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

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