

Warren Buffett on newspapers [pdf] - ValentineC
http://online.wsj.com/public/resources/documents/LettertoPublisherandEditors.pdf

======
bradfa
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 / month)
version delivered to my iPad (or similar) that just had the local stuff (no
AP, stocks outside upstate NY, no national sports, etc) because I do care
about what's going on locally. I get the national stuff for free online lots
of places, I can't get the local stuff easily.

Buffett seems to agree with my take, it'll be interesting to see where
Birkshire takes their papers wrt the internet.

~~~
brandnewlow
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.

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

~~~
brandnewlow
Ever received a letter to the editor? Legal threat from a story you published?
Had someone get fired over a piece you wrote and had to deal with the guy's
family having to sell their house. These are extreme examples, but newspapers
have support costs, too.

~~~
horsehead
As a reporter! These are all VERY real considerations, and very very VERY
common. i wrote stories that contributed to a few local elected officials
getting the boot. I've had people threaten legal action on my stories too.
There are lots of things most people never see/think about concerning
journalism. (edit: while there are some reporters who are assholes and who
relish getting people fired, most decent ones agonize over whether they are
reporting accurately and fairly. Such was the case with Woodward and
Bernstein).

Also, the local news thing Buffett talks about is so true. Why would you run
national news in a local paper people are buying when folks can get it free
from CNN ? or a blog?

I think there's a healthy mix that hasn't really been found yet. The NYT has a
decent model of 10 articles a month that seems to have been working well so
far. I also _really_ like the thing that that foreign company "Piano" is doing
(I had a very similar idea. It's like cable subscriptions but for newspapers).

I'm not ready to say newspapers are dead yet, but they're mighty close,
especially if they don't come up with a new business model. =\

------
loumf
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...](http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway)

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).

Probably a coincidence, but maybe there's some latent hyper-local vibe in the
halls of the Washington Post.

~~~
VonGuard
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.

~~~
loumf
In "Made to Stick", they profile a newspaper called "The Daily Record" in
Dunn, North Carolina. Their penetration into their local area is 112%. Quote
from the owner:

"The fact is, a local newspaper can never get enough local names. I'd happily
hire two more typesetters and add two more pages in every edition of each
paper if we had the names to fill them up."

Look at the front page

<http://www.mydailyrecord.com>

All local stories (and a pay wall -- perhaps the future of Berkshire owned
papers)

------
mfieldhouse
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.

~~~
digitalengineer
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.

~~~
greedo
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.

~~~
adestefan
You were witnessing the people who are directly connected to the event, either
through a member of the team or through the school. What about the other 500,
5,000, or 20,000 people in the town that didn't care enough to have instant
notification, but still want the information even if it's a day later? That's
where you make money.

~~~
CamperBob2
_What about the other 500, 5,000, or 20,000 people in the town that didn't
care enough to have instant notification, but still want the information even
if it's a day later?_

How many events in that class tend to happen? Anybody who cares about a high
school track meet is either there, or connected via Twitter/FB/whatever with
the people who are. Larger scale events are bipolar: they're either not of
immediate interest (new highway construction announced), ignored entirely by
most people (the President is in town), or people want to know what's
happening _now_ (chemical spill, bomb threat, school shooting...)

The one thing that can be said about local print newspapers is that they
aren't the best vehicle for disseminating _any_ of the above news topics
except possibly the big-but-not-of-immediate-interest kind.

Finally, the ultimate fate of the newspaper cannot possibly be understood by
anyone who, as in Buffett's case, admits he doesn't understand tech.

------
corry
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 via FB / Twitter, etc you can
bring your competitive advantage to the digital realm.

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

~~~
chc
By focusing your reporters just on the more in-depth stuff and running
rewritten press releases for everything else, essentially.

------
NDizzle
I love how Warren Buffett uses plain language in everything he releases. It's
easy and pleasant to read for simple folk like me.

~~~
nazbot
I consider it a sign of intelligence to be able to speak about complex issues
in a plain and straightforward manner.

------
spenrose
Clay Shirky does not agree with Buffet's reasoning:

[http://www.shirky.com/weblog/2012/05/warren-buffetts-
newspap...](http://www.shirky.com/weblog/2012/05/warren-buffetts-newspaper-
purchase/)

------
pstinnett
To give a little more context - this letter was sent after an announcement
that Berkshire Hathaway was purchasing all of the newspapers owned by Media
General.

<http://www.mediageneral.com/press/2012/may17_12.html>

------
seanalltogether
The only newspapers I read anymore are local newspapers that are free to read.
I still feel like online resources are a terrible way of finding out whats
happening around you. I read news online, but I read about shows and events in
local papers.

~~~
lukejduncan
I'm curious your thoughts on Patch. Personally, any local news I read I get
from twitter of facebook via Patch

------
lukejduncan
It seems to me that Patch beats a local paper any day. The argument that
making a paper hyper local somehow saves it from having to compete with the
Internet just seems off to me.

~~~
loumf
I just took a quick look at Patch and it looked like very superficial robo-
generated news from public sources (police blotter, HS sports schedule, stock
photography). It doesn't look very readable. Here's an article that puts words
around a calendar

[http://chelmsford.patch.com/articles/softball-team-to-
face-n...](http://chelmsford.patch.com/articles/softball-team-to-face-newton-
in-miaa-tournament)

This article is probably just auto-generated for town (it's about the view of
Venus we are getting right now).

[http://chelmsford.patch.com/articles/chelmsford-look-up-
venu...](http://chelmsford.patch.com/articles/chelmsford-look-up-venus-is-in-
transit)

There are some articles better than these, but not much -- perhaps it's better
for other towns.

Here's what a hyperlocal newspaper looks like:

<http://www.mydailyrecord.com>

Real names and faces of people the residents know. The articles aren't
Pulitzer prize winning, but they're not just autogenerated.

You can't compete with auto-generated on price, but it doesn't seem hard to
write better articles.

~~~
meatsock
patch isn't entirely auto-generated, there are reporters and editors working
for them

~~~
loumf
I'm sure -- I clicked around randomly and my impression was that the articles
were generic and auto-generated. Sadly, it might be able to compete with what
passes for local news some places, but my local paper is much better.

The key to local news is local names and faces -- stock photography and
localized generic news isn't going to cut it.

------
tubbo
"I have some strong political views, but Berkshire owns the paper - I don't."

Why can't all CEOs think this way?

~~~
muhfuhkuh
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.

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

------
sparknlaunch
There has been a strange trajectory of print and online media. You had print
businesses that dominated the news market (now suffering). Suddenly the
Internet came around and people's main source of news was via the web (now
booming). Large print and online establishments do not personalized and local
content.

People now want quality and relevant content. Therefore local print newspapers
may be a lucrative place to be. Utilise the benefits of online, with the
relevant content of local. Build a community.

Buffett is a smart investor. If he sees some value in newspapers then there
has to be something there.

