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Warren Buffett Sees Most Newspapers as ‘Toast’ After Ad Decline

222 points| JumpCrisscross | 6 years ago |bloomberg.com

260 comments

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[+] davidw|6 years ago|reply
This is a problem for all of us:

https://www.citylab.com/equity/2018/05/study-when-local-news...

And it's one that requires money to solve, because to cover local politics well, you need someone who sits through the local city council meetings, with their hours of discussion of things like 'sign ordinances' to write up a summary, or maybe bring attention to something that they're spending a lot of money on.

[+] askafriend|6 years ago|reply
This is why I'm bullish on Nextdoor.com for making inroads into local news and local reporting. I think they're well positioned and best incentivized to pick up the hyperlocal online distribution.

Facebook, Twitter, Snap, etc are all too saturated with content that's scoped so globally that local content has a tough time penetrating through. Nextdoor on the other hand is built for local and has the perfect geographic and privacy model to take things really really local in a way that others can't.

They'll be able to make money in a way that independent local newspapers can't, but they'll also hopefully be able to drive demand enough to incentivize local journalists, reporters and even super engaged citizens.

Nextdoor doesn't fill this use-case super well today, but I think they can pull it off if they choose to focus on it. They certainly have all the right ingredients.

[+] rjf72|6 years ago|reply
I think this misses the point.

Newspapers can do fine when people read them. Ad sales, sponsorships, etc provide more than enough revenue for a local paper that has a at least a moderate readership. The reason newspapers are failing is because they aren't finding that moderate readership - people aren't reading them. And this is the exact same reason that ad sales/revenue are declining. So it's not like if you externally fund a newspaper, you fix the problem. You simply end up with a well funded paper that nobody reads.

And ultimately I see no way to save newspapers. Why would I read one handful of journalists' takes on events that happened 24+ hours ago, when I could instead see the views of not only countless journalists but even real people and specialists takes on issues, as they unfold? And as the article mentions the times of finding jobs or local sales in the newspaper is completely gone as well. To a degree this will also lead to a paradoxical decline of online outlets. They, like local papers, need loyal viewers to survive. But there's no inherent reason to offer loyalty to any given news outlet in era of the internet. This is, in my opinion, why most media has gone full-on partisan and op-ed type stuff. It tries to turn the news into entertainment to draw a recurring audience like a weekday sitcom in times past. Suffice to say this is not a viable long term strategy - fanaticism invariably destroys itself in the long run.

[+] Pigo|6 years ago|reply
I remember visiting the local newspaper as a kid, seeing the presses working. The people had a lot of pride in their job. I don't know what the answer is, but it makes me sad that it's becoming less important to people.
[+] em3rgent0rdr|6 years ago|reply
> need someone who sits through the local city council meetings

City council meetings can be lived-streamed, auto-transcribed, and their agenda can be posted. People will still of course offer their opinions on the subject on their social medias. We don't need newspapers to do this.

[+] munk-a|6 years ago|reply
I really think we as a society need to figure out how to properly fund unbiased reporting without letting the government step in as a censor but while letting outlets be called out for outright falsehoods - I think this is a very hard problem to solve and solutions have been tried many times in the past.
[+] gutnor|6 years ago|reply
It could be done with a new separate branch of government. It used to be there was good money to make doing it privately, but nowadays the system needs government funding. Impartial and accessible (also meaning average Joe can understand it) information is as fundamental as the judiciary in order to maintain a working democracy.

There are various element of it in various countries. Like national offices of statistic. There are stuff like the BBC and variety of EU initiative to inform about various processes. Democratic government keep complete record and have public service already make analysis and summary for ministers to work with. So it's not like it is out of the realm of the achievable. Maybe an official rating could be created based on a service like politifact that independant newspaper must display on their frontpage like the food safety rating for restaurants. Teach the kid at school that anything not rated is basically fiction and that will take care of the majority of the population.

There is the risk of it becoming a propaganda arm of the government, sure, but you can have the same argument with every branch of the government. There is no intrinsic reason to trust the judiciary, the military or the police, except a tradition of being trustworthy which is really what maintain the whole system running: a lot of honest people everywhere. In any case, that's a moot point since the journalism it replaces is dying, and we know the new media that is killing it is not even pretending to have any kind of integrity.

