This is an attempt to put the content business disruption that came into our experience with development of Internet distribution channel.
There is no secret for anyone today that business models of modern content management companies are being violently disrupted. However it seem to me that the arguments on both sides are missing some of the root causes of the disruption. At least I have not encountered anybody making this point before.
Business of charging units of economic value (money) for consumption of content, such as book, newspaper, music recording or film, is relatively new business model in terms of historic perspective. It only became available with advent of industrialization, i.e. nearly 200 years ago. Before that time the mass re-production of content for consumption was not economically viable as manual re-production methods were not scalable, potential customers did not have ability to consume yet as they had no money to pay, leisure time to consume or ability to consume (read). At these times only organized religions and states could afford to produce content, because the content they produced helped them to “market” (i.e. enforce) their economic and administrative powers.
It all started to change with invention of printing press that heralded appearance of “unofficial” content we call literature. Traditional purveyors of content surely tried to participate in democratization of printed word, however even small members of literate market, given the choice preferred the content of higher quality and started to support economically market oriented content production.
Given relatively fast (historically speaking) economical development of industrial societies, the availability of leisure time and common literacy quickly produced strong demand for content with a cost of production lagging behind. That is when a content became the king. Any content would sell regardless of its quality and the content packaging, distribution and marketing machinery of publishing, news and studios was born.
When Internet distribution platform started to threaten this machinery, two currents have merged:
1. Economics of scalable distribution no longer required massive capital for logistics and marketing, as realities of digital distribution and consumption eliminated them;
2. The production of content started to meet, and exceed the demand. This manifested itself in demand for higher quality content as oppose to any content.
This second point is really worth further exploration. Consider music record model – create one hit and market it to stimulate the demand, package it with 9 or 10 mediocre tracks, and sell them at the price of an album to produce healthy royalties and profits even after the cost of printing, tracking, retail selling and unsold inventory destruction. And this worked until the market became flooded with too much mediocre music and costs of marketing became too difficult to bare. Enter digital distribution that does not need to support legacy infrastructure and enable customers to buy only the track they want. Industry cannot exist on $.99 price per track (unit of content) and internal cost of royalties distribution of $2.99 per album. And it will not, but we will end up with better music quality and only truly creative artists who are and will be rewarded. Perhaps not as lavishly as they were in very short era of misbalanced supply and demand, but this era only lasted for a few decades and before that the artists were starving.
Take this logic to the newspaper publishing business and you will see that the pattern is repeated. The quality of the news content kept deteriorating to reduce cost of content creation while marketing and re-production costs kept growing until people started to read blogs instead because their content became more interesting. Truly gifted, creative and honest journalists are finding the consumers for their content that allow them to monetize that content. The opinionated political pundits of each persuasion seem to find their respective niches without any editorial oversight because people who “buy” their content do not care whether it is the “truth” as certified by self-important authority.
The book market seem “frothy” now with everybody and anybody is publishing books that are supposedly doing well on numerous lists. Some of them are very good, but most make think that the tree was killed for no good reason. I wonder how long will this last?
The point I am trying to make is that digital distribution based on internet protocols and platforms will make a content a true king, but not just any content, the great content only.