Content Economics

Give consumers the content they desire in the format that they want it, when they want it, and build a business model around it. That’s the right way to drive the media industry forward, not by forcing litigation, subsidies, or other handouts to simply preserve a model that has seen its time come and go.

The latest round of controversial statements coming out of traditional media this week centers around the question of how news media can survive. Some are calling for Google to subsidize them for linking to their content (FYI – if they don’t want Google to link to them, a simple robots.txt file can fix that). Others continue to suggest that consumers should pay for their content. At a cable industry conference last week, Rupert Murdoch said “People reading news for free on the Web, that’s got to change.” But how do you force people to pay for something they either don’t want or can get for free elsewhere? As I stated in a previous blog post, the Internet breeds ubiquity, minimizing the market for all but the most unique content.

The Associated Press fired a salvo at the industry by stating that they are going to police the use of their content on the Internet – but in typical old media fashion – have no idea how. "I think it would be premature to get into the mechanics of how it might work," said Sue Cross, a senior new media executive at the AP. "We simply aren't that far along."

The economic stimulus package and corporate bailouts notwithstanding, the concept of capitalism is quite simple. If you create products or services that people want, have value, and are unique, there will be a market for those products or services. Sometimes that market is a direct market (the consumer pays directly for the product or service), while other times it is an indirect market (the consumer “pays” by accepting the intrusion of advertising). But one very important point seems to keep getting lost – there is no inherent right in a capitalist society for any particular product or service to exist – the market dictates their existence.

If people are no longer buying a printed media product, if their advertising is no longer valuable, if they aren’t providing value that people are willing to pay for, then why must they exist (at least in their present form)? If the production costs for print media exceed revenue, then there is a problem with the business model in the current market.

The media market of the (near) future must understand how people consume content and then determine a way to monetize that market. What are the ways people find content in the current media market?

1. Twitter / Facebook / Other Social Networks: You get links to articles of interest based on people you have “friended” or “followed”. Often very relevant, since there is a tendency to be linked to others in your particular industry or who share similar interests.

2. Google News Alerts: You enter keywords and get news article headers sent via email. No loyalty to a single media product, but you get the information most relevant to the topics you care about.

3. Email Newsletters: You register for a daily/weekly newsletter and are sent a header on the relevant information from a particular site. Much more brand loyalty, but the consumer is limited to the perspective of the site they subscribe to.

4. Portals: You set up a page on “My Yahoo” or “iGoogle” or one of several other aggregator sites.
A great way to pull all the content you need onto a single place, but you need to make the effort to go to the page to get the links to the content.

5. Related Links: You are reading an article of interest and there are links to similar articles. Very effective if done well, unfortunately, too many media companies under-invest in the technologies to do this right.

6. Web Search: You enter keywords and are directed to relevant web sites. Not very effective for finding only relevant articles as you are also directed to marketing sites and only receive information as good as the keywords you enter.

7. RSS feeds: Frequently combined with portals, but also used with “feed readers” or similar software, utilizes the feeds from various news sources to provide you with headers and links to news items you have subscribed to. Downside is that some sites don’t offer granular enough feeds to drill down on specific topics of interest. For example, I can get an RSS feed from the NY Post for all of their columnists, but not for a specific one.

8. (Last but not least) Print: Still very effective for Sunday reading and doctor’s/dentist’s offices, but losing steam elsewhere. The print medium is still significantly more effective at delivering longer form, more analytical content than the Internet. And I imagine that only a few people grab their laptop over breakfast in bed on Sunday. The newspaper or magazine still has its place on trains, offices, bathrooms, and reading rooms. Unfortunately, however, it is no longer the predominant way to deliver content to the masses, is often already outdated, and carries a price tag that is circumvented by reading the same (or similar) content online.

So how do media companies reconcile all of the various access points to media and ensure compensation for their efforts?

The first step is to determine what they do that truly has value. For example, the New York Times may have a large number of visitors to news, sports, and key columnists but very few visits to LifeStyle and Travel online (hypothetically). At what point do they determine that it is no longer profitable to continue publishing sections online that receive little traffic? Or does it make sense for some papers to only produce a printed version on Sundays and be online only the rest of the week?

Secondly, how do we engage the consumer as the consumer wants to be engaged? This is the key question, as it helps determine where there may be potential for subscription charges, where valuable registration information may be collected, or where advertising revenue can be maximized through effective targeting that drives cost-per-click or cost-per-action dollars into a range that produces advertising profitability.

These two ideas assume a remodeling of the current business models as opposed to a radical change in the overall business models. But what if the current models were blown up and we completely re-visioned the way content is delivered? What if all major columnists were freelance “bloggers” and were either paid subscription fees for their content, or were able to attract sufficient advertising – while cutting out the middleman (the newspaper or magazine publishers) and keeping all profits to themselves? Major columnists, in effect, become brands unto themselves. For example, I always read Phil Mushnick in the NY Post. I would still follow him if he was independent (to me, the NY Post simply serves as a container for his content). This is not a radical idea – think Arianna Huffington or Michael Arrington (TechCrunch) – who compete, successfully with the Washington Post and Ziff-Davis/Cnet, respectively.

The bottom line is that people currently, and in the future, will gather their information as they see fit – not as a single publication or website dictates to them. We will continue to use news aggregators, social networks, and other methods of personalizing our informational content, not tied to a particular brand or media firm. Sure, we may have some brand loyalty, but that is more likely to be targeted to a particular writer than a specific media title. Let’s face it, as an American Idol fan, I read Michael Slezak’s column religiously, but it doesn’t matter to me whether it is part of EW.com or a blog unto itself. In fact, the EW brand really adds nothing to the user experience – its Slezak’s words, his brand, that drives me to his column. The same with Michael Kingsley from the Washington Post, Ken Rosenthal from FoxSports, and Mushnick – their affiliation is less important to me than their content – so what value is it, to them, for their columns to appear under a major masthead instead of as an independent news source – especially when RSS subscriptions, aggregation, and linking are so prevalent?

So the key question is – will we really still need traditional newspapers and magazines, or is the future of the media industry simply to personalize and aggregate the information we want to read in the format we want to receive it? If you read a newspaper today, many of the articles are likely from the Associated Press or another news source – in a way, the newspaper is just acting as an aggregator of news information printed out for consumption where the consumer doesn’t have access to the online version.

Time Inc. is already experimenting with a personalized magazine (albeit, quite limited). Hearst is experimenting with a tablet device for content distribution. Firms like Zinio and Texterity are building online readers. Interesting concepts, but isn’t this all just an exercise in giving the consumer the specific content they want in the format they want? (Quite frankly, I think all of these experiments will fail, because they are still executing them from the content provider standpoint instead of the consumer standpoint).

At the end of the day, it comes back to the initial viewpoint of what succeeds in a truly capitalist society. It’s not about finding ways to subsidize outdated business models, but about striving to invent new ones that incorporate the social mores and consumer preferences of the current time. Give consumers the content they desire in the format that they want it, when they want it, and build a business model around it. That’s the right way to drive the media industry forward, not by forcing litigation, subsidies, or other handouts to simply preserve a model that has seen its time come and go.