Eric Schmidt’s 5-10 year view on news

By November 5, 2009News, Venture Capital


Inspired by Fred Wilson’s recent post on thematic investing I’ve been thinking a lot about how the world will look in five to ten years with a view to building an investment strategy around that vision.  Hence I was interested to read the following quote from Eric Schmidt this morning (on Niemen Lab):

In five or ten years, what will the primary news reader look like?

Well, that person will be probably on a tablet or a mobile phone, probably the majority of the reading will presumably be online not offline, just because of the scale of it. It’ll be highly personalized, right? So you’ll know who the person is. There’ll be a lot of integration of media — so video, voice, what have you. It’ll be advertising-supported and subscription-supported, so you’ll probably have a mixture. Think of the Kindle as an example. The Kindle is a proto of what this thing could look like. People will carry these things around.

I think this is pretty accurate.  Picking out the bones:

  • News is consumed on a device – I would say it could well be the mobile phone
  • It will be connected – I would add there may well be caching capabilities for offline consumption, tube, plane, poor network areas etc
  • It will be highly personalised and self educating
  • Text, audio, video will be combined
  • Revenues come from ads and/or subscriptions – I would add subsidised by third party services, e.g. airtime contract (think Nokia Comes with music)

Most of this could be delivered today, meaning the startup opportunity is in application/service provision.

As ever, I post this to crystalise my own thoughts and start a conversation, so please comment away.

I may follow with other 5-10 year view posts.

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  • A lot will depend on the mobile devices we get. Smartphones have a lot of potential for location aware apps and as such far more sophisticated business models/ads. I don't see a lot of reading being done on smartphones though. I think we will have to wait for tablet computers to take off before we see a new business model for news but we are in the very early days for those. Only the kindle has any traction and the iTablet is not even out yet. I'd also prefer something more book like such as the rumoured Courier:

    The idea of a large tablet like machine strikes me as awkward.

  • People are starting to read on the iPhone I think – certainly book apps are a big release category. You are right though, it all depends on the device. Personally if it fits in my pocket and doubles as a phone that would work for me.

  • Agree with you Nic on your thesis. What I'm wondering is what is not in your bullet points. Who will deliver these news ? Will it be peer-to-peer driven/human based (twitter logic) or a big algorithm guessing your interest based on key words or alike (google logic) ? I tend to bet on the first one.

  • Good point – eric doesn't mention how the personalisation will work. I would bet on a hybrid of social and AI.

  • Not all news will be read on the mobile platform. The headlines and the appetizers will be for sure. Shortform content may be looked at and interacted with while “mobile.” We will consume a large volume of information quickly this way. The result is there will be demand for longform content to be consumed and participated with in a more intensive way (the tool will not be as significant as the setting and motive). We may not consume as much volume of data this way, but we'll spend a lot of time learning and participating with this content. Net: the facility to consume more information quickly will create more time for content we learn from and actively participate with.

    The implication of all this is that packaging and brand marketing are going to be much more critical to the future of media. I did a post called 2020 this week that imagines what the media marketplace will look like when, media programming companies, ranging from Disney to Harpo to Time to McClatchy, buy content, technology, package them and market them as brands.

    Katherine Warman Kern

  • For a demo showcase how the personalized news might look like, check out (an Estonian company from one of the Skype founding engineers). Agree it will be hybrid (as will ad networks), using many inputs to fine-tune the formulas. Social is just one of many inputs, as are your previous actions, interests, favourites, peer group habits etc.

  • Hi Katharine – I'm enjoying the comments on this post! I think you are right that we need to think about long form and shorter content differently. The convenience of mobile might reinforce the trend towards shorter pieces though.
    I'm not sure what you mean by branding and packaging, but from reading your blog post I think my vision of the future wher content emanates from a larger number of smaller companies than today is different to yours. Brands will be active associating themselves with and partially paying for these producers.

  • Thanks for the pointer to Dailyperfect!

  • I agree with you that content creators are going independent and lowering their risk by building a relationship with hardcore “taste maker” consumers. But the rewards will still be the most lucrative when they leverage their consumer relationship in a deal with media programming brands like Disney, Viacom, who can achieve critical mass by negotiated favorable deals with cable companies, ISPs, and wireless, etc.

    The big change I'm going out on a limb predicting is the relationship between the media programming brands and the cable companies, ISPs, wireless, etc. My prediction is based on a very simple premise: “follow the money.”

    Media revenues flipped from being ad driven to consumer driven in 2004 when consumer spending on cable, wireless, isps grew total consumer media spending to exceed ad revenues in importance to the market.

    The big media programming companies haven't done anything about this yet for two reasons. First, ad revenues were still growing and higher than ever before. And second, selling, servicing, and collecting money from consumers is a lot more complex and expensive than calling on a few advertisers and their agencies.

    But today, we've had budget cuts from an economic crisis and these dollars are not coming back. The biggest premium ad spenders are out due to the Anheuser Busch sale & the collapse of the car industry. The below premium ad spenders, like P&G, are shifting ad dollars into custom digital publishing and other non-traditional advertising vehicles.

    Suddenly, those consumer revenue dollars looks like something to go after.

    Right now they are trying to turn the dial slowly with “TV Everywhere,” paywalls, and increasing “re-transmission” fees.

    Next, they will start thinking like a company who markets to consumers. They will package content, social media technology, customer service and ecommerce technologies to start selling value added media brand experiences directly to consumers. Disney's Iger is already hinting at approaching media lilke a marketing company here:

    Once they get into this, the market will learn that consumers will pay more, cumulatively, for a la carte entertainment brand experiences, than they will for access utility. Then the negotiation dynamics will change between programmers and cable, isps, wireless companies.

    How long will this take? We'll see.

  • Some more good thoughts Katherine. And thanks for another interesting link.

  • Some more good thoughts Katherine. And thanks for another interesting link.

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