Jim Spanfeller is the former president and CEO of Forbes.com. He is also treasurer of the Online Publishers Association and chairman emeritus of the Interactive Advertising Bureau.
The conventional wisdom in digital has been that content in and of itself is a no-win business model, at least recently. The idea is that without core differentiation in technology, there is simply no way to make original content pay because it’s so expensive to create. This is not an entirely wrongheaded, but many investors and senior executives have made extremely misguided decisions in its name.
In every medium, technology has played a key role. But through history, once critical mass has been achieved, the technology implications around the business model begin to wane, and the value of the core product begins to take center stage. Movable type was groundbreaking and totally changed the world. Radio and then TV waves likewise. Sheet feed color printing presses, color TVs, FM radio, and so on — they all fundamentally changed the way the business of the specific media was transacted. But as they became commonplace, and as the newer innovations became variations on a theme, the core creative content was once again the most important part of the product.
The web is no different. Rupert Murdoch recently said that “content is not just king, it is also emperor of all things electronic.” He is right, as he has been many times before. Content is indeed the driving force behind almost any business model in the digital world (with the obvious exception being e-commerce plays). By definition, media is about content. Without content, there is nothing to search; without content, there is nothing to aggregate; without content, there is a whole lot less for folks to comment on.
The problem has been publishers’ inability to deliver on consumer expectations around the new medium. Users want multi-media, they want non-linear navigation, and, most importantly, they want interactivity — but in most cases, they’re not getting it. As people change how they consume and interact with content, publishers have to create some new rules. What it does not require is allowing third parties to perform disintermediation of content from the producers of that content with either the latter’s tacit or explicit permission. The most glaring examples of this are data networks and horizontal-ad networks. Big premium content producers allow these third parties to aggregate their impressions and their data and pay mere pennies in return is one of the most value-destructive practices imaginable.
It is, in fact, these kinds of misguided practices that are at the root of the problems around making content organizations successful in the digital world. And while I do not share quite share all of Mr. Murdoch’s enthusiasm for pay walls, I believe it’s a step in the right direction. Content is king, but only if it is treated as such. At the end of the day, the reason the end user ventures onto the web in the first place is usually to be informed or entertained. The relationships forged between experience creators and consumers are at least as strong online as off. And the value in that relationship is at the very heart of the general concept of advertising — that is, of inviting consumers to consider a product or service in a different, more positive light than they had before.
The future of value creation in the digital world will almost certainly be more about content than technology. The platform is starting to mature. We have arrived at critical mass and open-source platforms, and the general transparency of code makes replication all too easy.
In reality, the world is almost exactly the opposite of how many see it today: It is the technology that is commonplace and the quality content that is unique. What a shame that many of today’s content companies will not be around to profit from the sure-to-come better understanding of the digital ecosystem. Why? Because they, themselves, are among the core promulgators of these misperceptions.