Content is King? Depends on Your Point of View

Did you know it was Bill Gates who said the oft repeated media catch­phrase: Con­tent is king? In a 1996 arti­cle by the same name he wrote, “Con­tent is where I expect much of the real money will be made on the inter­net, just as it was in broad­cast­ing. The tele­vi­sion rev­o­lu­tion that began half a cen­tury ago spawned a num­ber of indus­tries, includ­ing the man­u­fac­tur­ing of TV sets, but the long-term win­ners were those who used the medium to deliver infor­ma­tion and entertainment.”

In his arti­cle in The Atlantic in July 2011 Jonathan A. Knee, from the Colum­bia Busi­ness School, responded for the exact same rea­sons that Con­tent Isn’t King. “In fact the dirty lit­tle secret of the media indus­try is that con­tent aggre­ga­tors, not con­tent cre­ators, have long been the over­whelm­ing source of value cre­ation. Well before Net­flix was founded in 1997, cable chan­nels that did lit­tle more than aggre­gate old movies, car­toons, or tele­vi­sion shows boasted profit mar­gins many times greater than those of the movie stu­dios that had pro­duced the cre­ative content.”

Con­tent isn’t king. Bill Gates actu­ally said it him­self in con­tra­dic­tion to his title: the win­ners are those that use the medium to dis­trib­ute con­tent, not the pro­duc­ers of content.

Con­tent isn’t king, it’s the sub­ject, the sub­ject of the ver­i­ta­ble mon­archs of the dig­i­tal realm: aggre­ga­tors in all their incar­na­tions, from search engines, to social media sites, Net­flix, Rdio, and other dis­trib­u­tors. It makes for many reign­ing mon­archs, but the realm is vast and the turf wars fierce.

To give an idea of the bal­ance of power at work con­sider the cur­rent land­scape, still made up of mostly (in terms of vol­ume) tra­di­tional indus­tries, broad­cast­ers as producers.

We see where the bal­ance of power lies.

Apple: the Next King of Kings?

Con­tent isn’t king, dis­tri­b­u­tion is. To wit: in most of the dis­cus­sions sur­round­ing con­tent, we aren’t dis­cussing the nature of the con­tent but the dis­tri­b­u­tion and the forms it takes.

Take audio­vi­sual dis­tri­b­u­tion for exam­ple. Ben Kunz, the keynote speaker who opened last May’s MIXMÉDIAS con­fer­ence in Mon­tréal, recently wrote on his Medi­as­so­ci­ates blog that it is time to rethink even the def­i­n­i­tion of tele­vi­sion. He cites as evi­dence the fact that Apple is prepar­ing to launch their new Apple TV. Like most observers he doesn’t believe it will be a big improve­ment on the cur­rent gad­gets. Nei­ther does he believe it will be another mega big screen con­nected to the inter­net. Rather, he sees it as a sec­ondary screen that won’t seek to replace the big screens that con­sumers have only just bought. Accord­ing to him, what Apple is pre­pared to offer is addi­tional, a device that allows us to con­sume con­tent any­where, at our dis­cre­tion and accord­ing to our needs, but above all a new ecosys­tem that, like iTunes, will gov­ern the dis­tri­b­u­tion and sale of audio­vi­sual con­tent in all its forms.

“In a few years, you might have a lit­tle 15-inch Apple TV screen in your bed­room for movies, bath­room for morn­ing news, kitchen for cook­ing chan­nels, garage for repair­ing your bicy­cle. Apple could charge $400 each for the glass pan­els, make a slight mar­gin on hard­ware, and lock you into a won­der­ful new iTunes-like ecosys­tem that cracks open $144 bil­lion in ad dol­lars and sub­scrip­tion fees.”

Free Con­tent?

In Con­tent is King, Bill Gates added, “One of the excit­ing things about the Inter­net is that any­one with a PC and a modem can pub­lish what­ever con­tent they can cre­ate. In a sense, the Inter­net is the mul­ti­me­dia equiv­a­lent of the pho­to­copier. It allows mate­r­ial to be dupli­cated at low cost, no mat­ter the size of the audi­ence.”

This is where he for­got a small but impor­tant detail: pay­ments to rights hold­ers – the pro­duc­ers of con­tent – each time we copy their prop­erty, whether phys­i­cally, by old fash­ioned Xerox, or vir­tu­ally on the internet.

If the busi­ness model that Apple man­aged to impose with iTunes is any indi­ca­tion of what awaits audio­vi­sual con­tent, it’s not even close to throw­ing off the yoke of the dis­trib­u­tor. Accord­ing to Amer­i­can jour­nal­ist Robert Levine, who recently pub­lished Free Ride: How Dig­i­tal Par­a­sites are Destroy­ing the Cul­ture Busi­ness, and How the Cul­ture Busi­ness Can Fight Back (a pro­gram in itself), music, for Apple, is the loss leader that sells their iPods and gadgets.

“Iron­i­cally the deci­sion that has earned the record labels the most recog­ni­tion was per­haps their worst deci­sion. Their eager­ness to find a decent sys­tem of dig­i­tal rights man­age­ment led them to accept a method that they didn’t con­trol, which has allowed Apple to dom­i­nate the mar­ket. They man­aged to extract 70 cents for every 99 cents that Apple makes, which leaves Apple with a very small profit mar­gin after sub­tract­ing the expenses of pro­cess­ing online trans­ac­tions and the oper­a­tion of the iTunes store. The com­pany recov­ers these prof­its with the iPod and deriv­a­tive prod­ucts that they use their online store to mar­ket. Like Wal­mart, Apple sells music to pro­mote its prod­ucts and make them more prof­itable, which gives them the lever­age to sell the music as they see fit.” (67)

In his book, Robert Levine defends the prin­ci­ples of copy­right and cas­ti­gated the pro­po­nents of more flex­i­ble rules such as Cre­ative Com­mons (in his opin­ion Cre­ative Com­mons is cronies with Google — Sergey Brin’s mother-in-law is a mem­ber of the Board, among oth­ers.) In each cor­ner of the ring it’s argued that more – or less – con­tent pro­tec­tion encour­ages – or bul­lies – inno­va­tion and creativity.

Whether we agree or not, it remains true that the more con­tent is lib­er­ated from the con­straints of copy­right, the more the prof­its of con­tent aggre­ga­tors increase. Should con­tent, the star of the MIXMÉDIAS con­fer­ence in Mon­tréal, be lib­er­ated or pro­tected? One thing is cer­tain, with­out con­tent, aggre­ga­tors would find them­selves kings with­out subjects.

Danielle Des­jardins is a con­sul­tant spe­cial­iz­ing in media. She has more than 20 years of expe­ri­ence in the broad­cast­ing sec­tor. She prin­ci­pally worked at CBC where she notably was the Direc­tor of Strate­gic Plan­ning and Reg­u­la­tory Affairs. Today she works as a con­sul­tant for orga­ni­za­tions in the media, cul­ture and web sec­tors. She writes a blog where she delves into her reflec­tions on the inter­sec­tions between cul­ture, the media, and technology.

This arti­cle was also pub­lished on the blog for MIXMEDIA Mon­tréal, a con­fer­ence by Pro­duc­tions Even­tia Inc. on the topic of dig­i­tal con­tent which took place on May 17th, 2012 in Montréal.