About a decade ago, Netflix, the video streaming pioneer quietly began building a huge subscriptions business from scratch. Its aim was to deliver the best video entertainment — movies, TV serials, documentaries — for a reasonable monthly fee. Media gurus opined that the streaming pioneer was destined to fail. You can’t build a media business without advertising, they argued. For years, Netflix lost money but doggedly stuck to its model of growing subscriber base and its library of video content. Then about four years ago, streams of profits began to gush out of the streaming spigot. The media world has never been the same again.
For months, I have had a back-and-forth over instant messenger with a journalist friend in Asia. My argument: “Old media” or newspapers are bouncing back as they give up their reliance on the advertising-based model to focus on digital subscriptions. The advent of generative artificial intelligence, or AI, is helping put winds in their sails as large language foundational models like OpenAI’s ChatGPT, Google’s Bard or Meta Platform’s LLaMA need more factual data to train on rather than any unsubstantiated stuff a web crawler can get its hands on. For his part, my friend insists that old media can only survive on an ad-based model.
Let me lay out my case in the court of The Edge Singapore readers. In 2000, US daily newspaper industry revenue peaked at US$90 billion, adjusted for inflation in 2020 dollars. When last year’s numbers are tallied up, analysts expect they will show that ad revenues for US newspapers have fallen 70% over the past 23 years. Websites and smartphone apps enabling users to access news without a subscription have increased competition for readers and ads, hollowing out the old media. Much to the chagrin of publishers, however, revenue gains from online ads have not made up for the loss in print ads.
