{"id":6489,"date":"2026-02-11T09:00:00","date_gmt":"2026-02-11T08:00:00","guid":{"rendered":"https:\/\/stefanfritz.com\/?p=6489"},"modified":"2026-03-04T17:12:20","modified_gmt":"2026-03-04T16:12:20","slug":"first-google-ate-the-newspapers-now-ai-is-eating-the-software","status":"publish","type":"post","link":"https:\/\/stefanfritz.com\/en\/first-google-ate-the-newspapers-now-ai-is-eating-the-software\/","title":{"rendered":"First Google ate the newspapers, now AI is eating the software\u00a0"},"content":{"rendered":"\n<p><em><strong>How the collapse of newspapers foreshadows the future of software business models\u00a0<\/strong><\/em><\/p>\n\n\n\n<p>Twenty years ago, the internet hit newspaper publishers. Suddenly, they could reach not just their city, but the entire world. Unlimited distribution. The idea was intoxicating. The reality was devastating.&nbsp;<\/p>\n\n\n\n<p>The problem&nbsp;wasn&#8217;t&nbsp;that distribution became free. The problem was that it became free for everyone. A market of scarcity \u2013 few could publish because distribution was expensive \u2013 became a market of abundance. Power shifted to those who organized content, not those who produced it.&nbsp;<\/p>\n\n\n\n<p>Google won. Between 2000 and 2023, newspaper advertising revenue collapsed by 92 percent. Not because newspapers did worse work. But because the conditions under which value creation happened shifted. Those who produced content no longer controlled distribution. Those who controlled distribution&nbsp;didn&#8217;t&nbsp;produce content.&nbsp;<\/p>\n\n\n\n<p>The same thing is happening to software now. Just faster.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Code becomes commodity&nbsp;<\/h2>\n\n\n\n<p>Software companies long&nbsp;operated&nbsp;like newspapers. Their key input \u2013 code \u2013 was scarce and expensive. That scarcity created value. And that scarcity defined who could build software and who&nbsp;couldn&#8217;t.&nbsp;<\/p>\n\n\n\n<p>AI-driven code generation makes this input increasingly cheap. What used to take weeks now takes hours. Code is becoming&nbsp;commodity. Not&nbsp;completely. Not&nbsp;immediately. But the direction is clear.&nbsp;<\/p>\n\n\n\n<p>Companies using AI gain an edge. Short term. But this advantage&nbsp;isn&#8217;t&nbsp;exclusive. Every software company gets access to the same models. Everyone can suddenly build unlimited amounts of software.&nbsp;<\/p>\n\n\n\n<p>Scarcity becomes&nbsp;abundance. And in abundance, control shifts.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Nobody wants to buy anymore&nbsp;<\/h2>\n\n\n\n<p>Software&nbsp;doesn&#8217;t&nbsp;die because it becomes obsolete. Software becomes problematic because nobody wants to pay for it anymore.&nbsp;<\/p>\n\n\n\n<p>The logic is simple: Every dollar spent on SaaS licenses is missing somewhere else. And that &#8220;somewhere else&#8221; is now internal AI usage. Last year, average monthly AI spending by companies rose 36 percent [<a href=\"https:\/\/www.cloudzero.com\/state-of-ai-costs\/\">Source<\/a>].<\/p>\n\n\n\n<p>At the same time, they reduced their SaaS applications by 18 percent since 2022. Less software spending = more capacity for internal AI.\u00a0<\/p>\n\n\n\n<p>Companies still need maintenance, support, compliance, integrations. But they want to buy less of it. And pay less for it.&nbsp;<\/p>\n\n\n\n<p>The last decade was defined by growth. You&nbsp;identified&nbsp;a function, built an app, hired a sales team, went&nbsp;public. The pie grew. Everyone could take a slice.&nbsp;<\/p>\n\n\n\n<p>The next decade will be different. The pie gets fought over. Software companies must expand into adjacent areas to justify their existence. Horizontal expansion&nbsp;becomes&nbsp;a survival strategy. Not because&nbsp;it&#8217;s&nbsp;strategically smart, but because customers want to pay fewer vendors.