[+] save_ferris|6 years ago|reply
Unbiased reporting has never existed in the history of the US press, and likely never will. The very decision to publish or not publish story inserts a little bias. The press can't possibly cover everything, so they have to decide what should be printed, and it's not always a straightforward decision.

40 years ago, there were several nationally recognized publications (NYT, WaPo, WSJ, etc.), and all of them had a bias. NYT editorial leaned left, WSJ editorial leaned right, and everyone knew this. The political leaning was baked into brand of the publication.

This all changed in the internet era. The collapse of print advertising decimated the industry. Publications became more incentivized to publish questionable reporting because clickbaity headlines brought more ad traffic. The Trump campaign was covered ad nauseum because having his name in a headline significantly increased traffic to an article, and thus revenue.

The online advertising model is fundamentally incompatible with the kind of journalism you're looking for, but we as a society are hooked on it because it means we don't have to pay for the content.

[+] fma|6 years ago|reply
I wonder if libraries can have some journalists on staff? Or a librarian that is part time librarian, part time journalist. As far as bias...it's hard to be unbias. Maybe there's some questionnaire that determines your bias, and libraries hire journalist that have different bias so they can keep each other in check. The funding would of course, but local taxes.
[+] bmmayer1|6 years ago|reply
What, exactly, is unbiased reporting?
[+] diminoten|6 years ago|reply
You need to give up on the government not being involved at all, because that's the only realistic way it'll ever happen.
[+] notatoad|6 years ago|reply
It's a problem that Facebook, Twitter, or YouTube could solve essentially overnight, if there was any motivation for them to do it. They are the media companies of our day, and they have the capital to hire local reporters in the 500-1000 largest metro areas in the us.
[+] zachware|6 years ago|reply
This is fundamentally a distribution problem. It's not dissimilar to retail or other industries with the design-produce-distribute-market chain.

A journalist (creator), produces a product (manufacturer), a newspaper/magazine distributed it (distribution) and a publisher creates the allure that makes you want to trust that brand (marketing). All that stuff was hard and expensive 15 years ago and consumers didn't have the tools to find the creator and the creator didn't have the tools to distribute.

A bunch of bundled industries are falling apart with the unbundling but in almost all cases there remains a creator that the mass population is now "capable" of finding. And the tools that allow for cheap distribution are basically free.

What's lacking is the arbitrage of the distribution platform's earning power to pay steady wages to journalists.

The worst thing that happened to journalism was no-paywall outlets. It convinced people that content is free. It's as if we buy toothpaste at CVS for $3 and on Amazon it's free just because it's on the internet. At a certain point you start to devalue ALL toothpaste rather than just devaluing crap toothpaste because Amazon makes it easier for you to buy toothpaste you like.

Today I can follow a journalist's work. I can follow a specific topic. But I have yet to figure out that doing that work costs money. So no matter the paywall model, it's gonne be hard for consumers to fund it.

[+] davidw|6 years ago|reply
> but in almost all cases there remains a creator that the mass population is now "capable" of finding.

I don't think that is true with local news.

At our city council meetings, you see two news outlets:

* The local paper had a reporter who would sit through the whole damn thing.

* The local TV news, who would show up, get some clips of the meeting, a few sound bites with different people, and then pack up and leave in order to get the segment produced for the 10 o'clock news.

Now, the paper is going through bankruptcy and the person doing the city council beat has left.

I'm not sure anyone will sit through the whole meeting to cover it all.

[+] jimrhods23|6 years ago|reply
It's interesting you brought this up, because it's the same thing that happened to the music industry with piracy. A decade of rampant piracy changed the mindset of the consumer to value music at $0.

Almost all of the musicians I know that were able to make a living without a major label, before 2000, all could no longer make a living. It really hurt the independent artist and only made musicians more reliant on big labels.

The same thing would have happened to the software, but many companies moved to SAAS.

[+] sytelus|6 years ago|reply
This oversimplifies the complex eco system that newspapers had. Content of a typical dozen page newspaper was headlines, minor news, infotainment, utility and ads. The minor news work by a journalist was heavily subsidized by other sections. In other words, a journalist sitting in city council meetings and doing reporting is unlikely to find revenue by himself to fund even meager life style. If newspapers were to completely fall apart, I would expect around 70% of journalists go extinct due to loss of ecosystem.
[+] sytelus|6 years ago|reply
Interestingly it’s not the readership that has plummeted but the ad revenue that has evaporated. https://www.journalism.org/fact-sheet/newspapers/

In other words, many newspapers still do get more or less same eyeballs as before but the price that advertisers are willing to pay for them has taken nose dive. So it’s not about circulation but ad revenue generated per subscriber.

