Reinventing the Newsroom

To Burn the Boats, or Not?

Posted in Cultural Change, Fun With Metaphors by reinventingthenewsroom on March 10, 2010

Over the weekend, Marc Andreessen lit up the Twitterverse with his advice for established media companies: “Burn the boats.”

The comment, made to Erick Schonfeld of TechCrunch, refers to the legend that when Cortés’s expedition landed in Mexico in 1519, he told his men to burn the boats, ensuring that they would have to push forward into the unknown instead of thinking about going back. In Andreessen’s view, that’s what “old media” need to do: see the print business model as a trap, abandon it, and devote their remaining resources and energies to finding a new digital one.

It’s an entertaining interview, one in which Andreessen casts cold water on dreams of an iPad-fueled rescue (he notes that Web-only publications are barely thinking about the iPad) and observes that technology companies are better at surviving wrenching transitions because they accept constant disruption as the way of the world. Technology companies that survive do so by seeing change coming, adapting before it arrives, and striking off in a new direction. Boats get burned all the time.

Another view came from Paul Gillin, who writes that Andreessen “has a point that it makes senses to abandon failing models in the long term, but setting fire to profitable print operations is the wrong strategy at the moment. After years of fretting over declining circulation and trying desperately to rejuvenate a dying business, newspaper publishers are finally adopting an intelligent strategy. They’re milking all they can from their profitable business while trying to manage it down to a level that new models can take over.”

While acknowledging the transition won’t be easy, Gillin says that “once publishers reach the threshold of 20% online revenue, they can conceivably shutter their print operations while sustaining the business and the brand. They’re trying to get to that threshold gracefully, though. Lots of money can still be made in print if publishers can manage that asset down steadily while reducing costs in lockstep.”

Like Andreessen, Gillin worries whether publishers will internalize tech companies’ move-or-die mentality, and notes that shareholder demands for profits will make it harder for publishers to find new revenue opportunities and grow them through investment. (It’s an excellent point — cultural change is hard enough without having to also convince shareholders of the need to switch.) His advice: Don’t burn the boats, but gather firewood.

I’m not taking Andreessen at face value — he was being a good, provocative quote. But I get what he’s saying. Big organizations have trouble avoiding consensus solutions and compromises. As Gillin writes, the danger of the milk-the-cash-cow transition plan from print to digital is it’s difficult to execute even in theory; compromise yourself short of it and you haven’t made the investments necessary to jump to a workable digital model. You’re still in the boats.

But there’s another aspect to this, one I find troubling. The Cortés story is one of those tales that never turns out to be true — in the newspaperese of another age it was “too good to check.” Assuming this would be the case, I started fooling around on Wikipedia and immediately noticed something. Cortés had been told by the governor of Hispaniola not to go to Mexico, but went anyway. He was a mutineer. As such, going back would have had repercussions considerably more serious than a failure to unlock innovation.

Perhaps there’s a lesson there — but if so, it’s a grim one for print media. What if surviving on the unknown digital shores requires that one first be a mutineer?

3 Responses

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  1. Paul Gillin said, on March 10, 2010 at 9:43 pm

    Jason:

    Thank you for doing the background research on the Cortes mission. What a wonderful detail of history that was overlooked in the retelling!
    One point that Andreessen made in his comments to TechCrunch is that publishers should take inspiration from Intel, which exited the memory business in the 70s to focus on the much smaller business of microprocessors. The comparison is apples and oranges.

    Intel’s Andy Grove saw that his core business was rapidly heading toward commodity status and that the company was going to start losing a lot of money in very short order. Intel had no alternative but to bail out. Grove’s brilliance was in seeing this before Wall Street did.

    I think newspaper companies are more like software businesses. Successful software companies make a substantial portion of their revenue supporting customers on legacy products. Office is ridiculously profitable, makes up half of Microsoft’s sales and funds its investments in new ventures like Live Office and Bing. Microsoft spends only a modest amount to tweak the product every couple of years in order to keep the upgrade gusher flowing.

    SAP still derives significant revenue from mainframe products that it shelved many years ago. Oracle, Computer Associates and IBM also have large legacy businesses that are insanely profitable. You don’t hear about these revenue streams because there’s nothing new and exciting going on in those product lines. However, they are the lifeblood of mature software companies.

    Even if new product sales at those companies dropped to zero overnight, they’d still be in business for years off the legacy income. Novell’s market dried up more than 20 years ago and it’s still around today.

    Marc Andreessen is a brilliant guy, but I think he’s drunk the wrong Kool-Aid on this one. Newspaper companies are like Oracle, not Intel.

    My best to your Dad, Don, who counseled my reporting staffs for many years.

  2. reinventingthenewsroom said, on March 10, 2010 at 10:31 pm

    Thanks Paul — will pass your greeting along, though Dad does check in here from time to time.

    That’s a very interesting comparison to software. I hadn’t thought of it that way. Definitely changes the way one thinks about it.

    Enjoyed your post and thanks very much for reading and commenting!

  3. […] main funder believes that the newspaper industry should “burn the boats” and rely solely on free online access to replace the billions made through paper […]


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