Tuesday, May 03, 2005 5:44 PM
In another instance of the continuing signs of the times, super investor Warren Buffett recently offered some disquieting thoughts on the economics facing the newspaper industry. In an
article published by the Washington Post, "Buffett said buying newspapers was once an excellent investment because the dominant paper in any city could count on steady advertising revenue and could raise ad rates, often as much as it wanted, every year. With circulation dropping, that is no longer the case..."
With the influx of free news sources, including websites, the article also noted that Buffett "said owning the dominant news Web site in a region is not enough to guarantee sustained profitability for newspaper firms."
Given that Buffett knows a thing or two about the economics of the newspaper industry (his Berkshire Hathaway owns the Buffalo News and Buffalo.com as well as a huge amount of Washington Post Company stock, and he serves as a Director for the Washington Post Company), his comments are not likely to be ignored.
The larger question his comments raise is just what will be the path to continued, long-term profitability for the newspaper industry? As a number of bloggers have been suggesting, simply adding blog content and headline feeds is not the answer. However, these technologies do offer insight into the future of information creation and dissemination. The change is not happening overnight, and many newspapers are still generating nice profits, so the industry may have some time to plot its future course...but, for the industry's sake, let's hope it starts plotting that future before it is too late.