Why Media Needs Technology to Rebuild Its Collapsed Economy
Reprinted in AdAge.
If you're in the content business you've watched nervously as the value
of your product dwindled over the past five years. The rules of the
game changed. But, how to play by the new rules? How much is a piece of
online content worth these days and why? Simple questions, yes. But,
unfortunately, no simple answers.
Most content companies today lack the know-how or even the data to
begin answering these basic questions. And maybe we shouldn't be too
surprised at this. Although content businesses have been around for
centuries, as the complexity of distribution has increased
dramatically, an understanding of what drives value has simply
collapsed. It's time for a new science focused on content and
determining the true market value of that content.
That science needs to take into account the following three trends.
- First,
technology is making it easier and less expensive to both produce and
distribute content. For example, companies such as Blurb and Lulu make
it dead simple and affordable for authors to produce and sell books
independently. Other companies such as About.com, Associated Content
(I'm an investor) and Demand Media enable writers and content producers
to easily publish their work online and to make money. As distribution
has become easier, content companies are realizing that they need to
loosen their control over a number of aspects (e.g., how newspaper
content is circulated online and where it is read, how a book is
reviewed and marketed, etc.). And this makes distribution less reliant
on traditional command-and-control hierarchies and more reliant on
crowd-sourced recommendations. For example, a 100-word customer book
review on Amazon can be just as helpful to an author as a 1,200-word
treatise from the NYT.
- Second, consumer behavior is
changing. While both the production and distribution of content are
becoming increasingly complex, the consumer's ability to find and
consume all this content remains limited, constrained by the time and
attention they are willing and able to devote to it. For most of us,
the primary challenge today is navigating this rapidly expanding
content universe to find what is most relevant to our individual
preferences or interests at any moment in time. The consumer wants to
be in control. And consumers are changing what they view as "quality"
content. In the past, it might have depended upon whether or not the
content came from a trusted source, or how well-crafted or extensively
researched an article was. Today, other attributes such as
authenticity, specificity, timeliness/freshness, utility and other
traits weigh heavily in that determination of "quality." And while the
source of a piece of content remains important, how it is aggregated,
curated, contextualized and presented to a consumer is becoming an
equally important consideration. Newer forms of content, such as
Twitter posts, will undoubtedly lead to new ways in which "quality" is
defined. Content companies are grappling with these changes as they
re-shape their businesses for the future.
- Finally,
online content monetization is changing. And it is in this area where a
new science focused on the fair determination of content value is
needed. Gaining a better understanding of content value presents an
enormous opportunity for content companies. Though far from perfect,
today's search engines enable consumers to more easily discover content
that is most relevant to them, making it easier and faster to find what
they want to consume.
Consequently, how content is monetized online differs significantly
from how content is monetized offline. An article in an offline
magazine or newspaper is for all intents and purposes published once,
and monetized one time only. That same article published online lasts
much longer and can continue to generate money long after the date that
it was published. At Associated Content, for example, content that was
created five years ago continues to be monetized far longer than
expected. In fact, that content actually produced more revenues in 2009
than in the first year that it was published. This fact suggests that a
different economic framework needs to be used when measuring the value
of online content.
For example, NBC Universal CEO Jeff Zucker famously warned media
companies against trading analog dollars for digital pennies (more
recently he amended this to digital dimes). But what if a piece of
content generated a digital dime in year one, a digital nickel in year
two, a few digital pennies in year three, etc.? More critically, what
if new technologies and business methods can enable content companies
to produce this content much more cost-effectively? The economic
picture now looks a little less bleak. And therein lies the
opportunity.
In the past decade, significant investment has been spent
re-thinking, improving and optimizing every facet of online
advertising, from creative to ad placement, from real-time campaign
management to post-campaign reporting and analytics. Every bit and byte
of a display ad and every user cookie can now be analyzed to the nth
degree and dissected for insights. In contrast, little has been
invested on the content side to become more analytical and
metrics-driven regarding the value of the content. A similarly rigorous
approach needs to be applied to how content is created, distributed,
measured, and monetized.
For the past decade, companies like Google have forced their more
traditional advertising counterparts to become more scientific and
rigorous in how they operate their businesses. Content companies need
to learn from Google's experience with advertisers and develop the
science behind their content, a science that explains and predicts its
value. In the process, content companies may well find more and more
ways to serve consumers, thereby delivering a more valuable audience to
advertisers. The answer is a new science with new value metrics
delivered at scale (along with the content) all in real time.
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