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Warren Buffett on newspapers [pdf]

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Re: Warren Buffett on newspapers [pdf]

#21

Post by lrs »

adestefan wrote: post #16
mfieldhouse wrote: post #2

I think in a way he's talking about newspapers getting back to their real roots as being genuine 'NEWS' papers. That's instead of the trashy gossip magazines that so many of them have turned in to.

Most local news is trashy gossip.

Not sure why you're getting downvoted here. Isn't this the same effect Buffett is talking about in the letter when he describes the local paper's advantage in coverage of "local sports?" People will pay to read about their kid's soccer goal; people will pay to peruse the list of people who got picked up for DUIs last week and look for anyone they know. Am I misunderstanding Buffett's position here?

Re: Warren Buffett on newspapers [pdf]

#22

Post by jasonlotito »

nodata wrote: post #17
adestefan wrote: post #13

Earlier quoted context omitted.

Why do you think a version delivered to your iPad should be cheaper than the print version? Do you not receive the same value in both cases?

How could you possibly believe all of the efficiency gains from having a digital supply-chain wouldn't lead to a cheaper product?

You consider the cost of printing and delivery to be much higher than it really is. You also ignore the elements of the newspaper that used to off-set various costs for you that are disappearing.

In essence, you were never paying for the news, and so unfortunately, you don't have a firm grasp of the true cost.

Re: Warren Buffett on newspapers [pdf]

#23

Post by eli »

nodata wrote: post #17
adestefan wrote: post #13

Earlier quoted context omitted.

Why do you think a version delivered to your iPad should be cheaper than the print version? Do you not receive the same value in both cases?

How could you possibly believe all of the efficiency gains from having a digital supply-chain wouldn't lead to a cheaper product?

Those gains are MORE than cancelled out by the miserable rates they are charging for digital ads versus print.

Thank about it: even if you read every page of the paper online every day for a month you wouldn't generate anywhere near $18 in revenue. Heck, you probably wouldn't generate that if you clicked on every ad.

It used to be that the cost of the paper roughly covered just the printing and distribution. All the money to actually pay reporters and editors and photographers came from the ads.

Re: Warren Buffett on newspapers [pdf]

#24

Post by muhfuhkuh »

tubbo wrote: post #14

"I have some strong political views, but Berkshire owns the paper - I don't." Why can't all CEOs think this way?

Buffett is notoriously liberal in both his political views and the way he runs Berkshire Hathaway. He's given alot of leeway to his direct reports (CEOs of the companies they own), not because he's some prescient slacker with a time machine, but because he invests and owns companies that

a) he can understand clearly the business model (i.e., few-to-no pure technology plays, no internet/social)

b) are profitable but maybe not growing gangbusters as time goes on (or because the particular industry is slow-growth)

It's a sound strategy. It won't get you big scores like investing in facebook (wokka-wokka!), but it just feels right and lends itself to safer returns. Messing with the flow like a corporate raider (a la Carl Icahn) is just not in Berkshire DNA.

Re: Warren Buffett on newspapers [pdf]

#25

Post by vailripper »

corry wrote: post #4

Interesting strategy. Focus on the only advantage local papers have -- the deep local connection -- and build the strategy around that. Might be a leaner newspaper with a smaller readership... but that will happen anyways. Coupling this 'deep local' focus with a better social media strategy could help them survive. If you become THE source for all local news + provide an easy way for things to be shared / discussed v…

The question I have is - with low readership numbers how do you support a news room that can provide in depth local coverage?

Re: Warren Buffett on newspapers [pdf]

#26

Post by watsix »

jasonlotito wrote: post #22
nodata wrote: post #17

Earlier quoted context omitted.

How could you possibly believe all of the efficiency gains from having a digital supply-chain wouldn't lead to a cheaper product?

You consider the cost of printing and delivery to be much higher than it really is. You also ignore the elements of the newspaper that used to off-set various costs for you that are disappearing. In essence, you were never paying for the news, and so unfortunately, you don't have a firm grasp of the true cost.

In essence, you were never paying for the news, and so unfortunately, you don't have a firm grasp of the true cost.

This is such a critical thing to understand. No one understands the true cost, because no one has ever paid for the news, it's always been advertisers. And now, for whatever reasons, advertisers don't want to pay for the digital equivalent, and they don't seem to be coming around.

