Friday, September 24, 2004

The Changing Face of Content

David Weinberger writes an interesting blog post about his attendance at an Entertainment and Media session of the World Economic Forum. This sorts of discussions always get me started. My comments below:

The greatest challenge for the content companies IMHO is how the explosion in distribution changes all the economics of their business. What has been a hit driven - venture capital style model has seen the erosion of limited distribution which deteriorates their margins. When the promise of a 'hit' to fund the 'misses' disappears, then the model isn't sustainable. In a world of previously untold distribution capacity, yes content is still king, but the marginal value of the content has to outweigh the cost to produce it. This is fundamental. In this world, content creation becomes less of a large scale enterprise and more of a cottage industry. I recognize that 'big hit' style content will continue to be produced, but the majority of content must become cheaper to make and has so if you consider non-mainstream music, reality based TV. etc.

The interesting thing about this sort of distribution is that it gives you an extremely powerful mechanism to market to a select audience in an extremely cost effective way. It really is a rethinking of the whole business, and requires a different skill set for success, but it is possible and I would argue, the inevitable outcome of what is occurring.

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