Bo Peabody, an early Internet entrepreneur and investor, wrote recently that he does not believe in the low-cost, fast-content model either. He observes that while high quality content has a lifetime that allows it to keep earning revenue after it is first published, Demand Media's "of-the-moment" content model will have nearly zero value momentarily. Peabody observes that high quality content -- like that published by Cnet, ESPN and WebMD (his choices) -- is a fixed cost, earning higher and higher profits as audiences grow; it scales. This is an important concept for all publishers. In other words, it may work on this small scale, but when the company tries to keep growing to reach 10 times or 100 times its current size, profits will not follow, and more important, they won't grow as a percentage of revenue. Once that cost is paid, and the audience keeps growing, the profit goes up and up. But the low value of low-quality content keeps the publisher on a treadmill, running hard but not getting ahead.
What Peabody doesn't point out is how quality content migrates from platform to platform, further scaling profits.
High quality content, news, analysis or entertainment, makes the transition from one platform to another because trust is transferable. News, information, interpretation or entertainment that is of high quality has its value increased by each new platform. It is easy to see how that happened for Hollywood. The movies that were made for theaters had a new life and revenue stream with TV, again with videocassettes, then with DVDs, and now with streaming video to hand-held devices. We see the same dynamic with high quality print content; it attracts an audience and returns a profit in print, online and on mobile devices.
Will Demand Media's flash content, optimized for Google to find it, translate to the next new platform? I doubt it.
ESPN is the epitome of a company delivering content under a trusted brand through many platforms and devices: magazine, television (ESPN on ABC), cable, Internet, and mobile. Much of ESPN's content is produced specifically for a particular medium, but each medium uses the other's "original" content to enhance its critical mass and to cross-promote.
The Print Business Model
I hear an ongoing drumbeat about the imminent death of print, especially for the newspaper business. But I still see, and the evidence shows, that being able to publish content on a second and a third platform is an advantage. Why wouldn't a second or third revenue stream be better than one? Of course it would. Yes, it's true that print companies are going through a wrenching change. They have more competition than ever before. For major print categories, newspapers and magazines, the glory days of gushing advertising revenue are over. But their terrestrial platform provides a different function and value than digital. And their multiplatform business will provide them with a competitive advantage because they will be better able to invest in the high quality content that builds audiences and profits.
In a world where every piece of content is one click away, will readers settle often for second best? Today we are still early in the game. Google will keep getting better at helping readers find the content they trust and they want. The quick-buck artists will move onto another arena, and quality will win out. With almost infinite choice, it's becoming harder and harder to get viewers or readers or advertisers to pay attention to mediocre content.
Note; for my loyal readers who quibbled with my last article about research showing that free internet content is not correlated with declining print circulation, here is a link to the latest article and that research.