A strongly-worded column by venture capitalist Marc Andreessen triggered an intense debate on the future of news. Andreessen might be right places, but his views can also be dangerously simplistic. 

For starters, it is always great to have an outsider’s view. Marc Andreessen’s witty, and fast-paced dithyramb on the future of news is undoubtedly welcome. But, as always, regardless of the depth and breath of the big picture he paints, the devil lies in the details. In no particular order, here are my thoughts on his manifesto.

As a European, I found his piece extraordinary US-centric or, slightly more broadly, Anglophone-centric.

Andreessen wrote :

[T]he market size is dramatically expanding—many more people consume news now vs. 10 or 20 years ago. Many more still will consume news in the next 10 to 20 years. Volume is being driven up, and that is a big, big deal.
Right now everyone is obsessed with slumping prices, but ultimately, the most important dynamic is No. 3 – increasing volume. Here’s why: Market size equals destiny. The big opportunity for the news industry in the next five to 10 years is to increase its market size 100x AND drop prices 10X. Become larger and much more important in the process.

By saying this, Andreessen makes two good faith mistakes.

First, he mixes up global reach and monetizable audience. Evidently, a growing number of people will enjoy access to news (maybe not all the 5 billion cellphone users he mentions), but the proportion of those able to generate a measurable ARPU is likely to be very small.

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.

And the huge, globalized English speaking market does not warrant financial success. The Guardian is one such example. It operates one of the finest digital news system in the world but keeps bleeding money. The Guardian brings a mere $60m in digital ad revenue per year — to be compared to a kitten-rigged, listicles-saturated aggregator generating a multiple of this amount. Journalism has become almost impossible to monetize by itself (I’ll come back to that topic).

Andreessen also vastly underestimates the cost of good journalism when he writes:

[T]he total global expense budget of all investigative journalism is tiny —  in the neighborhood of tens of millions of dollars annually.”

Fact is, journalism is inherently expensive because it is by laborious and unpredictable: An investigation can take months, and yield nothing; or the journalistic outcome can be great, lifting the reputation of the media, but with zero impact on the revenue side (no identifiable growth in subscriptions or advertising). The same goes for ambitious coverage of people or events. No one has ever translated a Pulitzer Prize in hard dollars.

This is also the case for what Andreessen calls the “Baghdad Bureau problem”. It was said to cost $3m/year for the New York Times. In fact, on an annual basis, the Times spends about $200m for its news operations, including $70m for foreign coverage alone. The NYT is likely to stay afloat when it goes entirely digital (which might happen before the end of the decade), but one of the nastiest features of digital news is the unforgiving Winner Takes All mechanism.

As far as philanthropy is considered, I won’t spend too much time on the issue except to say this: Relying on philanthropy to cure malaria or to support ill-understood artists bears witness to an absence of sustainable economic system. (Until, perhaps, the artist dies; as for malaria, there is indeed a very long term benefit for society, but not for those who supply the treatment, hence the mandatory call to generosity.) Saying investigative or public-interest journalism could/should rely on philanthropy is the same as admitting it’s economically unsustainable. Luckily, American society has produced scores of philanthropists free from any agenda (political, ideological, religious) — such as the Sandler Foundation with ProPublica. That’s not the case in France — not to mention Russia and many other countries.

There are plenty of areas in which I completely support Marc Andreessen’s view. For example: A media company “should be run like a business“, i.e. seek the profitability that will warrant its independence (from every economic agent: shareholders, advertisers, political pressure, etc.) This brings us to the size and shape of a modern news factory (I use the term on purpose). We have to deal with an unpleasant reality: Good journalism is no longer sustainable as a standalone activity. But — and that’s the good news — it remains the best and indispensable core around which to develop multiple activities (see my recent column about The News Media Revenue Matrix).You can’t develop services, conferences, publishing, etc. around a depreciated journalistic asset. On the other hand, this asset has to be drastically streamlined: In many cases, less people, better-paid (simply for the ability to retain talent) and with sufficient means to do their job (don’t go for the press junkets because the travel budget has been slashed, you’ll lose on three counts: credibility of your brand, self-esteem of your team, quality of the reporting.)

Unfortunately, as Andreessen noted, there are plenty of hurdles to overcome. In fact, most existing news companies do not fathom the depth of the transformation required to survive and thrive. Nor do they understand the urgency to set this massive overhaul in motion. Such moves require strength, strong leadership, creativity, a fresh approach, unabated confidence, and a systemic vision — all of the above in short supply at legacy media. Note that when Marc Andreessen prides himself to be an investor in media ventures (for instance Business Insider– no conflict of interest), all are digital natives and bear none of the burdens of traditional media. His bullishness on news is selective, personal.

frederic.filloux@mondaynote.com

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