Terrific post. I wrote a little about this last week on my personal blog, and while Philly Future's business model still isn't laid out, it was part of the bet I made when I re-launched it.
Nick Carr
· 3 years ago
Can anyone think of a content business — meaning a company that produces original content — that has scaled dramatically in recent years?
Wikipedia.
Scott Karp
· 3 years ago
Nick, yes, perhaps I should have been more specific -- a for-profit business producing original content that has scaled?
rickburnes
· 3 years ago
I agree with most of what you've said here, but I think it's important to note that the Internet has helped places like the NYT, the BBC, the Guardian and the Washington Post scale up -- not to the scale of aggregators, but certainly up. 20 years ago these were outlets consumed only on their home turf. Now they are the world's leading English-language news sources.
I think things are different for these guys because (A) they create top-notch content in the head (relevant and interesting to almost everybody), and (B) it is hard to produce this kind of content (not everybody gets leaked memos from the Secretary of Defense). The result is that as media unbundles, these winners are stealing audience from local and metro papers that were bundling low-quality head content into their reports.
Scaler
· 3 years ago
Calling Techcrunch, Weblogs Inc, Gawker, PaidContent business that are successful at scale is stupid. They are far from scaling. The produce nothing in terms of content. Pumping out trivial text is simple.
Media businesses have proven scale on their 'old' platform. We'll certainly see new companies emerge that can scale with video and audio. There are a few out there now pumping out a ton of video and audio original content.
Scott Karp
· 3 years ago
Scaler -- first, why not take credit for your insights? Second, I said those content businesses are successful at their scale, i.e. at their current scale, meaning they are all profitable today. I profitable content business is far from "trivial."
There are a few out there now pumping out a ton of video and audio original content.
Can you be a bit more specific?
Nick Carr
· 3 years ago
a for-profit business producing original content that has scaled?
Yahoo Answers.
Wikipedia and Yahoo Answers may be exceptions that prove the rule, but they're illuminating exceptions.
Good post, by the way.
David Brazeal
· 3 years ago
Great post, Scott. The theoretical "pie" of our attention is being divided into smaller and smaller pieces. Old-line content creators have responded by desperately trying to maintain their share of the audience. I think they'd be better served by giving away audience -- if they do it right.
Here's how I envision it: newspapers, radio and TV stations, and magazines have excellent relationships with advertisers. They should be working with those advertisers to help the advertisers capture an audience of their own. Radio stations can keep producing content to reach the biggest number of people possible. Or they can find revenue by creating 100 online programs for 100 niche audiences, each delivered to an advertisers' specific demographic.
For example, I work for a company that's in the radio network business. But the interactive division I work for is not producing the same old programs for mass audiences online. Instead, I get to work with individual clients to help them talk to their audience. In effect, we're using our ability to create content to give away audience attention to our client-partners, instead of trying to hog it for ourselves.
howard lindzon
· 3 years ago
when did they ever scale. They have always been huge overhead businesses. If not at the beginning, than when they mature slightly.
There is an abundance of talent -that is the story Scott. Content has never been cheaper to make so this is the first time it CAN scale
Scott Karp
· 3 years ago
Howard, I agree that content creation is scaling like crazy due to an abundance of newly empowered talent -- but that's precisely why it's so hard to scale the audience for any given content effort -- and that's why the content platforms are what scales.
Pramit Singh
· 3 years ago
Great post, Scott. These are not that good a time for content providers as hyped. I wrote on the issue a few times back which your readers may find useful.
