We have all more or less resigned ourselves to the eventual demise of the sold newspaper. C’mon, admit it. Because nobody sees a future for news being delivered the following day using an inefficient, expensive delivery system. Really, how can there be a business in asking consumers to pay for something they can get for free?
It just doesn’t make sense. The medium has been decimated by the loss of revenue from not only traditional ads, but also financial notices and classifieds. In 2000, the classified revenue of newspapers in the United States was $20 billion. Today, Craigslist (an international local classified ads online forum) on its own takes $16 billion. The infrastructure it needs? Just 35 people who run a classified ad service for more than 300 cities. Beat that!
And at the forefront of the technology that is sinking the presses? Companies like Google and Amazon. But out of the blue, Amazon’s founder Jeff Bezos decides to buy one of the icons of the medium he is burying, the Washington Post. True, it cost him a pittance – it’s estimated the cost represented around 1% of his personal wealth. But to buy a company that is diametrically opposed to the way you do business – a model that delivers goods to the consumer faster, quicker, cheaper, with unlimited choice and more efficiently – seems nonsensical.
No-one has found the silver bullet to save the newspaper Titanic yet. And while Amazon has found the technology solution for a whole new retail platform, I’m not sure a website or app, no matter what the innovation, will rescue the Washington Post, much less the entire newspaper industry. But one has to do a double take when you read that the Boston Globe too has been sold. John Henry, the buyer, also owns Liverpool Football Club and the Boston Red Socks baseball team… go figure. He made his fortune as an investment advisor whose system was mechanised, eliminating all human emotion. Cool. Obviously he would apply an incredibly objective set of criteria to his own investment strategy. Which means he’s certainly seeing something we can’t in the future of the newspapers at large, and the Boston Globe in particular.
And last year Warren Buffett bought 28 daily newspapers for $344 million.
So we have three billionaires buying iconic newspapers. Three incredibly, astute, successful businessmen. One has to ask: Why? Where do they see the green, the profit, the return on investment coming from? It takes a brave person to invest in newspapers, no matter what the masthead reads. Never mind in a first world, cutting-edge, early technology adopting society like the US. But something’s afoot. If they have the faith they seemingly are showing, will newspapers rise again like Lazarus? Or maybe, given the fact that in billionaire terms the investment by these three individuals was chump change, is this just ego fulfilment for three people who have it all already? You decide.
However, my discomfort with my preconception that all is lost for sold newspapers was further tested just this morning. How? Well, if the internet is the new way of getting your daily dose of news, then a local news website network, providing local news, events and sports reporting, sounds like a winner if you have the capital to establish it. And surely AOL has the resources? In 2009, AOL acquired the network of local news sites called Patch. They invested hundreds of millions of dollars in Patch. In 2010, AOL expected to be the largest hirer of full-time journalists in the US. The network quickly spread through 23 states and set up 900 local websites. Surely they could pick up a nice slice of the $132 billion local advertising pie in the US?
Well, no story-book ending. Patch has just laid off around half its staff, and reports say it will be closing 300 to 400 of its sites. Plus to rub salt in the wounds, the CEO fired the creative director publicly in front of 1 000 co-workers.
Conclusion? Just when I thought I had the answer as to where the media world is going, everything gets turned upside down. Those ventures that seem to be reaching their sell-by date are snapped up, and the no-brainers that had success written all over them are in heaps of trouble. Maybe Oscar Wilde was right when he said: “Every saint has a past and every sinner has a future.”