Content Has Been De-Valued by the Internets®

And that is a major reason why the advertising model isn’t working any more for “the media”, whether it be newspapers, TV, movies, the music industry, book publishers, etc.

There. I’ve figured all this out now. You can all thank me by sending a check for $50 to … oh, wait, too late, I’ve published this on the damn Internets®! For free! What a moron.

Of course, I’m far from the first to dig deeply into all this, but I’ve been thinking about it alot the last few months. And as one who is trying to build a freelance writing career, I have to think about, and understand at a basic level, the concept of content and how it is delivered. What is the value of content in a market where “information wants to be free”?

And here’s what I’ve come up with. Content-producers like newspapers and TV networks are suppliers in an economic market, governed by the rules of economic markets. That content used to be more controlled, and therefore precious and rare, and so by definition, more valuable. Newspapers controlled what we read, and how much they allowed us to read. TV controlled the news that we saw, and how much of it we were allowed to see, and all the TV shows, and the stars that were on them, and the writers that wrote for them; and since there were only 3 networks, the supply was extremely limited compared to today’s 300 or more channels on satellite, cable, etc. Same for movies, music, books, etc.

All of these industries were in the business, whether they realized it or not, of restricting the availability of the content they provided, in order to prop up its value. And this is because rather than charging the end consumer for that content, they used ratings to drive ad revenue to fund the whole thing. And ratings depend on having just a few delivery channels, so that the audience doesn’t get too fragmented. Once you add hundreds more delivery channels, (or millions, in the case of the Internet), the whole model won’t work any more.

Suddenly, they had to compete with content providers who weren’t protecting revenue streams, all driven by the Internets®, and the audience became fragmented, and the bottom fell out.

They thought they were providing content, but as we’ve seen over the last few years, with the decline in movie viewership, TV ratings, newspaper circulation and ad rates, etc., providing content and relying on advertising to fund it is a suckers game when the market is saturated. So their business model relied on restricting content more than providing it.

The Internet has changed all that, by introducing tools to make it easy to self-publish, and self-podcast, and self-YouTube. And it introduced more tools to build relationships between people and build online communities. And the net result of all this is a chaotic and wonderful flow of information, opinions, creativity, images, music, videos, on an unprecedented scale. Content providers, who mostly haven’t been focused on revenue streams from that content.

So this morning, for example, instead of being limited to a choice of 2 or 3 morning papers in my driveway, and 3 or 4 TV channels with news or children’s shows, and 30 or 40 AM/FM radio stations, I have a choice of literally thousands of online newspapers, and hundreds (if I subscribed to all of them) of cable channels, and thousands of online radio stations. The mere fact of having all this choice at my disposal changes the game, both for me the consumer, and for the provider. And because of the increased competiton, any given channel or stream of content is much, much less valuable to the provider than it used to be, by definition.

Greater supply of media content (with constant demand) = lower prices. So now, advertisers no longer have just a few choices on where to target their dollars for maximum impact.

Now one could argue whether all this has been a net gain, or not. The value to “the people” has been immeasurable: information, and therefore knowledge, is much more freely available than it was just 5-10 years ago.

If you’re in (or depend on) the content-delivery business, though, not so much. While “the internet wants to be free”, should we let it do what it wants? Who runs the world economy, people or the Internet? Of course, this would mean government control, which is always a horrible idea. And the Internet spans national boundaries, so it would have to be U.N. control. And the U.N. could screw up a one car funeral, so scratch that whole plan.

Looking back, it seems that media buinesses with formerly viable business models should have thought harder about what kind of Internet presence they desired. Newspapers, for instance. Maybe they couldn’t have avoided their current financial mess no matter what they did, and maybe this is all moot. But jumping in with both feet to give away electronically what they used to print and charge for sure didn’t do anything to delay that trouble. And I say that as somebody who has always loved reading newspapers, and also loves to be able to read a wide variety of news sources online.

Of course, newspapers (and TV news) have had other issues, like partisan news coverage that drove away people like me who don’t care to read bullshiat that I know is framed and spun and hiding a larger context. And I know this because I can read other sources that tell an entirely different story, and are backed with more facts and context that I happen to know to be true (history is your friend). In other words, a weakness of the newspaper model (left-leaning partisanship) was exposed by information wanting to be free, after having been protected far too long by limiting the channels of content distribution. So on one level, I have no sympathy for them; anybody who is in a mass market but decides to cater to 40% of the audience is an ideologue and a moron. Nice strategy, McFly!

And what is up with Twitter? Do we really need to log what we’re doing all the time on a computer so that other people can read it? At what point does the obsession with this sort of minutiae become silly self-indulgence instead of Yet Another Brilliant New Internet Innovation! ? And are we as a people better off with more and more of our communication taking place electronically instead of face to face or on the phone? I have to vote “no” on that.

And as consumers, we might be better off if we lower our expectations a little bit. Because of the Internet, and to a lesser extent the Open Source movement, the consumer’s expectation today is that everything — source code, media content, the whole shebang — is free. How is this much different from the social welfare attitudes of Europe, California, and other places, that our health care, and our education, and everything else important should be free, too? How’s that working out? Ain’t no free lunch, folks.

But expectations are very hard to fight. So today, this equation is tipped toward the consumer; what if it ends up bankrupting large segments of our economy? Is this really what we want? Are we willing to sacrifice our economy on the altar of “information wants to be free”?

I don’t know the answer to all this. There are “true believers” in both new media and old; there are free marketeers who believe the market rules everywhere and always. All of them have some valid points, but are very likely wrong here and there, as well.

So here’s hoping that content survives in some form, and that consumers are guided to a place where we don’t expect everything to be free all the time.

And don’t forget to send that check.

  1. xiwhang said:

    So in other words, media used to be simply a “push” model and now it’s moving to a “pull” model.

    Eventually everything will be pay-per-view.