Omidyar’s big, bold bet on next-gen news
Apart from the common bond they share with a collective net worth approaching $100 billion, each of the business superstars is pursuing a distinctly different path in the quest for the elusive next-gen news model, as discussed more fully in a moment. Given their divergent strategies, could they all be right? Only time will tell.
But there’s no doubt that their energy, creativity and considerable wealth are welcome at a time that the digital revolution has driven the traditional purveyors of the news from distress to distraction to dysfunction to divestiture.
With unquestionable entrepreneurial chops and demonstrated investment acumen, the three billionaires are bringing far more than bulging checkbooks to the challenge of how journalism will be funded and practiced in an age when ever-changing technologies are unhinging the ways that consumers get and, increasingly, give the news.
The techno-tsunami has cut newspaper revenues by more than half, has all but killed Newsweek and continues to dangerously fragment commercial broadcast audiences. As the media behemoths tumble, the investments they historically made in funding journalism have crumbled (details here and here).
Now, Buffett, Bezos and Omidyar (plus a few others), are stepping up to try to figure out how to pay for real journalism, as opposed to jiggly GIFs, for the generations to come.
Each of the trio is taking a markedly different approach. Buffett, who has assembled a portfolio of more than five-dozen newspapers in two years, is aiming to refine and preserve the legacy publishing business. We’ll call him The Protector. Bezos almost certainly will try to move his newly acquired Washington Post away from its heavy reliance on print advertising and circulation to a state-of-the art digital business model. We’ll call him The Pivoter. Taking a third path, Omidyar announced last week that he intends to launch a bottoms-up digital model to create and distribute the news. We’ll call him The Pioneer.
Omidyar’s nascent, and evidently still evolving, effort looks to be the boldest, and riskiest, yet. To understand the challenges and opportunities he faces, it helps to see where the others are placing their bets. So, let's start at the beginning:
The Protector. Buffett, whose fortune is estimated at $58.5 billion by Forbes, was the first of the Big Three to plunge into the publishing business, buying the Omaha World Herald, his hometown paper, in 2011 with $200 million of the more than $35 billion in the coffers of Berkshire Hathaway, his legendary investment company. Within a year, Buffett’s newly formed BH Media spent a couple of hundred million more dollars to scoop up dozens of small and medium newspapers in relatively isolated and defensible markets. Eschewing metros like the Washington Post (where he has been a long-time stockholder and board member), Buffett professes to be so fond of newspapers that he will buy them even when their “economics” fall “far short of the size threshold we would require for the purchase of, say, a widget company.” As a fiduciary responsible to his shareholders, he is bound to protect the profitability of his assets to preserve, if not enhance, their value. This puts him in the position of being a Protector of the traditional, 20th Century publishing model, not an innovator who is likely to blow it up.
The Pivoter. Amazon-founder Jeff Bezos jolted but largely delighted the journalism community when he purchased the Washington Post with $250 million of his own money in a deal that closed earlier this month. After getting over the shock of learning that they would be deprived of the long-running patronage of the Graham family, staffers of the iconic newspaper viewed the acquisition as a vote of confidence in the medium, if not themselves. But Bezos, who is the first digital native to buy a newspaper, didn’t build a $27.2 billion personal fortune by sticking to the conventional rules of book selling, retailing, web hosting, media delivery or any of the other industries he has disrupted. He undoubtedly plans to use the D.C. presence, journalistic resources and prestige of the Post to find new ways to build and monetize audiences in more high-tech ways than putting ink to paper. Though he has to tread carefully as he repositions the business on the fly (as discussed here), Bezos is pursuing the path of a Pivoter as he endeavors to migrate from a print-based past to a profitably-pixelated future.
The Pioneer. The least affluent of the billionaires with only $8.7 billion in personal assets, Omidyar last week declared that he would put at least $250 million into building a global network of journalists to deliver news on a platform optimized for the digital age. He said he chose the sum of his investment because it was what he would have paid, if he, instead of Bezos, had chosen to buy the Washington Post. Based on his thoughts here and excellent reporting from Jay Rosen here, Omidyar appears to be trying to find a way to capitalize on the two major forces reshaping the journalistic landscape and the appetite for news: (1) Anyone, anywhere can publish anything at anytime and (2) users can control the content they consume at the time, place and platform of their choosing. The trick, as the eBay founder well knows from starting a for-profit Honolulu news site called Civil Beat, is to find an efficient, popular, scalable and eventually profitable model to that both captures the public’s fancy and serves the public interest with bold and consequential reporting. To kick things off in a big way, Omidyar is hiring Glenn Greenwald and the other journalists who broke the NSA data-scraping story. Because he is starting an entirely new kind of business with little more than a blank white board, Omidyar, who promises to be personally active in building the still-unnamed venture, clearly can be characterized as a Pioneer.
The saying here in Silicon Valley is that you can spot a pioneer because she’s the one with arrows in her back. But some pioneers are better at dodging arrows than others. Fortunately for those who care about journalism, Jeff Bezos and Pierre Omidyar are two of the best of them.