&nbsp;<\/p>\n\n\n\n<p>The orderly SaaS silos \u2013 one function, one app, one vendor \u2013 are breaking apart. What&nbsp;remains&nbsp;is a&nbsp;distribution fight over shrinking budgets.&nbsp;<\/p>\n\n\n\n<p>Who profits? The model providers.&nbsp;They&#8217;re&nbsp;the arms dealers of this war. No matter who wins \u2013 they make money on all sides.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The identity dilemma&nbsp;<\/h2>\n\n\n\n<p>The largest software companies face an&nbsp;additional, existential problem. Their business model is based on human identity.&nbsp;<\/p>\n\n\n\n<p>Take Microsoft. Active Directory connected all Microsoft products through a single identity layer. Every employee had an identity. Every identity had&nbsp;permissions.&nbsp;Every permission&nbsp;linked to products. This enabled the per-seat licensing model: For every user, you pay X dollars per month.&nbsp;<\/p>\n\n\n\n<p>This model works&nbsp;as long as&nbsp;humans are the primary actors in companies. But agents fundamentally change this assumption. The more successful agents become, the fewer human seats exist. An agent&nbsp;doesn&#8217;t&nbsp;replace a task \u2013 it potentially replaces an entire role. Every replaced role is one license fewer.&nbsp;<\/p>\n\n\n\n<p>Microsoft&nbsp;can&#8217;t&nbsp;defend this business model without endangering its future. And it&nbsp;can&#8217;t&nbsp;build the future without cannibalizing its business model.&nbsp;There&#8217;s&nbsp;no painless path.&nbsp;<\/p>\n\n\n\n<p>This shows up in concrete decisions: In early 2025, Microsoft redirected GPUs meant for Azure customers \u2013 into its own Copilot products and internal R&amp;D. The rationale was sound. Its own products have higher margins and better lifetime values than renting&nbsp;compute&nbsp;capacity.&nbsp;<\/p>\n\n\n\n<p>But it reveals something fundamental: Microsoft competes with its own customers. Those who rent capacity get it \u2013 unless Microsoft needs it itself. This&nbsp;isn&#8217;t&nbsp;malicious.&nbsp;It&#8217;s&nbsp;structural. And&nbsp;it&#8217;s&nbsp;a pattern.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The crack in the foundation&nbsp;<\/h2>\n\n\n\n<p>Hyperscalers&nbsp;seemed unbeatable. Network effects, economies of scale, lock-in. The bigger they got, the stronger they became. That was the theory.&nbsp;<\/p>\n\n\n\n<p>But network effects have limits. And&nbsp;they&#8217;re&nbsp;showing now.&nbsp;<\/p>\n\n\n\n<p>The analogy comes from the chip industry of the 1990s. Integrated Device Manufacturers \u2013 Intel, Texas Instruments \u2013 developed their own chips and&nbsp;operated&nbsp;their own factories. If you wanted chips manufactured as an external company, you could rent capacity.&nbsp;But only as long as they didn&#8217;t need the capacity themselves.&nbsp;External orders got pushed when internal production took priority.&nbsp;<\/p>\n\n\n\n<p>TSMC fundamentally changed this model. As a Pure Play Foundry \u2013 exclusively chips for others, none of their own \u2013 TSMC was neutral. It&nbsp;didn&#8217;t&nbsp;compete with its customers. This neutrality became&nbsp;the&nbsp;decisive competitive advantage. Founded in 1987, TSMC controlled over&nbsp;half&nbsp;the global foundry market by 2000. Today&nbsp;it&#8217;s&nbsp;over 60 percent.&nbsp;<\/p>\n\n\n\n<p>Today we see the same pattern with&nbsp;compute.&nbsp;Hyperscalers&nbsp;aren&#8217;t&nbsp;neutral foundries.&nbsp;They&#8217;re&nbsp;Integrated Device Manufacturers. They rent capacity \u2013 but use the same capacity for their own products. And when they must choose, they prioritize themselves.&nbsp;<\/p>\n\n\n\n<p>This creates a market gap. For token foundries. Providers who exclusively supply compute capacity without competing with customers. Oracle is already positioning in this direction. Specialized providers will follow.