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Is Marc Andreessen right about what is holding the media industry back? Mostly, yes

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Venture investor Marc Andreessen of Andreessen Horowitz doesn’t have many media investments, apart from small stakes in sites like Pando Daily, Talking Points Memo and RapGenius — but that hasn’t stopped him from holding forth on Twitter about his views on the industry, a process that includes an often passionate back-and-forth with critics of his views. In the latest instalment of this manifesto, Andreessen looked at what he believes is holding the existing media industry back.

In the first part of the series, the former Netscape Communications co-founder talked about why he is fundamentally optimistic about the future of journalism (although perhaps not the future of traditional media entities). In the second part he talked about ways that new media entities can make money online, and in the third he gave some examples of companies that he thinks are doing it well — including VICE Media, The Atlantic and Wirecutter.

Bloated cost structure

On Tuesday, Andreessen listed off some of the reasons why he thinks most traditional media companies have not been able to make the transition from print to digital, or at least not as smoothly as they might have. First on the list: “Bloated cost structure left over from monopoly/oligopoly days. Nobody promised shiny HQ tower, big expense accounts, lots of secretaries!”

Judge’s ruling: This one might seem a little unfair, since hardly anyone has a shiny headquarters (most have sold them and moved to much less impressive digs) or lots of secretaries. But the part about a bloated cost structure is arguably still true, even after waves of layoffs — and a big part of that cost structure is things like pensions, which Andreessen mentions in his next post:

Staying married to objectivity

Next, Andreessen mentions the principle of objectivity, which he says is “still relevant for some, but broad journalism opportunity includes many variations of subjectivity.” In the days before World War II, Andreessen argues, subjectivity was the dominant model for newspapers — as he describes it, “lots of points of view battling it out in marketplace of ideas.” Objectivity as a guiding principle for all media, he argues, was “an artifact of new monopoly/oligopoly structures; necessary to ward off antitrust; embraced by reporters.”

The VC added in follow-up tweets that “many stories don’t have two sides; describing with point of view can even be better” — a comment that echoes journalism professor Jay Rosen’s repeated criticism of false balance, or what he calls The View From Nowhere. David Weinberger of Harvard’s Berkman Center for Internet and Society has argued that “transparency is the new objectivity.”

Judge’s ruling: Andreessen is right when he says that objectivity, often held up as an inviolable tenet of journalism, is a relatively recent invention. Early newspapers were incredibly lop-sided in their political and social viewpoints, since many of them were owned by rich proprietors who had an agenda they wanted to promote. The risk, of course, is that not everyone will read every perspective, which could leave some with a distorted picture.

The Chinese wall and too much defense

Next, Andreessen mentions the “Chinese wall” that many media entities maintain between the business side and the editorial side. This approach is flawed, he says: “No other non-monopoly industry lets product creators off the hook on how the business works.” Many businesses, Andreessen argues, manage to balance incentives and conflicts and can still “hold the line on quality.”

The venture capitalist then accuses media outlets of spending most of their time and effort on “playing defense and protecting the old” as opposed to a strong offense or inventing the future. In the long run, he says, this approach leads to almost certain doom. Even newspapers that are now making a go of things in digital “would be much better off today if [they] had shifted resources/focus harder/sooner,” Andreessen says.

Judge’s ruling: The division between business and editorial did serve a purpose in the old days of newspapers, in order to prevent the desires of advertisers infecting the purity of the journalism. But Andreessen is right that Chinese walls are expensive. As for his point about newspapers playing too much defense and not enough offense, he is 100 percent correct on that one, as Digital First Media CEO John Paton would no doubt agree.

Too much competition?

His final point is that the industry in North America at least suffers from an excess of competition, in the sense that too many general news organizations — from newspapers to TV networks — are chasing the same market. More than 15 full-scale national news entities in the U.S., he says, along with international players, “consolidation [is] required.”

Judge’s ruling: Andreessen has a point that there are a lot of national and international news entities chasing the same group of readers or viewers — and there are a lot of new online startups entering the field as well. But would it be any better if those groups were consolidated so that one or two owners controlled TV networks and newspapers and radio stations, and their online equivalents? This is one area where I’m not convinced. What’s wrong with competition?

In his last point, which requires no judging, Andreessen notes that these are all “business challenges/opportunities that can be rethought, addressed, fixed” if the industry wants to and puts its collective mind to it. And he closes with a quote from legendary baseball manager Tommy Lasorda: “Nobody said this f***ing job would be all that f***ing easy.” But even though it is hard, the Netscape founder said, “it can be done, and it is worth doing.” Amen to that, sir.