This correlates to brandnewlow's comment above as well. It would be fascinating to see a news source that was paid for entirely by customers and thus not beholden to advertisers--something like HBO. But it would very hard to sell such a thing, because $15-$30/month for news, historically speaking, seems insanely high.

Re: Warren Buffett on newspapers [pdf]

#27

Post by jallmann »

muhfuhkuh wrote: post #24
tubbo wrote: post #14

"I have some strong political views, but Berkshire owns the paper - I don't." Why can't all CEOs think this way?

Buffett is notoriously liberal in both his political views and the way he runs Berkshire Hathaway. He's given alot of leeway to his direct reports (CEOs of the companies they own), not because he's some prescient slacker with a time machine, but because he invests and owns companies that a) he can understand clearly the business model (i.e., few-to-no pure technology plays, no internet/social) b) are profitable but m…

Above all, Buffett invests in companies that have a solid management team in place. Otherwise his hands-off approach would never work.

Re: Warren Buffett on newspapers [pdf]

#28

Post by VonGuard »

loumf wrote: post #10

Although he doesn't mention it here, Berkshire also owns about 18% of the Washington Post: http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshi... Not sure if this is related at all, but Adrian Holovaty (co-creator of Django, founder of EveryBlock) also worked at the Washington Post -- he has been a big proponent of the hyper-local strategy for Newspapers (the original reason why Django was developed). Probab…

Yer absolutely right. Hyper local is the only way to win as a newspaper. Sure, you can just reprint the AP stories on the big international news of each day, but a better tactic is to post pictures of locals on the front page, and to let them voice their opinions in the op-eds and column sections.

An Ohio paper did this just right a number of years ago, though I forget which city it was. It wasn't the Cox News towns, so not Dayton...

Anyway, this local Ohio paper's tactic was to replace its business section with a "Mothers" section, with info for local mothers, like day-care news, preschool listings, parenting tips, and info on places to take toddlers during the day. It worked extremely well, and the paper then opened an online forum for these Mothers, who then became the most common users of their Website.

I'm a journalist, as some of you may know. The thing that really makes a printed outlet work is its readers. They should be able to be a community, in the physical sense, rather than the social network sense. It's tough for magazines to make meatspace reader conncetions, as they are national. But local newspapers, they're a perfect place to build local communities.

Re: Warren Buffett on newspapers [pdf]

#29

Post by makomk »

brandnewlow wrote: post #20
bradfa wrote: post #12

Our Rochester, NY USA paper just raised rates 50% for subscribers and are backing that with an online version of the paper that looks exactly like the print version. I canceled my subscription. I want local news. I want to pay a reasonable rate (was $12 / month for 5 day delivery, now $18 / month). I don't care for an online version that looks just like the printed paper. I would sign up for a reduced (like $6 / mont…

Just want to point out how insane is is that none of us would price even the most basic SaaS product at less than $30/month, but people balk at paying $18/month to have a professionally edited newspaper printed and DELIVERED TO THEIR DOOR. Newspapers are so hosed.

SaaS products have support costs. Newspapers are media - they're produced, replicated a bunch of times, then consumed.

Re: Warren Buffett on newspapers [pdf]

#30

Post by greedo »

digitalengineer wrote: post #9
mfieldhouse wrote: post #2

I think in a way he's talking about newspapers getting back to their real roots as being genuine 'NEWS' papers. That's instead of the trashy gossip magazines that so many of them have turned in to.

I think he feels newspapers should return to their original function of writing their own (local) news and doing their own investigations. NOT 'copy/paste' all the Reuters-news. We've got the web for that kind of news.

The problem is that the cost of generating and distributing that local news is not sustainable in the face of internet technologies.

Witness this: I'm at a graduation celebration in Wisconsin this weekend, and all the parents attending throughout the day are very involved in student athletics. One of the kids was running in a track competition out of town with the rest of the school. The results were texted immediately throughout this small town. Another parent was tweeting the play by play of the track meet.

These are tech savvy 40 year olds, completely bypassing the print world. What can print offer them? Maybe a pic or two? They've got those instantly via FB. If this crowd is doing it, it's over for print papers.

And since online papers either need a paywall or higher revenue for ads, they just can't compete.

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