-2000s – and precarious jobs are absolutely the toughest to organize. My only thought is that the practice these days is different from the theory. A left-leaning college acquaintance who became a noted academic on labor told me at a chance meeting he was looking for a new subject. The pioneer browser has now been supplanted by others (though I am unclear whether there is some lineage to Mozilla/Safari). As a venture capitalist, he and his firm has had early positions in several of the giants, but I don’t know how successful they are overall.

    http://imscrapidmailer-review.com/

  • http://www.siliconvalleywatcher.com/ Tom Foremski

    Mr. Andreessen should stick to topics he knows something about.

  • http://about.me/jpramas Jason Pramas

    thanks Rick … and yes, your friend is well informed … most American unions are highly flawed in practice, and I certainly do not think that they’re the best institution to take on multinationals in this day and age in their current state … this is why I’ve been in the reform wing of labor since I first joined a union in the early 1990s … but, warts and all, unions are the best defense that workers in many sectors have until new labor leadership emerges is willing to experiment with institutional forms better-suited to our era … as regards the plight of contingent workers like low-paid service workers at McDonald’s and Walmart, I agree with you … I spent almost a decade in the leadership of the contingent workers movement between the mid-1990s and the mid-2000s – and precarious jobs are absolutely the toughest to organize … it’s my considered opinion that traditional unions will not be able to effectively organize contingent workers until they adopt a broad associational model and drop their traditional membership model – a strategy a number of unions are trying to one degree or another, in fairness … workers centers and other models can also be helpful … however, all is not lost for contingent workers either – my adjunct professor colleagues and I just won a union election at Lesley University as part of the SEIU Adjunct Action campaign … so I think labor will muddle through this crisis as we have done in the past, and figure out a way to rein in the titans of industry and inch towards the storied Cooperative Commonwealth envisioned by previous generations – hopefully without the violence and turmoil that has tarnished similar movements in other times and places … all while dealing with global warming (d’oh!) … cheers …

  • redmonds

    Jason:

    That is a well-put defense of the role of unions, and thanks for taking the time to comment.

    My only thought is that the practice these days is different from the theory. A left-leaning college acquaintance who became a noted academic on labor told me at a chance meeting he was looking for a new subject. He had concluded that most unions are out for the union. They look for comparatively well-paid workers who stay in their jobs and can afford dues. That is why government unions have grown so much over the years and why probably no one will be successful trying to organize at McDonald’s (we will see about the Walmart effort.

    Rick

  • http://about.me/jpramas Jason Pramas

    nice article, but I’ve gone to disagree with Rick’s comment on unions … labor relations have nothing to do with unions being a “great match” with bosses … short of an enterprise being run as a workers’ cooperative with all employees having an equal stake in the business – which is almost certainly not what Andressen meant by “sharing equity” – “the working class and the employing class have nothing in common” as the IWW put it a century ago … like all other capitalists, the owners of news organizations want to make as much profit as possible and keep labor costs as low as possible in that pursuit … employees, if they have brains in their heads, want good wages, good benefits, job ladders, and collective bargaining agreements that mandate same – which, before anyone protests, does not mean that employees want to run businesses into the ground with unrealistic demands if they’re doing poorly … still, these are competing interests even in businesses run by “enlightened” capitalists (e.g., Ben and Jerry 25 years ago) … under American capitalism, employees have virtually no bargaining power on the job without unions – or without at least a willingness to fight collectively for redress in some fashion in any given job market … the conceit that everything is somehow different in the 21st century even as the bottom 80 percent are seeing their fortunes continue to decline in today’s neo gilded age is utter nonsense … sociopathic CEOs like Andressen will happily spin tails of the unicorns and rainbows that await workers if they just shut up and take what they can get, while laughing all the way to the bank … they will only be stopped by revived militant unions – and by democratic economic institutions like worker, producer and consumer cooperatives that take as much of the economy off the market system as possible in the broad public interest … or by an outright socialist revolution, and I’ll assume that Rick doesn’t want that … but I will also assume that no sane person wants America to spin off into the barbarism of the “war of all against all” that techno-libertarians and their sometime Christian Right allies are pushing our society towards either … so working people – whatever their education level and social status – should not be so quick to dismiss the ongoing importance of unions in a democratic society in my estimation … if they want the society to remain at least nominally democratic and prosperous, that is …

  • redmonds

    Thanks for the comments, gentlemen.

    Edward: I was aware that part of the post could be offensive to union members and other ground level reporters and editors. Look, I have been a journalist for 45 year and am all for them being paid well and retiring well. Unions were a great match for the good old days when business was booming and workers needed to fight for a share. But for a business scrambling to reinvent itself, the high salaries, generous benefit packages and work rules all are a drag on getting done what needs to be done. You are right that vacating the tall towers and shedding support staff are well underway.

    John: A short summary of Andreessen’s career was one of the things that ended up on the cutting room floor. He got there first with Netscape and cashed out when the cashing out was good. The pioneer browser has now been supplanted by others (though I am unclear whether there is some lineage to Mozilla/Safari). As a venture capitalist, he and his firm has had early positions in several of the giants, but I don’t know how successful they are overall. In that world you don’t have to have a high batting average if the hits are home runs.

    Rick

  • https://twitter.com/John_de_Vashon John Sage

    Anyone who’s been paying any attention to Andreessen (remember Netscape? How about NCSA Mosaic? Have you ever actually *used* either?) over time knows that he’s consistently famous for being mostly wrong about stuff.

    Except that people keep seeing him as some sort of visionary. Which he might have been, once or twice, kinda, over the last twenty years.

    No news here. Nothing to see. Move along.

  • Edward Ericson Jr

    So an internet VC guy thinks stock options are better than unions and pensions, eh? How surprising. How innovative. And Rick’s right there, nodding.

    Uh huh. Fair wages are a big ol’ drag. And yeah, those giant towers filled with secretaries! Oh, the secretaries! The many, many secretaries.

    Except…the towers have been emptying out for two decades. Here in Baltimore they rented part of the building to a TV show–and still only use a third of it–for the paper and the set. Staff at the paper is about 1/3 what it was 10 years back. Raises? Not this decade. Not for years before the start of this decade.

    You know what they got?

    Stock options.

    Options–but no say in how the business should run, when it was clearly set to run into bankruptcy.

    “Can’t quarrel with that,” Rick?

    OK, how ’bout this: “A healthy business is the foundation for being able to build quality products.”

    That’s Marc on, I guess, The Existential Facts.

    Should he not have written that sentence the other way ’round? Or to imagine it another way, if “A healthy business is the foundation for being able to build quality products,” what, then, is the foundation of a healthy business?

    Ah, but this is nit-picking, isn’t it?

    As a verified winner of tech lottery one-point-oh, Marc is so far beyond your puny human logic, you can’t be expected to comprehend the fullness of his wisdom. You are still stuck in the old thinking–the problem thinking that got disrupted by these great givers of, uh…well…tech stuff. Your old notions of reality, integrity, newsworthiness, “conflict of interest”–these are not relevant in the new world of riches for those who Get It.

    You need to ask yourself about core values, as Marc advises: “Ask yourself, would you rather be right or successful?”

    It is clear which one Marc prefers. And Rick?

    Rick is nodding.