Conventional Wisdom And The Evolution Of Content Providers

Recently, Dave Fleet wrote a thought-provoking entry in his blog entitled “McDonalds Content and Social Search.” It was, in part, a response to a post by Michael Arrington about the evolution of news content. The bottom line in both instances seemed to be that content is being cheapened by emerging technologies and the ability to react to that trend would determine whether traditional outlets live or die.

First, I think both writers are absolutely right. The searchability of tweets from Twitter and Facebook posts, for instance, will flood an already saturated content base. And, true to form, some of it will be good (useful and/or accurate) and some bad (superfluous and/or inaccurate). However, to me this is another version of a shift that has happened many times before to what we’re now calling “content providers.” Here are a few examples of conventional wisdom from our recent past:

“Desktop publishing will kill the mainstream print industry.”

With the advent of the personal computer, you no longer needed an expensive offset print operation to publish a newsletter or other communication. Now a person or company could do that relatively cheaply themselves. Suddenly, the “little guy” had a voice. Advice on your finances, your politics and your local sports team could now come from sources other than Forbes, Time, and Sports Illustrated.

“Open source platform software will devalue the paid software model.”

Software development was traditionally a closed model. And developing on a platform necessitated getting permission from (and almost always paying a fee to) the company that held the license for the platform. Once the 800-pound gorilla was determined to be Microsoft, companies developing software found themselves working in a tightly closed environment. And in this case, the platform provider was often competing with them as well. Remember the initial fuss over the release of Internet Explorer? Those ripples are still felt today. But then Linux became a viable alternative platform. And its open source model meant that access to the source code was easy and free and development was unencumbered by paid licensing.

“Digital video shooting and editing will put traditional film companies out of business.”

For years, the film business was a bulky, labor-intensive, cost prohibitive venture. But digital camera equipment and editors came along and changed all that. What took 100,000 square feet of space, scores of people and millions of dollars of capital can now be done with little more than a loft space, a small core group and much less money. And over time the technology progressed and the trend accelerated.

First, let me acknowledge the obvious. Did some big printing companies and publishers close? Absolutely. Did software companies go belly-up? Without a doubt. Did film companies lose their shirts? Many did. But there are also cases of these businesses adapting, restructuring, and in many cases using the new technology to save their businesses.

But what about the value of their product or service? In many cases, the new technology put economic pressure on these companies to lower their prices. But free market economies do that to just about any business. So many of these legacy “content providers” became niche market businesses. As their competitors faded away, some were even able to hold or increase prices. Though the market was smaller, there were fewer places for their customers to go.

Two things to consider about the type of “McDonalds content” Arrington and Fleet write about.

1. Companies selling cheap content still have to make a living.

The traditional wisdom is that, if you sell something cheaply you have to sell a lot of it to make any money. If that’s true, then those providing cheap content will always be chasing the next dollar. It’s tough to focus on much else if that’s your primary focus. And that should leave a market for angles such as “premium” (read “quality”) content and specialization.

2. It is crucial for content providers to build value in their product.

Shame on us if we don’t properly build value in what we do in our customers’ minds! If all we’re doing is providing the same things for more money, then we get what we deserve. But if we are providing real value, and we promote that value properly to our customers, then we are truly positioning ourselves in the marketplace. Not everyone will choose us in that scenario, but we at least have a chance.

This is an exciting time for consumers seeking content and individuals and companies providing it. As the paradigm shifts further, it will be interesting to see who thrives, who adapts and who perishes. But history tells us that a value proposition will always be part of the equation. Even in the era of 1’s and 0’s.

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