Buffett: newspapers are “toast”
If you’re an investor, then you already know who Warren Buffet is. (And if you’re not an investor, and you’ve wound up here by accident, here’s the scoop: he’s one of the most famous and successful investors of all time, a billionaire who is famous not just for his track-record on the market, but for his insights into life and investment too). You might also know a little about Buffett if you work in the newspaper industry, as it’s one he’s invested in massively over the years. Given his interest and expertise, it’s bad news for print media that Buffett has just declared most newspapers “toast”. But it’s much better news if you happen to invest in Dominion’s Global Trends Ecommerce Fund.
Alphabet, Amazon and Facebook compete with the newspaper industry over news and advertising
Source: Yahoo Finance
First off, lets get one thing straight: not all newspapers are going the way of the dodo. Buffett concedes that the best papers out there still have a lot of life (if not a great deal of profit) left in them. So, don’t panic if you love print – the industry is contracting wildly, but it’s not dying… just scaling down. But Buffett owns a print media empire through Berkshire Hathaway, and he doesn’t se its fortunes increasing. Why is that good news for Ecommerce investors?
Here’s why: print didn’t just roll over and die… it was out-competed, displaced by more business models pioneered by Big Tech. Think of Facebook and Twitter, Google News, magazines read on Amazon Kindle. All of these mediums have made news quicker and easier to access – and, partly as a result of that, and partly down to the price and efficiency competitiveness of digital advertising generally, they’re hoovering up the ad dollars too.
In an interview with Yahoo Finance (not, it should be pointed out, a print newspaper), Buffett said that the newspaper industry had gone “from monopoly to franchise to competitive,” and that, as a result, most papers were now “toast”. He was commenting in respect of years of declines in advertising revenue. According to Buffett, consumers actually liked ads. They were checking classifieds and looking for bargains or interesting new products: “it upsets the people in the newsroom to talk that way, but the ads were the most important editorial content from the standpoint of the reader.”
Google and Facebook are unquestionably the world’s largest digital advertising companies. Amazon is a relatively new mover in the area, but its particular platform has so much potential in this industry that most observers are already beginning to think about the “Big Three” online ad businesses. Between them, they’ve supplanted print media – benefitting Ecommerce investors in the process. And, best of all, there’s more growth waiting to happen in that space.
Dominion holds Facebook, Amazon and Alphabet, the parent company of Google, in its Global Trends Ecommerce Fund.
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