tomo
· 3 years ago
Scott,
Sometime during the past 14 years all economic rules got temporarily tossed aside to make way for the internet and the new economy. This was the verge of utopia and then the bottom fell out. The crash or correction during 2001-2004 was the market getting itself back to a state of equilibrium, or as close to it as theory will allow. Since the internet wasn't able to BK itself :) and telco's weren't pulling their fiber out of the ground and content was getting more compelling and lastly ubiquity in broadband access was not a pipe dream of a rocket scientist(milo medin from @home) but was actually beginning to happen, we were presented with an ideal economic setting for growth. Leverage the efficiencies of this internet with a combination of hardware and software to drive efficiencies in every possible nook and cranny of enterprise and consumer goods and services. The relevance to your posting is that this notion of the market evolving to maturity can be applied to the original content industry. Based on the attributes of the internet like always on, ubiquity in reach(global, not local or regional, interactivity between participants it becomes astoundingly clear that the content producers as we know them are not examples of efficiency as it pertains to the internet. So when you state that content producers aren't scaling to the degree that the aggregators are you are 100% correct but that shouldn't be shocking news to anyone. What it should do is stand as a wake up call to how easy it was to get consumed in the hype of web1.0 only to suffer a rather long hangover which wiped out many false dreams. One last example on why youtube, flickr, blogs, and UGC for that matter, are examples of efficiency enablers is highlighted by this fact, it cost the producers of Friends somewhere in the neighborhood of $5M per episode(disclaimer: that # is from memory and rough guesstimate of per actor salary and general production expenses) to produce
Todd Cochrane
· 3 years ago
One of our properties that we own PodcasterNews.com is all based on original content it has been a interesting year on that site and traffic continues to grow and I can tell you original content sites are pretty hard to scale especially for a boot strapping startup. We require that all of the content be original aka not found anywhere else that is not to say that the producers are producing 100% original but we try..
ann michael
· 3 years ago
Scott – what a great post!
I work more with reference content in the STM (science, technical and medical) market and the “silver bullet†there is integrating content into the workflow and creating tools, thereby, making content more accessible (for a professional practitioner or researcher). If you look at Thomson, for example, they have been successful on this front and it is the mantra for Elsevier and Wolters Kluwer as well.
But your point still holds in STM because even with the move towards integration and tools – companies that still want to sell JUST their content will meet with less success than those that are open to all content sources. Consumers want what they want regardless of who published it.
Aggregation is an important model in STM, but even some aggregators are having a hard time keeping their market share. Aggregators that don’t keep updating their pricing, content "bundling" options, and platforms are learning the hard way that they can’t just “dump†books and journals on the electronic shelf anymore.
john dodds
· 3 years ago
My immediate reaction is that content never was truly scalable - but there are certainly some news publishing companies in the UK that recycle content across a series of their titles and through new giveaway editions. I guess it depends on your definition of dramatic.
Chas Edwards
· 3 years ago
Great post, Scott. But I actually think today's independent publishers have a better shot at scale than traditional media start-ups because, unlike media start-ups of the past, they can outsource more of the publishing work, namely ad sales, ad serving and collection of accounts receivable.
At the low end of the effective CPM scale, there's Google. I'm at Federated Media, where we're trying offer independent sites with higher effective CPMs. We do this by working with advertisers directly (human sales people) to build integrated programs & to sell each site's unique magic. This gives us access to higher CPM brand-advertising budgets rather than the direct-response / CPC budgets that fund most of the campaigns with Google.
Traditional print magazines and web publishing companies spend 75-85% of their budget on SG&A, the non-editorial stuff. Mike Arrington, Om Malik, the Boingers and 100 other indie publishers offload those costs to FM, while giving away (to FM) only 40% of the ad revenue. For small & mid-sized publishers, Google takes about 49%. FM's "federation" approach gives us economies of scale that small & mid-sized sites wouldn't have on their own. In other words, today's niche publications can collect the premium ad prices previously only available to major media companies with funds for big sales staffs -- without the same cost structure. Maybe those higher margins will enable them to publish more content, launch new publications, and reach larger audiences. Perhaps there's hope for scale!
Rahul Pathak
· 3 years ago
Scott,
I've enjoyed your blog for a while and thought this was a tremendous, thought-provoking post. I think you make a lot of sense and as an entrepreneur, it definitely makes you think about what you want your startup to be when it grows up.
Thanks for posting.
Rahul
Tom Foremski
· 2 years ago
There is a difference between finding a content business that has scaled and saying that content doesn't scale. Foremski's first law of new media states that content is infinitely scalable...
All Comments
Wikipedia.
I think things are different for these guys because (A) they create top-notch content in the head (relevant and interesting to almost everybody), and (B) it is hard to produce this kind of content (not everybody gets leaked memos from the Secretary of Defense). The result is that as media unbundles, these winners are stealing audience from local and metro papers that were bundling low-quality head content into their reports.
Media businesses have proven scale on their 'old' platform. We'll certainly see new companies emerge that can scale with video and audio. There are a few out there now pumping out a ton of video and audio original content.
Can you be a bit more specific?
Yahoo Answers.
