Archive | February, 2014

State of the News Media

21 Feb

I traded some messages on Twitter last week with someone who was lamenting that there isn’t as much investigative journalism as there was in the past, and also that editorial standards had fallen.  Similarly, this echoes comments you hear often from people about how there aren’t any “unbiased” news sources that people trust anymore.  I couldn’t disagree with these criticisms more.  

For one, there’s more media, choice, and reporting than ever before.  It might not look like the media of +15 years ago, but it’s there and in huge quantities.  Pre-internet, you were relegated to a handful of media outlets.  Generally speaking, there were (any I’m missing?):

  • National newspapers like the NY Times and WSJ
  • Regional/local newspapers
  • Magazines like Time, National Geographic, Life, etc.
  • The major news networks – CBS, ABC, NBC
  • CNN as of the late 1980s
  • Radio news and personalities

When people lament the decay in supposed bias-free news, I think they’re really focusing on the newspapers of old and the traditional nightly news broadcast.  Newspapers and TV news anchors like Dan Rather, Walter Cronkite, and Peter Jennings were supposed to give you a summary of important events and supposedly do so in a biased way.  There are two problems with telling it this way.  

For one, there’s always a bias in the news.  There’s no such thing as an “unbiased” telling of an event.  By definition, a newspaper editor or TV producer’s job is to be biased since there are hundreds of events they could cover but can only choose to cover a few.  By choosing to place event X on the front page and event Y on page 20, the newspaper is exhibiting bias.  

Second, the newspaper and the nightly news broadcast are incredibly limited formats.  There are only a handful of events that a 30 minute news program (probably closer to 23 minutes of actual broadcasting) can cover, or even a large newspaper like the NY Times.  

The beauty of the internet is that it has allowed for an explosion of niche content and gives a distribution outlet for proper coverage of that content.  Anyone can write on just about any topic, and they do.  The better economics of online journalism means that it’s much easier to sustain a professional media business focused on a small niche than it is offline.  You have more access today to high quality coverage of all sorts of events, people, and regions that you had zero visibility into before.  Think of coverage of the technology industry or sports as an example.  This is a good thing.  

One byproduct of the explosion in content is that perhaps average editorial standards have fallen versus the standard of old.  In this new world, not everyone has the rigor of a New York Times editorial board.  But that’s OK, I’m willing to take that trade off if it means more access to news and opinion.  And, generally, if you’re smart about using your own filter and not being a 100% passive consumer of information, then I don’t think this is too much of an issue.  

Another aspect of this new world is that there is much more opinion journalism and strong points of view than in the past.  The best bloggers today – Nate Silver, Andrew Sullivan, Andrew Ross Sorkin, Ezra Klein, etc. – all have strong points of view.  That’s the point.  Their job is to have an opinion and to argue their case in favor of that opinion.  I’m no fan of Fox News, but I’d say the same thing about a Bill O’Reilly or Sean Hannity.  If you’re watching their programming in the same way you used to read say that Washington Post (“this is my daily source of ‘unbiased’ news”), then you don’t get it.  

A final and crucial point I’d make is that the internet provides a mechanism for fact-checking the media that never existed before.  Pre-Google, you had no way to actually check whether what a media source was telling you was true or not.  And you had no way to quickly educate yourself on issues.  Right now there’s a debate going on over whether a recent CBO report means that Obamacare is costing jobs or not.  Pre-internet, you’d have to accept the analysis of whatever news source you used at face value.  Today, you can go read the actual report online, you can read competing analyses of it, and you can form your own opinion.  In fact, today there is better coverage of and watchdogging of the media than ever before.  

To call our current news media environment “biased” or to pine for the days of old is to be lazy and is to paint the past with too rosy a brush.  

Google: The March to a Trillion Dollars

13 Feb

google vs microsoft

The appointment last week of Satya Nadella to lead Microsoft got me thinking about another company: Google.  There are many points of similarity between the two companies, but the differences are key.

Both companies are effectively monopoly businesses.  Microsoft was and on the desktop perhaps still is an OS software monopoly.  Until recently with the rise of tablets and smartphones, Microsoft never faced real competition in its market.  Similarly, Google possesses roughly 2/3 market share in the online search industry and its share of online search profits are higher.  Like the Microsoft of yore, Google faces few credible threats to its core search monopoly.  Bing and Yahoo’s efforts have largely failed, and the worry of Facebook challenging Google through social search  is much more benign than once thought.

Microsoft and Google’s monopolies in their respective core businesses leads to two of the biggest cash machines the business world has ever seen: Windows and AdWords/AdSense.  Both businesses are high margin and throw off tons of cash.  This has given both companies incredible leeway to do three things: #1. Enter new lines of business; #2. Be highly acquisitive in support of #1; and #3. Retain talent.

I think this is where the comparisons between the two companies largely ends.  The main difference I see is that Google is ambitious in a way that Microsoft never was and no other company is, and Google is much smarter at building around its core search business.  These are two sides of the same coin.

On the one hand, Google is expanding into new areas far afield from core search.  Take Google’s well publicized self-driving cars initiative.  This requires a huge level of technical talent and investment that very few companies can make.  It’s also incredibly audacious and a potentially huge new  business for Google.  Compare this to say Microsoft’s Xbox effort.  Xbox has been Microsoft’s most successful consumer business and its a great product (I own one).  Having said that, I’d argue that it’s a less ambitious effort than something like self-driving cars and the potential size of the business is more limited.  Google is tackling huge, unsolved technology problems with much larger market opportunities.

Aside from more ambitious efforts to expand beyond its core business, Google is also much better at and more strategic about defending and growing its core.  Microsoft is limited in some ways because it’s much harder to introduce new products that monetize off of the Windows monopoly, whereas Google has plenty of options to introduce new products that monetize off of core search and its ad platforms.

For example, Microsoft’s efforts at building an online business – Bing, MSNBC, etc. – have a completely different monetization model than Windows.  Ditto for Windows Mobile.  You could argue that Windows Mobile makes it easier for Microsoft to retain its desktop users and therefore defends their  OS monopoly, but the only way they’ve made new revenue off of Windows Mobile is by selling licenses to smartphone OEMs and now by selling Nokia hardware bundled with Windows.

Contrast this with Google where much of what it does not only defends its search monopoly, but also grows it and creates revenue.  Whereas Microsoft started off by licensing its Windows Mobile platform to OEMs, Android is free.  Google did this because Google is able to earn money off of mobile search ads.  It’s a way for Google to protect its core business as user’s spend more of their online time on mobile devices.  Similarly, Google Glass and self-driving cars may very well end up monetizing primarily through serving ads off of Google’s existing platform.

To summarize it all, I think Google is far more ambitious in entering potential new businesses than any large tech company today, and its in a much better position to defend and grows it search monopoly than Microsoft was with Windows.  AI have no doubt that Google will be the world’s most valuable company in the not-so-distant future, and that it will be the first company in history to reach $1 trillion of market cap.


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