When Warren Buffett speaks, Wall Street listens. The 81-year-old Chairman and CEO of Berkshire Hathaway has used his keen business sense to become one of the richest men in the world. So, when Warren Buffett says that free news is bad business, publications around the world might want to take a second look at their business models.
Buffett's proclamation came in a letter he wrote to employees of newspapers that Berkshire Hathaway recently acquired. Bloomberg quotes the letter in their report:
“This is an unsustainable model and certain of our papers are already making progress in moving to something that makes more sense,” Buffett wrote in a letter to editors and publishers of Berkshire’s daily newspapers. “We want your best thinking as we work out the blend of digital and print that will attract both the audience and the revenue we need.”
According to Bloomberg , Buffett wants to buy more newspapers and will shift their focus to more local, community-oriented news. This may be newspapers' last great hope, as digital news companies that have tried to orient toward community news, such as AOL's Patch, have not seen success. Niche news is certainly the best bet for a pay-for-news service, and The Wall Street Journal's paywall has made money due to that publication's first and last-word status within the business community.
Now, Buffett has a higher business acumen than almost any person alive, so questioning his views on that subject is not usually good for an investor. However, it is possible that his age has kept him slightly out of touch with developing technologies, much the same way news mogul Rupert Murdoch has struggled on the web. The fact is, every Twitter user is potentially a journalist. Every blog author is a publisher. The ability of the internet to disseminate information instantly means news will spread without news organizations. Whether or not Buffett knows it, news organizations will have to acknowledge the power of the free flow of information on the web. With publishing essentially free, that means news will be free, whether sustainable business models can be built around it or not. Though some hybrid paywall schemes, such as The New York Times', have see limited success, the face remains: news is free now.