A few months ago, Marc Andreesson wrote that he expects demand for news content will grow 10- to 100-fold over the next two decades. He went on to claim that demand for news is already outstripping supply, a point of view not typically expressed inside established newspapers.
Of course, Andreessen isn’t making the case for increased demand for traditional products. His benchmarks are digital, driven by three interwoven trends (presented here verbatim):
- Distribution is going from locked down to completely open, anyone can create and distribute. There is no monetary premium for control of distribution.
- Formerly separate industries are colliding on the Internet. It’s newspaper vs. magazine vs. broadcast TV vs. cable TV vs. wire service. Now they all compete. Both No. 1 and No. 2 drive prices down.
- At the same time, the 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.
How do we know that the market size is expanding? Andreesen uses projections for the number of cellphones in use in 2020 (5 billion) to argue that “[t]he 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.”
Andreesson provides a useful framework for thinking through new publishing investments: “[E]xpect the big winners in the news business to either be the broadest or the deepest: To go maximum mass, or maximum specific.” His investments in Talking Points Memo, Business Insider and PandoDaily all fall in the second bucket.
The distinction between mass and targeted echoes a theme teased out in “Disaggregating supply“, a talk I gave at the Publishers Forum in 2013. There, I argued that “the web isn’t a community of millions; it’s millions of communities”. Effectively serving those communities has become possible through the use of the web.
There are ways that publishers can take advantage of the web as a platform to collaborate with creators and consumers, but almost all of those options challenge traditional publishing models. This is true for more than just newspapers. As Andreesson argues, other forms of published content (I would include magazines and most book content) are “colliding” on the web.
When it comes to publishing investments, I think the opportunity is not hidden in the existing supply chain. Consolidation at any level – publishing mergers, for example – works only to the extent that it increases a firm’s ability to reach and serve global communities.
Rather than think of ways to make modest gains in efficiency or margin, publishers should challenge themselves to take advantage of what could be significant or even exponential market growth. It’s hard for established businesses to assume growth, but doing so opens up new ideas for creation and delivery of content as a service.
It also competes effectively against the kinds of investors who value traditional publishers for their cash flow. Those buyers tend to be in the liquidation business.