[+] basetop|6 years ago|reply
"Same number of readers" is deceptive since the overall population has increased. In 1990 there were about 220 million people in the US. Today, there are 320 million.

So newspapers have a smaller market share and a much older demographics.

It's more than "ad revenue generated per subscriber", it's also operating cost to generate revenue. Most newspapers are unionized and salaries, benefits, costs, etc have increased while revenue stagnated. That's why newspapers have to constantly lay people off. If costs stayed stagnant along with revenue, then newspapers theoretically could be fine. But inflation doesn't allow that.

Due to legacy ( essentially what advertisers know and are comfortable with ), advertisers spend more for each pair of eyeballs on print, tv, etc. Since digital is new, advertisers spend less per pair of eyeballs. That's can't last forever as digital gets more established. It's why large newspapers are moving quickly onto social media and the internet. It's where eyeballs and ad spending is going to be.

Also, local and mid tier newspapers are facing digital headwinds as social media focuses on boosting "trusted authoritative sources". So the big boys - The NYTimes, WSJ, Bloomberg, etc are going to thrive as they eat the smaller newspapers' lunch with the help of google, facebook, apple, etc.

What we are seeing is a form of stealth media consolidation. Smaller newspapers are being bought up by larger newspapers. Sadly, it's happening in every industry. More consolidation, less competition.

[+] majani|6 years ago|reply
Yes. The problem is the internet has created advertising avenues that are way more efficient than any newspaper can hope to replicate. Only the most trusted newspapers that can turn to subscription and affiliate revenue will be able to survive.
[+] ravenstine|6 years ago|reply
I haven't seen anyone bring up changes in the average reader's lifestyle that could impact how often they read local newspapers. It seems commonly accepted that people have to pick up and move more often these days for career advancement. I know that myself and those in my circle of friends all end up moving every few years for career purposes. If people spend years or decades not settling down, how invested can they really get in the local news?
[+] _bxg1|6 years ago|reply
Journalism joins the list of domains that simply don't work as capitalistic institutions, alongside healthcare, education, higher-level academic research, and environmental stewardship. These things serve important public good but aren't sustainable by a consumer-based model. They have to have public funding.
[+] tumba|6 years ago|reply
Here is a relevant interview with journalist Steven Pearlstein in which he suggests that current conditions only support 7-9 global journalism outlets worldwide, with only 2 or so non-partisan and fact-based, mostly for the upper classes.

http://review.chicagobooth.edu/economics/2019/article/capita...

[+] majani|6 years ago|reply
Well those 7-9 outlets could enable porous paywalls that allow for shared links to be viewed for free.
[+] ww520|6 years ago|reply
Newspapers used to be the gateway of fast changing information. The Internet changes that completely. With so many different kinds and sources of news on the web, and with ever faster publishing speed, newspapers have lost their biggest moat. It's only a matter of time they will be gone.
[+] pravda|6 years ago|reply
> Newspapers used to be the gateway of fast changing information.

Wrong answer!

Here's the correct answer: Newspapers used to have a monopoly on advertising. They could extract enormous sums of money from advertisers due to this.

Most towns had a single newspaper, because the nature of the newspaper business generally led to a natural monopoly. Big cities had maybe had two or three newspapers.

Newspaper owners lost their monopoly. No more overpriced classifieds!

No more money gushing in!

[+] losteric|6 years ago|reply
Then why could papers coexist with radio and TV? Why are all three dying now?

The internet allows hyper-targetting individuals - that's why money flows to the web. Advertising efficiency.

Pace or quality of news was never a factor - hell, if you want quality traditional media's websites are still the go-to. Distribution is really the only eroded moat of value.

[+] chiefalchemist|6 years ago|reply
Less newspapers is a concern.

A bigger concern is the shameles willingness of video-based news media to publish anything in order to tickle more eyeballs.

Less sources of information is bad. Misinformation is worse.

[+] Joakal|6 years ago|reply
My favourite two ideas for the future.

Currently, most places, the news is funded by ads, subscriptions or gov funded agency. So this idea would replace above with voters. Done via a change to the government system to have two people in same seat; politician and shadow politician (SP). Both paid positions but SP wouldn't have any power.

