The question of whether the media business is driven by content or distribution has been a fundamental issue in media business strategy over the past two decades.
In the past, acquiring the capital in order to create the means of distribution gave companies that wherewithal to subsidize content and aggregate audience.
In the 1980’s, with the development of multiple distribution channels and increased interoperability of content because of digitization, the relative value of content and distribution began to disaggregate. In response, large media companies attempted to acquire significant distribution platforms and significant content platforms. The logic was that the businesses could be operated independently, but that ownership of both categories would create an industrial leverage that was embedded in the early media company models.
In today’s world, consumers look for content across platforms; they will migrate to branded content to the degree that the content is presented in a intelligent design that is available AND consistent across platforms.
While this new reality is largely accepted on an intellectual level, it continues to create challenges to businesses attempting to migrate their capital and business models into the new media economy. Alan Patrick of Broadstuff last week shared the outcome of a talk at the Telco 2.0 Brainstorm conference that helped to illustrate this conundrum.
David Touvre, a professor at the Williams School of Commerce, asked the attendees of the conference five questions:
- Is media a product or a service?
- Do you believe the “3 strikes and you’re out policy will (1)decrease, (ii)increase, or (iii)give no change in Piracy?
- Will a policy of filtering/disconnecting give a better economic outcome than licensing for Media?
- Will a policy of filtering/disconnecting give a better economic outcome than licensing for ISPs?
- Will a policy of filtering/disconnecting give a better economic outcome than licensing for Telcos?
As the chart above shows, licensing is the logical outcome to the series of questions. If that’s the case, why don’t more companies shift to that strategy, focusing on creating exceptional content and leaving the distribution to partners across the board?