&nbsp;<\/p>\n\n\n\n<p>The insight is simple: Network effects&nbsp;don&#8217;t&nbsp;protect you when you become your customers&#8217; competitor. Size stops being an advantage. It becomes&nbsp;ballast.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Room for the new&nbsp;<\/h2>\n\n\n\n<p>What&#8217;s&nbsp;breaking here&nbsp;isn&#8217;t&nbsp;software&nbsp;itself. What&#8217;s breaking are the structures the software industry built over the last decade.&nbsp;<\/p>\n\n\n\n<p>Per-seat licensing&nbsp;doesn&#8217;t&nbsp;work in a world where agents take over roles. Orderly SaaS silos&nbsp;don&#8217;t&nbsp;work in a distribution fight over shrinking budgets.&nbsp;Hyperscaler&nbsp;monopolies on&nbsp;compute&nbsp;don&#8217;t&nbsp;work when neutrality becomes a competitive advantage. The illusion of eternal network effects&nbsp;doesn&#8217;t&nbsp;work when size creates structural conflicts of interest.&nbsp;<\/p>\n\n\n\n<p>New licensing models will&nbsp;emerge&nbsp;\u2013 function-based instead of identity-based. How do you sell software when the buyer has no human users? The answer&nbsp;probably isn&#8217;t&nbsp;in seats, but in outcomes. In measurable results, not access.&nbsp;<\/p>\n\n\n\n<p>Neutral token foundries will grow. Companies that&nbsp;don&#8217;t&nbsp;build their own agents,&nbsp;don&#8217;t&nbsp;sell their own software, but exclusively provide capacity. Their strength will be their neutrality.&nbsp;<\/p>\n\n\n\n<p>Software consolidation will increase. Not through M&amp;A, but through expansion.&nbsp;Who&nbsp;survives will get broader. Function boundaries will blur. This triggers margin fights, which in turn force specialization. A contradiction that unfolds over&nbsp;years.&nbsp;<\/p>\n\n\n\n<p>The publisher era ended with an aggregator that organized the abundance. The software era&nbsp;probably ends&nbsp;without one. Model providers make money on all sides.&nbsp;Hyperscalers&nbsp;compete with their customers. Fragmentation is the pattern, not consolidation.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion: A new era in software&nbsp;<\/h2>\n\n\n\n<p>For entrepreneurs, this means: The giants have structural problems. Their size&nbsp;isn&#8217;t&nbsp;just an advantage.&nbsp;It&#8217;s&nbsp;also&nbsp;ballast. They have legacy business models to&nbsp;defend. They have customer bases expecting continuity. They have organizational inertia.&nbsp;<\/p>\n\n\n\n<p>Transitions create&nbsp;room.&nbsp;Not for&nbsp;everyone. But for those who stay mobile.&nbsp;Who&nbsp;understand the rules are changing. Who&nbsp;don&#8217;t&nbsp;try to play the old game&nbsp;better, but&nbsp;recognize the new rules earlier.&nbsp;<\/p>\n\n\n\n<p>The software era&nbsp;isn&#8217;t&nbsp;ending. But&nbsp;it&#8217;s&nbsp;reorganizing. And like every reorganization: The established fight their legacy. The mobile&nbsp;find&nbsp;new markets.&nbsp;<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>How the collapse of newspapers foreshadows the future of software business models: Twenty years ago, the internet hit newspaper publishers. Suddenly, they could reach not just their city, but the entire world. Unlimited distribution. The idea was intoxicating. The reality was devastating.\u00a0<\/p>\n","protected":false},"author":5,"featured_media":6491,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[649],"tags":[519,596,597,457,621,426,502,641,555,620,523],"class_list":["post-6489","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-deutschland-en","tag-future","tag-germany","tag-innovation-2","tag-it-2","tag-ki-en","tag-kuenstliche-intelligenz-en","tag-linkedin-2","tag-start-up-en","tag-technology-management","tag-unternehmertum-en"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>First Google ate the newspapers, now AI is eating the software\u00a0<\/title>\n<meta name=\"description\" content=\"How the collapse of newspapers foreshadows the future of software business models: Twenty years ago, the 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