Pros:

- SP doesn't need to go back to full time job and wait for next election cycle.

- SP will continue to represent the leftover voters and question the politician. (Its beyond me why election systems do not allow representation for miniority voters. Ie win with 51% of vote, 49% voters are NOT represented by anyone??)

- Not biased towards companies, ad revenue, subscriptions.

Cons:

- Need to pay SP.

- Biased to getting elected.

Second idea: government site where anyone with ID can post news.

Pros:

- Free for citizens.

- Ideally, government won't take dowm articles. Just because anyone can post, doesn't mean no consequences.

- Historical archive.

- Local news in one place.

Cons:

- Government need to pay for hosting and support.

- News Corp.

[+] dragonwriter|6 years ago|reply
> Its beyond me why election systems do not allow representation for miniority voters

Many election systems do. The systems used in the US and certain other poorly-representative democracies don't, and those states score poorly in terms of popular satisfaction with government compared to democracies with systems where minorities within constituencies aren't systematically excluded from representation by the structure of the electoral system.

[+] kristianc|6 years ago|reply
There probably is a future for high quality reporting like the FT, WaPo.

I’m probably more of a contrarian in that I think it’s no bad thing if ‘viewspapers’ which exist to make people mad, make false equivalencies and write ‘People are saying’ type stories go to the wall.

It turns out the direct link between a paying customer and the provider of news is actually an important one and that once you sever that link and treat the reader as ‘eyeballs’ the quality does suffer.

[+] ALittleLight|6 years ago|reply
I think the negative news is the only kind that will survive the digital era because it scales well. Not that many people care about local news, and so that will die out because it can't reach more than a small number of people.
[+] s_willster|6 years ago|reply
In San Jose we have a new non-profit news organization https://sanjosespotlight.com/ that is doing a great job covering local issues. The traditional newspaper in the area, The Mercury News, has been laying off reporters and no longer does much original reporting after being purchased by Alden Global Capital.
[+] bashwizard|6 years ago|reply
Who the hell under 50 reads newspapers these days? Of course they're "toast". If news sites are dying because of the ad decline, ad blockers and the unwillingness of paying for news digitally then how on earth are newspapers supposed to survive?
[+] scarejunba|6 years ago|reply
Online blinded-to-publisher exchange-based ads are the most democratic mode of news support. Having them be user-relevant instead of content-relevant allowed us to support content creators without doubling on the clickbait problem.

The death of online targeted ads is going to be sad for this. I can't think of a cheaper way to pay for stuff. It's the only way I was able to see so many incredible videos or pictures or articles.

My kids and I will be fine because I have money now but previous me would have trouble in the coming all-paywall universe. We're going to be better informed than anyone else and reinforce the positive feedback loop of wealth begetting wealth.

Good luck to everyone else.

[+] umeshunni|6 years ago|reply
> Online blinded-to-publisher exchange-based ads are the most democratic mode of news support.

The trouble with this model is that publishers like to have editorial rights over ads. A left-leaning publisher, for e.g, will want to be associated with ads for an oil company or to generalize, not publisher wants to be associated with any outrage-of-the-day brand.

[+] RickJWagner|6 years ago|reply
I'll miss papers.

I was a paperboy and have fond memories of it. I also like to read things on physical media.

On the upside, it's got to be good for the earth to not print papers every day then trash them immediately after.

[+] meruru|6 years ago|reply
They were replaced with batteries that need to be recharged everyday and get thrown out after a few years though.
[+] erfgh|6 years ago|reply
They're not trashed, they are recycled.
[+] douglaswlance|6 years ago|reply
Why do we need centralized dissemination of information? How does that benefit society? Top-down, command and control has always lead to non-optimal outcomes throughout history.

In the absence of centralized journalistic outlets, we could have open access to data/information and a reputation system that rewards objective, consistent analysis.

Let the old systems die, so new ones can be developed. We should stop subsidizing legacy systems.

[+] devit|6 years ago|reply
Why can't we have a "Spotify for newspapers"?
[+] droithomme|6 years ago|reply
The big papers post too much fake news. They have little legitimate value. This and not mass copyright infringement or a shift to watching vloggers and specialty social media groups regurgitate the days events is responsible for the decline. Legitimate honest journalism does not exist for the most part. People know when they are being lied to and do not take kindly to being played for fools. No one is going to pay to read Pravda except for laughs. Yes there are some exceptions that do real journalism. Some.