In an earlier blog entry on content, readers provided a number of interesting comments. If you haven’t already read that article (and the comments), you may want to do so in order to understand this new article.
Many did not agree with my point of view. And that is great. I only wanted to stimulate some conversation.
Let me first address some of the comments (and I appreciate the time that everyone took in writing comments). The comment is in italics with my response following.
“I wonder if the Kindle model requires a subsidy to offset the upfront cost of technology development and/or design manufacturing.” Two thoughts come to mind. 1) No one has an issue paying $150 for an iPod even though the cost of the music is pretty much the same. 2) As new generations of eBook readers hit the market, prices will drop. Several are now on the market for under $200.
“The reason distribution appears to be the source of value isn’t distribution itself but the monopolistic nature of new distribution channels.” Indeed. And that’s my point. Those who aggregate are the ones who create positions of power. The content creators are not the power players. And the individual publishers certainly aren’t.
“If content was truly losing its ability to create value, Comcast would not try to purchase NBC – they might instead bid for Netflix or for a content delivery device company like Roku.” Great point. The reason why I mentioned Comcast’s acquisition of NBC was not to say that it was a good or bad move. I was only trying to point out that a few years ago, the networks were the ones doing the acquiring. Now the distributors are in a position to buy the content creators. It will be interesting to see what this Comcast deal does to Hulu.
“It’s the publisher that is not essential anymore – the content creators are also becoming content publishers due to technology.” Indeed, the publisher is now playing the role of middleman and is going away in many respects – or needs to play a very different role. As you suggest, content creators do have the option to go straight to the consumer now. And we are seeing a democratization of content. Having said that, content creators will still want to push their content to content aggregators – the source of the eyeballs. The reason why Google is so successful is that they are currently a significant player in how content is found.
Some interesting things have evolved in the past week since I wrote the first article. It appears that the big innovations are being developed by the content aggregators (not that that is surprising).
Google Digital Books: Google is offering eBooks on out of print books that are no longer subject to copyright restrictions. They scanned nearly 2 million books and will be offering them in digital form for about $8.
HP/Amazon paperback books: Soon after Google’s announcement, HP and Amazon.com indicated that they will offer print on demand paperback books for these out of print books. A 250 page book from their library of 500,000 can be purchased for about $15. A single copy can be printed in a few minutes.
Book Pricing War: Wal-mart, in an effort to crush Amazon.com, is offering 10 new release books for $10. Well, that was until Amazon said they would offer those same books for $10, at which point Wal-Mart dropped the price to $9. Target joined the price-war, dropping the price to $8.99. This caused Wal-Mart to drop the price to $8.98. According to the WSJ, “The publishing industry is also watching warily to see if the price war will have lasting impact on book pricing and the contracts that publishers sign with authors.”
BN Nook eBook Reader: Barnes and Noble, announced the release of their ‘Nook’ eBook, intended to take on Amazon.com’s Kindle. One account says that the Nook is “closer to a printed book than its precursors in some respects, (in that it) allows users to lend their copies of electronic books to any friend who has installed Barnes & Noble’s e-reader application on a mobile device or personal computer.”
Comcast Premium Channel Streaming: Comcast announced that by end of the year, you will be able to watch popular cable television series such as HBO’s “Entourage” and AMC’s “Mad Men” on your computer without paying extra. They are reported to be the first cable TV operator to “unlock online access to a slate of valuable cable shows and movies, aiming to replicate what’s available on television through video on demand.”
Please don’t get me wrong. Content is necessary. As an author, I sure hope there is value in what I do. Amazon.com, iTunes, Wal-Mart, Barnes and Noble, and Comcast would not exist without content. So yes, content is important. I just wonder if it is still king.
P.S. As an aside, Andrew Odlyzko published an article entitled “Content is Not King” where he contends (according to Wikipedia) that “1) the entertainment industry is a small industry compared with other industries, notably the telecommunications industry; 2) people are more interested in communication than entertainment; and 3) therefore that entertainment content is not the killer app for the Internet.” I realize it is a different topic altogether, but it is interesting nonetheless.
Stephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.