Why Buffett Is Wrong On Newspapers And The Internet

Warren Buffett’s remarks on CNBC about newspapers and the Internet have been getting a lot of attention today. Since he’s rich and powerful, any utterance of his tends to carry a lot of weight. Too bad he seems to be so far off base on this.

First, here’s what Buffett said:

IF MR GUTTENBERG HAD COME UP WITH THE INTERNET INSTEAD OF MOVABLE TYPE BACK IN THE LATE 15TH CENTURY AND FOR 400 YEARS WE HAD USED THE INTERNET FOR NEWS AND ALL TYPES OF ENTERTAINMENT AND ALL KINDS OF EVERYTHING ELSE AND I CAME ALONG ONE DAY AND SAID I HAVE GOT THIS WONDERFUL IDEA WE ARE GOING TO CHOP DOWN SOME TREES UP IN CANADA AND SHIP THEM TO A PAPER MILL WHICH WILL COST US A FORTUNE TO RUN THROUGH AND DELIVER NEWSPRINT AND THEN WE’LL SHIP THAT DOWN TO SOME NEWSPAPER AND WE’LL HAVE A WHOLE BUNCH
OF PEOPLE STAYING UP ALL NIGHT WRITING UP THINGS AND THEN WE’LL SEND A
BUNCH OF KIDS OUT THE NEXT DAY ALL OVER TOWN DELIVERING THIS THING AND
WE ARE GOING TO REALLY WIPE OUT THE INTERNET WITH THIS IT AIN’T GOING TO
HAPPEN.

Just about everything in that statement is nonsense. First, it fails to recognize that millions of people actually want a printed product, and in fact, prefer it. And more than that, they’re willing to pay for it, probably a lot more than what newspapers charge. I’m working a longer post to elaborate on why that it is, and why we seem to have forgotten that. But many folks still prefer the passive experience, and prefer to consume their news and information in that format. Why is that so terrible? Yes, the economics need to change. But even if you had the Internet all those years, it might indeed be plausible that if you came along and offered consumers a different experience that some of them enjoyed and preferred, they might in fact be willing to switch.

Second, when Guttenberg invented movable type, he also came up with a way to make money from it. Content companies of all sorts, not just newspapers, have failed to do that on the Internet. And by the looks of the things, the economics of the online model is deteriorating, too, as companies grapple with the fact that online ads are terrible and companies are not finding the to be as effective as once thought. Even Google is seeing the amount advertisers are willing to pay per ad on the decline. So what exactly is the rush to go online only when that side of things doesn’t seem to be working either?

Finally, the CEO of Berkshire Hathaway owns a newspaper, The Buffalo News. If he really believes print is dead, and newspapers should go online only, then let’s see him put his money where his mouth is. Turn off Buffalo’s presses and show us all how to run a profitable, online only news organization.

Before he does that, though, he might want to check in with his editor in Buffalo, Margaret Sullivan, who says things aren’t so bad there. And she’s recently convened a “Reinventing The Newsroom” committee to help move things forward. Buffett could learn a few things from her.

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One Response

  1. Malcolm Gladwell, author of the Tipping Point, had the opposite point at the NAB a few weeks ago:http://www.youtube.com/watch?v=fusj2d-k-1Q

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