The Content Glut: Why It Stinks To Be “King”

March 28, 2012 8:20 pm

Content Is KingWhen I started in digital in 1994, nobody imagined the content glut that was to come. The prevailing wisdom was “content is king.” Content owners salivated over the massive new revenue streams just waiting to be tapped. Wall Street, too.

What a difference a new century makes. Today, it stinks to be “king.”

Remember Long Island Newsday, the daily newspaper the Dolans bought for $650 million? In October 2009, they put behind a pay wall, hoping to attract a number of paying subscribers.

They did. The number is 35. Less than three dozen people were willing to pay for Newsday’s content.

Content isn’t King. It’s common as dirt, and worth about as much. Accountants at News Corporation, The New York Times, Time Warner and CBS have been forced to write down tens of billions of dollars in assets.

What created the Content Glut? Digital.

The costs of producing and distributing content have shrunk to essentially zero. There are no barriers to entry for Web publishers: in half a day you can set up a WordPress blog and start running Google ads.

The result? The world is absolutely drowning in content, and the laws of supply and demand are kicking in, hard.

Porter's Five Forces AnalysisThe New York Times plans to try a pay wall next. But if you’re familiar with Michael Porter’s Five Forces analysis, this move hurls the NYT squarely into the three buzzsaws of “Buyer Power,” “Competitive Rivalry” and “Threat of Substitution.”

Buyer Power: This is laughably one-sided: buyers don’t have to fight to push the price of news lower. It’s already at zero. Switching costs? They’re already at zero too.

Competitive Rivalry: The NYT has dozens (hundreds?) of hugely capable competitors.

Threat of Substitution: Substitution is easy and painless (free, high-quality news is ubiquitous on TV and radio and everywhere else, never mind the Web). The only thing that can’t easily be substituted is serious investigative journalism.

What Does It Mean For Marketing?

Nobody has a flawless crystal ball, but here are the trends I see:

1. Mass audiences will continue to fragment and atomize. The growth in mobile will only exacerbate this problem.

2. Video will not be immune. Successful business models will be found, but pricing power will be scant.

3. Advertisers who sell through mass retail (and that’s pretty much all the big ones) require mass audiences, so there is both a challenge and an opportunity here. Media owners: forget trying to fight to preserve the old status quo. It’s gone. Instead, if you can figure out how to either build mass audiences or re-aggregate them seamlessly for advertisers you can rule the world again. But hurry: Google is already working on this.

4. As prices and audience sizes tumble, media buying back room operations will look more like the server room at the New York Stock Exchange on Wall Street than offices on Madison Avenue. Fellow MediaBizBlogger Neeraj Kochhar of GroupM has already explained this far better than I can.

5. Content companies will find new business models or die. Former giants will vanish, and our colleagues in their young 20s will wonder why those companies were ever important.

6. The real-time Web (think mobile and location-based services, and real-time social media like FourSquare) will create new and more relevant advertising opportunities. (I predict this will spark a serious privacy crisis and new regulations from Washington, but that’s a subject for a later MediaBizBlogger post.)

7. Managing marketing will become more complex as brand managers struggle to integrate and interpret a tidal wave of data to optimize multiple efforts in real time. Marketers who insist on doing deep dives into this tidal wave will drown.

8. The more campaigns happening at one time (TV, paid search, mobile, social media, PR, direct marketing, etc. etc.), the more difficult it will become to attribute success. Which effort made the sale, and what was the relevant contribution of each?

9. Costs of producing advertising will have to fall. More automation will be needed.

10. The most difficult commodity to maximize will be consumer attention. How can you make your needle of advertising information stand out in this digital haystack?

What Does Your Crystal Ball Say?

Do I have these 10 trends right, or are there others that are much more important that I’ve missed?

If these are the right trends, which content companies are getting it right and who’s in trouble?

Comments, please…

Photo Credit: Epsos on Flickr (Adapted | Creative Commons)

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