Two Platforms Are Better Than One

With the Demand Media IPO on deck, the industry is asked again to revisit assumptions about media economics.  Will low quality content drive out high?  Will crowd sourcing content prevent high quality, professionally produced content from achieving future financial success?  As a magazine guy who left the New York Times Company to be deeply involved with founding, iVillage, and Mediabistro, I'd have to say no.  Quality, actual expertise, and genuine human connections will rise to the top.  But I'm not the only one who sees fast-buck media as a short-term starburst.

            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.

Trust Travels

            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.

5 comments about "Two Platforms Are Better Than One".
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  1. R.J. Lewis from e-Healthcare Solutions, LLC, December 2, 2010 at 3:33 p.m.

    This is a great piece and a great debate. I think the looming question is do advertisers care? Will enough of them "support" the fast buck content (at a lower costs) that the quality content model (higher cost) can't be sustained. Any new player (fast buck or otherwise) dilutes the other players. There are only a finite number of ad dollars to go around.

  2. Daniel Ambrose from, corp., December 2, 2010 at 5:26 p.m.

    thank you for your note R.J. The point I"m trying to make is that when competing for limited ad $$ it's an advantage to have two or more platforms on which to monetize quality content. So there it an advantage to content that is of high enough quality to migrate.

    As for advertisers, they'll go where the eye-balls are. If the eyeballs can be found on the low quality, that is where the advertisers will be. to wit: see reality TV.

    I wrote this column more than a week ago, and since then we've seen more public evidence of another principle that applies here; Google will only get better at identifying the good stuff over time. Or perhaps I should say -- based on the news -- Google will only get better at separating out the manipulative from the meaningful. This too will give an advantage to quality over time.

  3. Yossi Barazani from, December 3, 2010 at 12:42 a.m.

    I don't have any research to confirm it, but I think that paradoxically low quality content is converting better than high quality content since readers when facing low quality content look for the next click and find it in ads. When readers read high quality content they hardly notice ads at all. I know it happens to me. Daniel do you have any data on it.

  4. Dean My Last Name, December 3, 2010 at 2:53 p.m.

    I can't believe you would cite ESPN as a source of "quality" anything. That example actually works against your argument. ESPN has become tabloid sports journalism.

    Need a couple of examples:

    * Look at what has happened to Monday Night Football Ratings since ESPN took it over.
    * Look at who their "experts" picked to win the World Series. ESPN consistently picked the Giants to lose every series. Then compare who the bloggers picked to win it all (most picked the Giants when the series began.)

    Because of their size, ESPN may generate revenue still but their lack of quality and accuracy will eventually doom them.

    What every analysis about whether Demand Media is good/bad/will work/won't work, etc.. When comparing to the "main stream media" ignores a few glaring facts:

    * Demand Media is not attempting to be journalists nor are they claiming to be doing journalism.
    * Traditional content providers (or "professionally produced content" as you called it) may be well written but 90% of the time it is liberally biased half truths.
    * Traditional content provider's revenues continue to plummet. Demand Media's continues to rise. When deciding whether it which will likely survive, I'll bet on the one that can stay in business every time.

  5. Gene Chamson, January 9, 2011 at 8:57 p.m.

    Yes, quality will always rise to the top, but in an era where everyone can be a content publisher, "quality" is determined by the new gatekeepers, the search engines and social networks. Established newspapers and other large media brands who thought they had a monopoly on "quality" content are finding the rules have changed. Meanwhile emerging content models that focus on new standards for quality and trust are thriving.

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