Blog Post

Marc Andreessen talks about the evolution of the news business and why he is optimistic

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Everyone seems to have an opinion about what’s wrong with the news business — whether it’s the best of times or the worst of times for journalism, whether paywalls are the answer, and so on — and that includes high-profile venture investor Marc Andreessen, who unloaded some of his thoughts on Twitter on Wednesday. While Andreessen isn’t actually involved in the media industry directly, he had some interesting thoughts about it, so I collected some of them here (there’s also a Storify collection that includes these and others).

Andreessen started by saying that he’s more optimistic about the future of the news industry than anyone he knows, and that he expects it to grow dramatically over the next couple of decades. Then, he launched into a series of tweets about how the journalism business is being disrupted by its transformation from a series of monopolies or oligarchies into a much more open and competitive market.

On this, Andreessen is right on the money: in the good old days of “mass media” — which at least some people believe was a historical anomaly, based on demographics and the lack of a cheap distribution technology like the internet — newspapers and TV stations were effectively monopolies, with control over the channels of distribution. That in turn gave them the ability to limit the amount of content that users got, and also made them a preferred avenue for advertising. But all that has changed, as Andreessen noted.

The first and second of these factors drive prices down, Andreessen argued, while the third drives the potential addressable market for news up — and while most people in the industry are focused on the decline in prices and the increase in competition, Andreessen said they should be more focused on the third factor. Even if costs can’t be cut by as much as they seem to require given lower revenues, he said, the massive expansion in the potential market should make up for that.

After a number of commenters asked what this might mean for local news, since the market for it is restricted geographically much more than national or international news, Andreessen said that he didn’t think there was ever much of a market for local news, but this was disguised by the ability of local newspapers to make money from classified ads, real estate, Sunday grocery fliers and other methods. Most people, he said, just weren’t that interested in local news — something that the failure of AOL’s Patch seems to help support.

When it comes to investigative or other forms of journalism, Andreessen said that in the grand scheme of things the cost of that kind of resource isn’t very large at all — perhaps only $20 million a year or so in total in the U.S. — and that this could easily be supported by philanthropism of the kind that supports ProPublica, along with crowdfunding and other methods of revenue generation. Andreessen said this would also serve to tie the fortunes of a media outlet directly to their readers.

In other comments during the same discussion, Andreessen said that he doesn’t think paywalls are going to work for many media companies, because they “penalize most loyal customers” and are therefore very tricky — another point I think he is correct on. However, he said charging for access to specific targeted information such as business news, the way the Wall Street Journal and newer ventures like Jessica Lessin’s The Information do, makes a lot of sense (Andreessen said he is a big fan of The Information).

Andreessen also said that he believes the online advertising industry and the media industry have both pushed that business down to the lowest common denominator, and argued that it should be possible to come up with premium advertising that would help pay the bills for content businesses — something that outlets like Vox are also betting (or hoping) will be the case. The biggest problem with many media companies, he suggested, was that they blame their customers for not wanting to buy, instead of blaming what they are selling.

Post and thumbnail photo courtesy of All Things D

6 Responses to “Marc Andreessen talks about the evolution of the news business and why he is optimistic”

  1. Trace Cohen

    I totally agree with him. There are big opportunities in the news business and not just in the tech/business world that we live in. Think of all the other industries in the b2b space that are hurting because of this disintermediation and ease of access by anyone with a computer. “News” is a general term that means different things too different people, but they DO want to know “what’s new” in their world, so find a way to deliver that.

  2. Scott Brodbeck

    Andreessen is off here. Local news will be the better market to be in.

    It’s hard to gain a competitive advantage in national news, thanks to programmatic advertising resulting in everybody pretty much getting the same ads and rates. It’s driving national online publishers toward near-perfect competition. Yes there are premium ads (Vox) and sponsored content (BuzzFeed) but that requires massive scale to make it work for advertisers, and that’s only going to get harder to achieve as more and more competition floods in.

    In local, SMBs are not making programmatic buys. Nor does programmatic really make sense for them. So they’re often still stuck advertising in local weeklies and in anachronisms like the Yellow Pages. And yes, many existing local news outlets are technologically-deficient and stuck in an “eat your spinach” mentality. Which is part of the opportunity for new players. For those who can attract a substantial online readership through smart, interesting, engaging local content (yes, it’s possible) that means an amazing opportunity to step in and provide advertising that reaches more people for less money than print. And, once you succeed in that, there are all sorts of possibilities for other services you can provide, leveraging your salesforce and client relationships.

    As a bonus, Patch’s poor execution and spectacular failure is keeping most large players out of the local market.

  3. Chris McCoy

    Good crowdfunding and interest graph chats here:

    Also, people care deeply about local sports–not local school board meetings.

    The sports-section drives 50% plus page views in most local and regional daily’s.

    Marc and most of tech it seems don’t really get this.

    Sports isn’t a vertical.

    It’s a platform that connects to other interests.

    Only in Silicon Valley is tech news > sports news.