Techcrunch published an article today in which author Erick Schonfeld details a lunch he had with Netscape founder Marc Andreessen. In the conversation Mr. Andreessen details what he thinks print media operations should do to save their business.
Yesterday, Andreessen was in New York City and we met up. We got to talking about how media companies are handling the digital disruption of the Internet when he brought up the Cortes analogy. In particular, he was talking about print media such as newspapers and magazines, and his longstanding recommendation that they should shut down their print editions and embrace the Web wholeheartedly.
I have a lot of respect for Mr. Andreessen because he’s made a lot of technological innovations and when it comes to building companies that get acquired for their technology I don’t think there’s anyone whose advice is more valuable. But that doesn’t make him an expert in running businesses that are in it for the long run.
In that regard his advice should be vetted like anyone else’s and looking at the advice he’s giving I have to conclude he’s dead wrong. Let me quote…
Andreessen once famously put the New York Times on deathwatch for its stubborn insistence on trying to save and prolong its legacy print business.
So Mr. Andreessen “put the NY Times on the Deathwatch” for not abandoning their print business and now, over two years later, the NY Times is still alive and still making most of their money off print.
And this is why we should listen to him? Moving on…
Despite trying time and again, Andreessen’s observation is that media companies have no aptitude for technology, nor do they really understand what technology companies do. The one thing technology companies do really well is deal with constant disruption. “Microsoft is going through this right now,” he points out, “Ballmer is not complaining about it.” He’s tackling it head on. So did Intel when Andy Grove gutted it to shift from memory chips to microprocessors.
Yes. That Intel part is true. But that was in 1983 and their business has been making microprocessors ever since. What Intel does is make products not “deal with disruption”. When Microsoft beat Netscape in the early 90s it was because Netscape’s management was constantly trying to “disrupt” while Microsoft was living and dying by reviews in the Wall Street Journal (Senior VP Brad Silverberg famously considered Walt Mossberg’s approval as the gold standard).
Dealing with disruption as a business goal is a great way to sell a start-up but not necessarily a great way to run a business.
Beyond the iPad, he believes that all the talk once again from big media companies about erecting paywalls or somehow charging for news, articles and video online is shortsighted at best. He comes back to the simple fact that the open Web is where the users are. Talking about paywalls and paid apps is like saying, “We know where the market is and we are not going to go there.”
This doesn’t say anything. “Free” has always been where the market is and that has nothing to do with the Internet. If McDonalds decides to give away free Hamburgers I can guarantee you they’ll have tons of business but that won’t matter because they’ll be losing money. Free’s great but it “doesn’t pay the bills”. Last quote…
Print newspapers and magazines will never get there, he argues, until they burn the boats and shut down their print operations. Yes, there are still a lot of people and money in those boats—billions of dollars in revenue in some cases. “At risk is 80% of revenues and headcount,” Andreessen acknowledges, “but shift happens.” You’d have to be crazy to burn the boats. Crazy like Cortes.
Anyone who looks at the world realizes that business is business no matter where you go. The Mosaic browser disrupting the technology industry by giving birth to the modern web is not all that different from Fox News disrupting the news industry by tailoring their product to an underserved political bent. Every market has disruptions that force all other companies in that market to readjust their approach.
But in the end business is still about products and not disruption. Marc Andreessen should know better than anyone that disruptive companies don’t always win the market.
Succeeding in business is about using the market to best achieve your goals and that is why it would be disastrous for media companies to “burn the boats". Media companies are not going to reinvent the newspaper for the digital age because they are not technology companies. Their product is not software or hardware it’s content. They need to focus on improving their content and dealing with disruptions in the content business.
I agree that content companies, like any other, need to go where the customers are. But as the iPad, Kindle, et al. have proven there will be technology companies out there to take them to the customers. They don’t have to flush their print business down the drain to get there they just need to embrace new things when they come about. Print companies shouldn’t care who wins between print, the iPad, Amazon’s Kindle or some unknown disruptor in the future. They should embrace them all and tailor their businesses to match the market as a clear leader becomes evident.
(And Just FYI, Cortés probably didn’t burn the ships and even if he did it would have been part of a political battle with the Governor of Cuba not a motivational move)