Times have changed, haven’t they?
Now:
Local ad spending will fall from $155 billion last year to $137 billion in 2011, predicted the Kelsey Group and BIA Advisory Services. Yet local online ad spending will increase from $14 billion to $23 billion during that time.
Then:
Advertising in newspapers (in the US, I presume) grew from $39M in 1880 to $150M in 1900.
From Kenneth Whyte’s book on William Randolph Hearst called The Uncrowned King: The Sensational Rise of William Randolph Hearst.
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Mark Cuban asks “Why do internet people think content people are stupid“, it’s a good question. I asked the same thing during the Boxee/Hulu brouhaha and encounter the phenomenon in my experiences running a new media content company. Let’s face it, technology just has this aura about it.
I personally think is overrated (see why below), but if you live or work in tech hubs such as SF, it’s all around you: content gets no respect, and the techies think they are saving content every time they launch an application or platform. It’s frustrating and disrespectful.
I am now reading a book by Kenneth Whyte, on William Randolph Hearst called The Uncrowned King: The Sensational Rise of William Randolph Hearst, and this passage sums it up for me:
“[Hearst] confessed that he had entered journalism because he was not up to the long, dull preparation required, say for a legal career: ‘The newspaper business seemed to offer more immediate attractions, and as many ultimate rewards’.”
I agree wholeheartedly. Now replace journalism/newspapers for media/content and legal with tech and you get my rationale for choosing content projects over tech ones. Tech is an enabler, it is a means to an end.
Why do I think tech is overrated relative to content (which is underrated)? Because content is created instantly and consumed on the spot. You see if it works or if it doesn’t. You can’t hide bad content with excessive VC money. Good content prevails and stands the test of time. Technology seems like a crapshoot - a better mousetrap won’t be worth more, won’t touch as many people.
It’s thus very backwards to see headlines such as the Declining Value of Content. This is the kind of thinking that got VCs in trouble, and thanks to the economic meltdown, irrelevant: by plowing all of this money in platforms and under-investing in content, they’re forced in the sidelines as the next growth area is serving user and advertiser demand for quality content as people continue to migrate online.
To borrow a phrase from Celine Dion, “Content will go on”, grow and continue to reach people, but there seems to be a plethora of roadkill in the tech space, no?
Ultimately, it’s not so much about media or technology, media or software, it’s all about:
1- Adoption: if no one consumes what you create, you’re out of luck. Now imagine if no one is aware of your product.
2- Retention value. If you build a technology or create content and X time later it has little value, you basically wasted resources and will lose out to a competitor whose product retained its value better. In tough economic times like today, this is probably most important.
3- Scarcity: demand and supply. If your application - be it content or software - has a favorable demand vs. supply dynamic, you will win. End of story, because you will have leverage in sales or M&A talks.
But seeing how a few readers emailed me the “Declining Value of Content” link; addressing it, I’d ask: what content are we talking about?
The truth is, to borrow a quote from Mark Cuban, “internet people” are creating content that “content people” (traditional media folks) don’t like or get, and traditional media is trying to convince “internet people”that its traditional media is worth aplenty, but judging at the continuing losses in market value in their market caps, the market disagrees, pure and simple.
Some of that has to do with distribution (and how technology has splintered and fragmented it, no doubt), but a lot of it has to do with content. Ultimately, the massive loss of value has one half to do with the systematic meltdown, the other half is the unique/unsystematic fact that old media’s cost structures are undeniably out of whack for a new economic order we’re entering now. Wasn’t it Hearst’s own president of Hearst newspapers Steven Swartz came to:
“One inescapable conclusion of our study is that our cost base is significantly out of line with the revenue available in our business today. It is equally inescapable that during good times our industry developed business practices that were at best inefficient.”
But trust me when I report from the front lines: the tone has changed. Purveyors of the Next Big Thing in Technology realize their platforms are ghost towns without content. As each month goes by, the balance shifts, and the reason for that boils down to scarcity and retention value, two things that good content will always have more of than technology.
As a side note, the Uncrowed King book has a lot of great quotes and interesting stats on the growth of print advertising and value of newspapers, as I plow through the book I will add some passages for sure. In the meantime, check out a couple of interviews our staff did with the author of the book, Kenneth Whyte, below:
