Is Warren Buffett right or wrong about the Washington Post's business model?
Forbes | GigaOM
Warren Buffett recently told CNBC that newspapers "have been giving away their product at the same time they’re selling it, and that is not a great business model." Warren Buffett, that wealthy fellow who recently bought the Omaha World-Herald and used to be on the Washington Post board! If you think a Warren Buffett quote about newspapers isn't going to be aggregated, torn to pieces, then re-aggregated by media bloggers such as myself, you probably get your news from newspapers (in fact, how'd you find this post?).
“ 'Giving away a product you’re trying to sell' is exactly what the Washington Post continues to do," writes Jeff Bercovici at Forbes. "[E]very time the Post has taken a public stance on the question of free vs. paid, it has always reiterated its commitment to the former, even as its profits continue to plummet."
Mathew Ingram at GigaOM says Buffett's clearly gone insane: the bazillionaire, he says, "assumes the 'product' is the news, and that this is what newspapers are charging for — and I don’t think that’s really the case any more. For content companies of all kinds, the product is (and in many ways, always has been) the relationship that you can build with readers around your content. And the monetization of that now comes in many different forms."
Ingram has some suggestions about what those forms might be: The Post's "social-sharing apps," such as Trove and Social Reader, and "freemium" offerings like the company's new Politics iPad app.
It's way too early to judge that last product's prospects, but Social Reader in particular is worth thinking about. With millions of users, it "has scale," as biz types say, and numbers like that can sometimes be turned into dollars. Still, wringing money out of a product that many people find annoying, one that the Post's CEO says wasn't designed to make money, might prove harder than just throwing up a pay wall and hoping your readers don't flee. (If a pay wall ensured a redesign so I could find stories on the Post's site as easily as I can in the newspaper, I'd quickly pony up. And cancel my Washington Post print sub. So maybe don't ask me.)
Correction: This post originally misspelled Mathew Ingram's first name as Matthew.