Ever since the first newsfeed appeared on the web, the traditional newspaper’s current business model was threatened. If you picked up a newspaper 50 years ago, it was filled with a lot of non-news items: real-estate listings, grocery store coupons, want-ads. Those money-making inserts were bundled with a journalistic product that focused on a defined geographic region.
Distribution was limited by the cost of physically delivering this bundle of paper. Gradually, each area developed into a local monopoly, usually with only one major paper per city. So when the internet arrived with newsfeeds and specialized websites for sports or cars or real-estate or job-listings, the news business was turned upside-down. Since 2000, lots of major papers have failed: the Chicago Tribune, the Minneapolis Star Tribune, the Philadelphia Inquirer, and others.
Journalism is now more competitive than it has been in decades. But its principal product—a finely crafted news story—can be distributed to anyone around the world for almost nothing. The New York Times now competes with the Los Angeles Times and The Guardian for readers, and the Frankfurter Allgemeine has a gorgeous mobile app.
The revenues of the news business aren’t drying up. Those rivers of gold are breaking into myriad streams of targeted ads and web subscriptions. As the poet Ovid said: nothing perishes, but all things change.
Douglas R. Tengdin, CFA
Chief Investment Officer