March 22nd, 2007

NBC Universal/News Corp Online Video Deal Demonstrates That The Content Creation Business Is Dying

by Scott Karp

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Did NBC Universal and News Corp cut a deal to create content for the web? New production capabilities? New armies of web-only content creators? No. This is about creating a platform for aggregating and distributing existing content, which they already have too much of.

You’re looking at the new media business. It’s not longer about creating content — we’re drowning in content. No, it’s about creating platforms for content on the network, then letting the network do its thing.

Everyone is of course focusing on whether NBC and News Corp are going to allow “user-generated content” or just “premium content” — but the reality is, IT DOESN’T MATTER. It’s just one big mass of content along a spectrum from great to crappy. And there’s more of it than anyone knows what to do with.

No, the business here is about platforms and distribution.

From the conference call:

Extending offer to other distribution partners, wants to work with everyone.

we want ubiquitous distribution

this is a web distribution venture

When there’s an overabundance of content and not enough consumer attention to go around, the value creation opportunity is in connecting consumers with content — it’s in aggregation, distribution, and filtering. Google gets it. The big media companies get it.

So when I say the content business is dying, I don’t mean you can’t make money off of content creation anymore. I just mean you can’t make a lot of money.

Want to see the future of media? Follow the money.

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Topics: Aggregation | Content Distribution | Distribution Channels | Media Economics | New Media

  • You're off the mark on this one.

    Setting up the online distribution is an important step for the networks, and it's something they had to do with television many years ago. Big networks brokered deals with small affiliates, and much money was exchanged hands.

    Once the distribution is in place, the big networks can then sell the ad space, which they are very good at doing.

    Once the serious ad money rolls in, the serious content creators will create web specific content for it.

    Let's get it clear - the money that is made other media - from movies to television to radio dwarfs what is made on the net by the media companies. And that's because so far they've handed over distribution to the search engines.

    Well, not anymore.

    See here: http://www.nytimes.com/2006/06/25/business/yourmoney/25frenzy.html
  • Sahar,

    The problem with YouTube is less about content ownership and more about the systemic struggle with online video advertising format (i.e. it's not pre-roll, but that's all we've figured out), as well as the problem of trust. The NYT can run YouTube-like low-production-value videos and still get advertising because advertisers trust the brand. Google gets so much advertising on its platform, without owning or controlling any content, because advertisers trust that Google properly manage the context.

    The content creation business dying, shrinking, whatever is about increasing competition around high quality content. You'll notice how much emphasis was made by NBC and News Corp around PREMIUM content -- the problem is, cats flushing toilets aside, these companies no longer have a monopoly on high quality content.
  • "The points from the conference call you listed are unique to NBC/News Corp. Without owning the content, the distribution wouldn’t be of such a high value."

    Every search engine's business model is predicated on the idea that *not* creating or owning the content, but driving people to other people's content - has terrifically high value.
  • How much content does Google own?


    How much content which youtube doesn't own can they monetize? Google spent 1.6B on a platform which they cannot monetize the majoroty of content within it. While I'm sure they have their reasons, we're yet to see it make sense.

    The points from the conference call you listed are unique to NBC/News Corp. Without owning the content, the distribution wouldn't be of such a high value.

    Is there a business model building distribution platforms? You bet there is. But to say the content business is dying? Not by a long shot.
  • Sahar,


    If you don’t own the content you cannot monetize it.



    How much content does Google own?
  • Hi Scott,
    If you don't own the content you cannot monetize it. Big networks have decades of content users are interested in AND can monetize them freely. User generated content is harder to monetize as most of it is copyright related.

    "Want to see the future of media? Follow the money." - Exactly right, and from monetization POV, it isn't user generated content.
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