Ever since the dawn of the mass-market web in 1995 or so, the saying “content is king” has moved in and out of fashion. With Verizon’s $4 billion purchase of AOL, and Facebook’s new Instant Articles initiative, which embeds content from other media sources directly into Facebook, it looks like it’s back in vogue.
Here’s the thinking.
There are only a few things that people want to really do online. Buy and sell. Communicate. Play. And look at content – news articles, TV shows, games, cat videos, porn, and so on. Over the years, tech compa i nies went through periods of ur i gency where they all seemed to realise that the technology they were building wouldn’t amount to much if they didn’t have something that people wanted to do with it. So they’d hire, buy, or partner with people who create content.
Verizon and fear of a dumb pipe
At the dawn of the smartphone era, Verizon (and other telcos) thought they were going to be able to add all sorts of new revenue streams. But Apple’s iTunes and later Google Play put an end to that dream. Texting, meanwhile, has diminished in importance thanks to social net working and apps like WhatsApp.
So once again Verizon is forced to confront its worst fear: becoming a “dumb pipe” that is only there to carry an ever-increasing amount of data at ever-faster speeds. The only way to win is to cut expenses faster than prices. So, it bought a content business. Verizon owns the pipes to day; with AOL it can also own, or at least profit from, more of the stuff traveling over those pipes.
Facebook’s mobile ad mastery
Facebook is an interesting case study in “content is king.” The company looks a lot like a media business, making nearly all its money from advertising, yet it doesn’t actually own or produce any content.
Content is produced or shared by the nearly 1.5 billion people now using the service. This has been a pretty good strategy. Facebook booked $11.5 billion in ad revenue last year, with a growth rate of 65%. It’s been able to do this by showing fewer ads (down 40% in 2014) and charging a lot more for those ads (up 173% in 2014).