Ken Doctor from the Newsonomics blog covers the acquisition of Associated Content by Yahoo! for a rumored $90 million. He writes an in-depth analysis and offers a sobering conclusion:
Overall, today’s deal is further evidence we’re into the age of cheap content and of content arbitrage. The stream’s being reversed all around the news business, with advertising driving content creation in ways that those of us who fought print advertorials couldn’t once imagine. Content arbitrage is a feature of the landscape as I recently wrote (“The Newsonomics of Content Arbitrage“) and one that modern media companies must learn. How they use its principles will make all the difference in what they and their brands stand for, but the need to understand the principles is reinforced by today’s deal.
What it means: I think these are two key trends to understand if you’re in the business of content production. Companies like DemandMedia or initiatives like Patch (at AOL) are creating scalable platforms to create low-cost content. Content arbitrage, creating specific content that can be easily monetized, is logical from a business point of view (i.e. go where the money is) but it begs the question from a democracy point of view. Who or what will fund important news reporting that doesn’t monetize well?
Another consequence is that it puts pressure on the price paid for articles. I had the opportunity to hear Luke Beatty, Associated Content’s founder, at the last BIA/Kelsey conference. One of the things that struck me was the “what’s in it for me” for network writers. Beatty told attendees that you couldn’t really make a living with what they pay but writers were getting exposure, were becoming experts through their use of their platform. This has tremendous impact on journalism. At the same conference, Rick Blair, Examiner’s CEO, described the various contributor levels we find on the Web today: pro, pro-am, amateur, user-generated content (Blair mentioned that Examiner is at the pro-am level).
It’s also forcing news organization to think about content production segmentation. Am I in the business of producing all the content I offer to readers? Am I outsourcing a portion of the content production? Do I want to control the technology platform behind that content production?
In a related article about the Huffington Post’s 5-year anniversary, Henry Blodget talks about disruptive technologies. He says “Disruptive technologies, meanwhile, are emphatically NOT better than incumbent technologies–at least not at the beginning. Disruptive technologies are often worse than incumbent technologies. Their advantage–the reason people begin to adopt them–is that they’re also simpler, cheaper, and more convenient.”
More questions than answers at this point for news organizations but these trends need to be taken into account when building the next strategic plan.