The internet killed newspapers. Everyone seems to agree on that.
Well almost everybody.
Not Warren Buffett who is generally accepted as the smartest value investor in history. He has recently bought more than two dozen local newspapers.
Not Jeff Bezos, a man so visionary he was pilloried by most for his strategic vision for Amazon only to be very right. Bezos is so visionary he the funder of his own personal space program. He has bought the Washington Post.
Then there is John Henry, hedge fund guy and owner of legendary soccer team Liverpool, now the proud Citizen Kane to the Boston Globe.
What is going on? What is the “newspapers are doomed” crowd missing.
The easy explanation is that newspapers are trophy assets. If you think the above would splash their cash for this reason then there is no need to look further.
However it might just be that these smart guys see something else.
Firstly newspapers are not dying, they are being killed.
They are being killed by google which is sucking the advertising blood from them, scraping their content and redirecting their readership. Google has torn their business model to shreds Granted the web is hurting them too, but with Google stranglehold on the web you can personify it.
You can throw up a paywall and die or you can stay free to air and die.
That $50 billion of ad sales at Google is coming out someone’s hide and you can tell who it is by watching the ad based media buckling at the knees.
But the web isn’t the be all and end all of the internet anymore.
As desktops web starts to ebb, so the other platforms start to ascend.
Mobile, be it phone, tablet or kindle-esque style platforms are not WWW dominated. They are not creatures of the Google monopoly. They are closed and semi-closed environments where content may not be King but at least isn’t a war torn pillaged peasant.
Newspapers are content, plus media, plus distribution.
Without the natural lock-in of print and distribution newspaper content is like beached whale at the mercy of an unfriendly environment. Put them back behind a wall garden and suddenly they are titans again.
On the web, pay walls are ugly. Most people don’t like to use their plastic online. However they have no such issue with the pay ecosystems of platforms like iphone/ipad, kindle or even their mobile.
Meanwhile the Kindle has blown paper books out of the water. People will pay for text online, so long as the environment is conducive. People actually prefer digital books to paper ones.
The same will go for newspapers.
So its not a surprise the Jeff Bezos is bidding.
As Google drains the revenue lake of the web and mobile devices deliver ever growing global markets for digital content on a fair commercial basis, so the content model will naturally shift.
Right now that’s on iTunes and Kindle with more such eco-systems to follow.
With that shift, newspapers no longer look like obsolete dead tree sellers, but tomorrows providers of high quality, branded content.
When you see smart people doing something you think is stupid, it is time to re-evaluate your assumptions.