Post and thumbnail images courtesy of All Things Digital

14 Responses to “Is Marc Andreessen right about what is holding the media industry back? Mostly, yes”

  1. freemiumJoe

    BTW, the successful internet news entities are mostly aggregators – you have to understand something about aggregators.

    They only report other news organizations hyperlinks and steal headlines, they don’t actually put feet on the pavement and go get any news.

    They are all show and no-go.

    They don’t break news that wasn’t on the wires or legacy news outlets.

    So, they don’t do news, they just copy what’s out there.

    So, I’m tired of hearing the musings of Mr. Andresson. He should go write some code and links – and stick to what he’s really good at.

  2. I think the Chinese wall is absolutely essential.

    The problem with corporate ownership in journalism is that the profit motive encourages news organizations to cut costs (stories about celebrities and soft news is cheap to produce), focus excessively on market demand (celebrities and soft news — advertisers and consumers both love them) and stay away from breaking stories that cast their corporate owners in a bad light or prevent their other businesses from making money (i.e. make nice to people in power in Washington and corporate America).

  3. Alton Drew

    I like Mr. Andreesen’s point about too many competitors in the general news space. Compounding that between 7am and midnight all these competitors are repeating the same story they broke at 6:30 am. That’s why its okay to move away from objective reporting to subjective or opinionated reporting. That’s the way to stand out from the competition.

    • @Alton, that was my thought — repetition of the same story, with little or no new insight, doesn’t equate to meaningful competition.

      As an example, let’s consider GigaOm content — what percentage of the stories are uniquely insightful (with perspective you won’t find somewhere else)? Do advertiser-supported publications have an obligation to produce mostly meaningful and substantive stories?

  4. freemiumJoe

    When internet browsing levels out in a few years, many of the money-losing internet startups in news will be shut down. This may include the internet dabbling of some of the legacy media giants.

    If you can’t make a buck in it when the “easy” internet money is being made, how would it ever make money after browsing levels out?

    He’s right about consolidation, but I think it really happens first, on the internet side, as more dominoes fall there, very quickly. After that dust settles, then let’s see who buys up any of the real internet-news properties, if there are any.

  5. Greg Satell

    Just one point about the Chinese wall: In addition to preventing product people from learning about the business, it also prevents business side people from learning about the product, which might be even worse.

    I spent 15 years working overseas and was shocked when I came back and realized how little publishers actually new about publishing. I think at this point,product people have a much better idea about the business side than business side people understand the product side (speaking as a business side person).

  6. I’d be for a model that awarded equity based on how well an employee performed for an organization. The equity model is just better because you’d reward great work and you could send the message to mediocre workers that they’d need to leave, kick it up a notch, or just stay as they were…with less equity.
    I’d like to see more earned equity in companies. That would also allow for better pensions for better workers. The union model worked once but it’s past its effective time. And the burdens that the union imposes on today? It’s not workable…and threatens the future and all of the employees that would like to stay employed TODAY.

    • No need to give away equity to promote the best ones: just raise salary.

      Problem is how to pick best ones? Sure there are obvious choices, like CEO had to have far greater compensation then average Joe. And anyone who is really good have to be promoted to management positions/higher income ones. But organization have to do a tough job of picking good/most useful guys and getting rid of ballast that do not help company to earn $$$.

    • Not sure how this would actually work in practice.

      First, no one makes any money from equity except investors like Andreessen, founders, and executives. Facebook and Google IPOs and the like are 1 in a million shots. You’re better off playing the lotto. So this is really a stealth paycut, just as it is at tech startups.

      Second, I don’t know what a “better” worker or journalist is. I would suggest that Glenn Greenwald is a better journalist than many of his colleagues, but I really don’t know. Does “better” mean he makes more money for the company, break more stories, lift the reputation of the organization, write more stories, get more traffic? No idea.

      Third, the only reason the union model is “unworkable” is because a bunch of executives mismanaged their news companies, failed to prepare them for the digital age, paid themselves too much, and then made their employees take the pay cut or a hike when things went south instead of themselves.

  7. Jean-Claude Goldenstein

    Thanks Matt I also read with interest your jan 9
    “love the stream but would need more filters” so I’d welcome your feedback about our

    Our attempt at personalized filters of the real time “collective mind”/neutrality. No legacy, HQ or secretaries and lots of snow today so we also managed to develop :-)

    JC Goldenstein Founder