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Mondays with Dr. Joe:

June 25, 2007

- If Content Were King, The King Would be Rich and Omnipotent

- Bridging Content and Distribution

- We're Qualified, if We Choose to Be

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WhatTheyThink Economics & Research Center Economic Outlook Webinar with Dr. Joe Webb

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If Content Were King, The King Would be Rich and Omnipotent

How many times have you heard the phrase “content is king”? Perhaps hundreds or thousands of times in the last 10 to 15 years. This has been uttered all those times as a justification for the dominance of publishers of all types—audio, video, text, and images—in the digital age. If it were true, the content kings would not always be whining about profits, downsizing, or restructuring. They'd be riding a wave of successes that emanate from their kingly dominance.

What happened in those years? The publishers' common complaint has been the lack of profitability of their Internet initiatives, with even the head of Time lamenting that a print subscriber is valued around $100 per year and an online one is worth only $5, implying they need twenty times the number of online subscribers to make money. That apples and oranges discussion is a different matter for discussion at a different time, but it's clear that's the way they look at it.

It's not all that rosy on the Internet side either. Advertising revenues and site visits for Google, Yahoo!, MSN, eBay, and a limited number of other “destination” sites dominate the industry. Yahoo!, which has attempted to build a content business, has failed to live up to its own public prognostications and just had a contentious stockholders meeting, resulting in the resignation of its CEO. Google, which really has no content at all, is gathering huge sums of money from advertisers (thousands of them) because of the company's ability to provide access to other people's content and its power to piggyback ads on that access.

The biggest failure in the “content is king” mantra has been AOL Time Warner. Online media in all of its forms has been such an incredible disaster that the company officially dropped the AOL from its name. Can one think of a more likely powerhouse of content and brand leverage than Time Warner? Its magazines, by some estimates, represent one-fifth of magazine advertising, combined with its vast music properties, and at one time, a large paying base of AOL subscribers? AOL Time Warner was a cross-media proponent's dream: it was and still is a company flush with content in all media forms. It had amazing publishing and broadcasting brands, ranging from Time, Sports Illustrated, CNN, and numerous record labels. AOL Time Warner should have proven the statement “it's good to be the king.”

As a sign of the struggle the company continues to have to make the digital shift, Time, Inc., is still fighting a battle with many of its journalists to get them to contribute to Time’s online properties.  In a recent meeting, Managing Editor Rick Stengel told staff, "I suspect that some of you regard writing for Time.com as an obligation, and not what you came to Time to do. But times have changed, and we have to change with them."

In addition to journalist reluctance, legal issues inside the company, such as contracts with performance artists, industry trade practices and traditions, and an organizational structure built around protecting those traditional businesses (usually compensation-based), has made it almost impossible to transition. What made it worse was the timing: broadband has proven to be necessary to make digital media come alive, and the AOL Time Warner deal occurred when broadband adoption was spotty and in its infancy. This is not to say that this was the sole reason for the difficulties, because rising broadband adoption has done little to give the company upside (except for its Time Warner Cable business), especially when the company has decided not to briskly pursue cross media opportunities. Time Warner proved to be a collection of independent businesses, not interconnected ones.

The least likely choice for success in the content business was, of all companies, Apple Computer. Heck, “computer” isn't even officially part of its name anymore. Its iPod and especially its iTunes e-commerce business have actually made content owners (and their lawyers on retainer) rather hot under the collar. The music industry, through its trade association, the RIAA, has made a practice of suing parents and teenagers who “trafficked” in digital music. The music industry long ago attempted to get a tax on cassette tapes to stop “pirating” of music. Like Google, Apple doesn't even own any content beyond its own software and hardware. And that's the point. Like the bureaucracy at Time Warner, the music industry's attempts at digital rights management have only aggravated consumers. Apple has successfully convinced some music publishers to drop DRM, sometimes offering a two-tiered pricing system for higher-priced DRM-free files. The distributor, iTunes, convinced the content owner to start acting like a serf.

Content is not the king. Distribution is the king. Content is a princess or a prince. You can't have a royal family without the two of them, but content without distribution might as well not even exist.

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Bridging Content and Distribution

Getting information from here to there requires a massive effort. Translating content ideas into a form that involves hard goods like paper or electrons destined for the Internet or broadcasting requires investment and skills. The printing industry was built on the fact that content creators needed to reach content consumers in some way. Many printers did start as publishers (one reason to buy a press ever since Colonial times was to publish things, many of them subversive and dissing the king, we're told). This is why many publishers have the word “press” in their name to this very day. The “power of the press” referred to what you could do if you owned one. The more recent role of the industry is to reproduce content for others who do not have the capability to do so, or the desire to own such capability. Just as before, these tasks require skills and specialists that are out of the range of content creators, much like halftone-making was in the early 20th Century, camera color separation was in mid-century, and high-end desktop color was in the tail end of the past century.

