CONTENT VS. DISTRIBUTION
Distribution was nearly king you couldnt get a cable channel going in this country without John Malone. But when real broadband arrives, owning distribution will be less and less important.
There’s a lot of signs that Murdoch really gets the new media space at the moment, but content vs distribution is an old battle, and this perhaps demonstrates how much his strategic instincts are still honed to fight old wars.
Content vs Distribution was the imaginary battleground of a war called ‘convergence’ that, like so many wannabee generals playing Risk or Age of Empires, occupied the executives and strategic thinkers of blue-chip media/comms companies for the last 10 years or so. Large bets were placed on whether it was more important to be at the centre of a huge content network, or a huge communication infrastructure. The riskiest gamblers (*cough* Aol *cough* TimeWarner) tried both, betting that this illusory convergence would create a new battlefield, and they would be the centre of it.
There were a couple of problems with this. The glamour of content hid the fact that its actually (in its hit-driven, pre Long Tail version) incredibly economically inefficient. Andrew Odlyzko’s excellent essay ‘Content is not King’ exposes this reality, landing a couple of really important facts, as well as some prescient predictions.
One of the facts is about the economics of content consumption. Odlyzko points out that the content sector is actually dwarfed by the communications sector in terms of average US consumer spend. He goes further, to point out that nearly all forms of content are subsidised for the user – ie, the user does not bear the full cost at the point of consumption, as costs are ameliorated by advertising, concessionaries, or indirect taxation (eg – the license fee). Conversely, consumers seem happy to pay way over the odds for some forms of communication, such as SMS.
In other words, we value gossip highly, and content rarely.
Of course, in our media 2.0 world, content can be conversation, and vice-versa. Murdoch might understand this, but it looks like he’s still placing his chips on the Head, not the Long Tail. Elsewhere in the Wired article he talks about building MySpace profiles for NewsCorp films and other content as a way to start to derive attention and revenue from MySpace into his Big Content properties.
This is a fundamental misunderstanding of how content operates in conversational spaces. In a recent post on his Long Tail blog, Chris Anderson challenges Malcolm Gladwell’s assertion that “Without the New York Times, there is no blog community. They’d have nothing to blog about.” Using Technorati to find out how many posts actually index Big Content brands, Chris concludes that the blogosphere is actually writing about almost anything *but* the New York Times. in fact, the top big media brand reference in blog posts (the BBC) is still only referenced in *0.3%* of blog posts.
Imagine a party with 1000 people in it. Murdoch would like to think that by walking into the party, people will start to talk about *his* movies. In fact, at best only three people will bother… That’s quite a cold, hard statistic if you’ve just spent half a billion dollars hosting the party.