Wikipedia and Yahoo Answers may be exceptions that prove the rule, but they're illuminating exceptions.
Good post, by the way.
Here's how I envision it: newspapers, radio and TV stations, and magazines have excellent relationships with advertisers. They should be working with those advertisers to help the advertisers capture an audience of their own. Radio stations can keep producing content to reach the biggest number of people possible. Or they can find revenue by creating 100 online programs for 100 niche audiences, each delivered to an advertisers' specific demographic.
For example, I work for a company that's in the radio network business. But the interactive division I work for is not producing the same old programs for mass audiences online. Instead, I get to work with individual clients to help them talk to their audience. In effect, we're using our ability to create content to give away audience attention to our client-partners, instead of trying to hog it for ourselves.
There is an abundance of talent -that is the story Scott. Content has never been cheaper to make so this is the first time it CAN scale
Sometime during the past 14 years all economic rules got temporarily tossed aside to make way for the internet and the new economy. This was the verge of utopia and then the bottom fell out. The crash or correction during 2001-2004 was the market getting itself back to a state of equilibrium, or as close to it as theory will allow. Since the internet wasn't able to BK itself :) and telco's weren't pulling their fiber out of the ground and content was getting more compelling and lastly ubiquity in broadband access was not a pipe dream of a rocket scientist(milo medin from @home) but was actually beginning to happen, we were presented with an ideal economic setting for growth. Leverage the efficiencies of this internet with a combination of hardware and software to drive efficiencies in every possible nook and cranny of enterprise and consumer goods and services. The relevance to your posting is that this notion of the market evolving to maturity can be applied to the original content industry. Based on the attributes of the internet like always on, ubiquity in reach(global, not local or regional, interactivity between participants it becomes astoundingly clear that the content producers as we know them are not examples of efficiency as it pertains to the internet. So when you state that content producers aren't scaling to the degree that the aggregators are you are 100% correct but that shouldn't be shocking news to anyone. What it should do is stand as a wake up call to how easy it was to get consumed in the hype of web1.0 only to suffer a rather long hangover which wiped out many false dreams. One last example on why youtube, flickr, blogs, and UGC for that matter, are examples of efficiency enablers is highlighted by this fact, it cost the producers of Friends somewhere in the neighborhood of $5M per episode(disclaimer: that # is from memory and rough guesstimate of per actor salary and general production expenses) to produce
I work more with reference content in the STM (science, technical and medical) market and the “silver bullet†there is integrating content into the workflow and creating tools, thereby, making content more accessible (for a professional practitioner or researcher). If you look at Thomson, for example, they have been successful on this front and it is the mantra for Elsevier and Wolters Kluwer as well.
But your point still holds in STM because even with the move towards integration and tools – companies that still want to sell JUST their content will meet with less success than those that are open to all content sources. Consumers want what they want regardless of who published it.
Aggregation is an important model in STM, but even some aggregators are having a hard time keeping their market share. Aggregators that don’t keep updating their pricing, content "bundling" options, and platforms are learning the hard way that they can’t just “dump†books and journals on the electronic shelf anymore.
At the low end of the effective CPM scale, there's Google. I'm at Federated Media, where we're trying offer independent sites with higher effective CPMs. We do this by working with advertisers directly (human sales people) to build integrated programs & to sell each site's unique magic. This gives us access to higher CPM brand-advertising budgets rather than the direct-response / CPC budgets that fund most of the campaigns with Google.
Traditional print magazines and web publishing companies spend 75-85% of their budget on SG&A, the non-editorial stuff. Mike Arrington, Om Malik, the Boingers and 100 other indie publishers offload those costs to FM, while giving away (to FM) only 40% of the ad revenue. For small & mid-sized publishers, Google takes about 49%. FM's "federation" approach gives us economies of scale that small & mid-sized sites wouldn't have on their own. In other words, today's niche publications can collect the premium ad prices previously only available to major media companies with funds for big sales staffs -- without the same cost structure. Maybe those higher margins will enable them to publish more content, launch new publications, and reach larger audiences. Perhaps there's hope for scale!
I've enjoyed your blog for a while and thought this was a tremendous, thought-provoking post. I think you make a lot of sense and as an entrepreneur, it definitely makes you think about what you want your startup to be when it grows up.
Thanks for posting.
Rahul