This pattern transfers to today’s situation as well. Now that software has transformed time-intensive craft labor to casual mouse clicks, potential changes in technology and consumer preference that can undermine the industry are always on the horizon. So it's time to get back to basics and ask ourselves if we understand who the king really is.

Content creation, as we have seen over the past few years, is not always what it is cracked up to be, at least from a profitability standpoint. If distribution is king, why can't people just set up new distribution methods? It turns out that while it's good to be the king, kings don't always have easy lives.

The other truism of the 1960s and 1970s, “the medium is the message” is being forced into retirement. The medium used to be chosen by the content creator, and it used to be easy: if you were a newspaper publisher, you knew exactly what form your message would take. Today, the choices facing content creators are myriad and not exclusive. They must, in most situations, have content available for delivery in multiple formats. “The medium is the message” meant that distribution channels were selected because they had a known and planned symbiotic effect on the content. Today, content must comprehend both the strengths and weaknesses of each medium used.

The problem is that each of those alternative media has different revenue foundations. That also means they have different cost characteristics.

This is the new place for our industry. Content creators still need to get content from here to there, not in terms of moving it, but in terms of making it accessible at an appropriate cost through the appropriate media channels.

A couple weeks ago, I addressed the IPA technical conference via webcast, of all things, in a session focused on workflow, especially the idea of bringing video into our purview. How prescient.

At a time when publishers of all kinds are downsizing and dismantling fixed cost organizational structures originally designed to support an obsolete media mix, there is a great opportunity to expand our capabilities in the area of content distribution, even, in some cases, becoming that bridge between content and distribution. Video is becoming much more prevalent as a standalone and also in combination with other graphic elements, and as was pointed out in the IPA session, the workflow for video is not all that different from what we are already doing.

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We're Qualified, if We Choose to Be

Print workflow is a complex process, and the skills required to be successful are often applicable to other information flows. Logistics for creation and deployment of electronic media are poorly understood right now because new media logistics have not yet evolved. Certainly, there is software that handles most channels, like the Internet, but everyone who surfs the web knows that there are web sites that function exactly as their programmers built them and they may be marvels of design, but they are totally impenetrable by anyone seeking to use them.

The industry has much to offer in crafting (and I used that word with great purpose and a sense of irony) how messages are organized and displayed to enhance their impact and accessibility, regardless of the media selected. This is especially true for small and mid-size businesses and their graphic communications advisors, as well as publishers.

This is beyond just building web sites for customers. This is about campaigns and ongoing relationships. I normally don't mention companies in this column, and this is not meant as any form of endorsement. But one cannot be unimpressed with the richness of communications campaigns that can be designed using tools such as those demonstrated by companies like XMPie, which is now a division of Xerox. Workflows for communications campaigns are complex and they need management, the kind that the industry is capable of bringing to the table. And there are many opportunities to apply those same skills against other business communications challenges facing the marketing executive these days.

I am amazed that most communications managers are not aware of the range of options they have for enhancing their most basic projects using new techniques and technologies. Sure, they know about direct mail, but they may not know about assigning unique web addresses for each recipient to establish a new response mechanism and an ongoing dialog. They may not know how to be sure that all of their product brochures are available online, and how to optimize them for desktop output or screen viewing. Nor may they be aware of how to feed campaign or other information to sales and other support people.

Many printers are in the dark about these issues as well, and that's why the transitions demanded by shifts in media have taken their toll on individual companies and the industry.

In the past, the printing industry was considered to be a craft industry, and many bemoan the fact that that craft has been destroyed by computer technologies. Craft, however, should be considered beyond the tools that were used at a particular time and place. Craft refers to the way things are done. Digital media deployment still needs the sense and skills of craft. We have to believe that first, before we can convince others that we have a valuable and viable role to play in this new multichannel world.

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Back on Monday, July 9

This column will return on the Monday after the July 4th holiday. Be sure to watch the economic notes until then for my comments about the latest news and trends.


Upcoming Dr. Joe Sightings

IBSA, July 22-25, 2007, Indianapolis
Graph Expo, September 9-12, 2007, Chicago
British Columbia Printing & Imaging Association, October 25, Vancouver, BC
International Print Buyers, November 7-8, Westford, MA


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