Wednesday, April 08, 2009

What is role of content owners in internet?

Today I was reading a article in NY times, which basically discussed the plans of associated press (AP) to rein in on sites using its content illegally .This news reignites old debate about what is Right to Fair Use means etc .But what amused me is the fact that majority opinion especially in Blogosphere seems to be that Newspaper communities actions like the AP one are somehow wrong and they are fighting loosing battle instead of adapting to new reality. That’s true every one has to change with time but that doesn’t mean what AP is trying to do or other newspapers that are fighting for their content protection is wrong.
Basically there are 3 players in Content production and consumption chain of. Here content refers broadly to Music, news articles, knowledge based journals, books, Movies etc
1) Consumers : Who consumes the content and pays for it
2) Distributors : Who typically does many functions but at the core they bring the content to mkt place /reach of the consumers
3) Content producers: Typically are individuals who produce content (creative people).
I am of the opinion 1 and 3 roles has not changed and will not change (i.e. it is still human are required to produce and consume the content) .It is the second function that has come under severe pressure due to internet. Though I agree that this function needs to adapt to internet but I don’t agree the present way it is evolving is sustainable especially at least w.r.t to Newspaper .Here I am referring to the trend that is prevalent that majority of people pay close to zero for consumption of news media and not only that but other new players like Internet search engines ,professional blog editors etc are having a free ride on newspaper content and making huge amt of money with internet ad dollars at the expense of dwindling ad revenues to newspapers.
The core problem is Newspapers doesn’t only play the role of distributing the content produced by journalist but also play crucial role of employing journalist fulltime and which in turn gives them financial resources to produce the content .In the evolving new model internet search engines are playing the cost efficient role of distribution but they are not playing the other crucial role of financial support for the content producers. Put it in another way they are typically riding freely on newspaper content without having to bear the cost of producing it .Which is clearly visible in high margins these companies have ex: Google etc .
Moving fwd for the reason explained above there would be major changes in newspaper industry i.e. basically small, weak newspaper will disappear leading to consolidation in the industry with very few strong newspaper brands (ex: NY Times ,WSJ etc) left at the end of this cleaning cycle. This would lead to shift in power from pure internet based companies like Google etc to few branded newspapers which would in turn lead to a better understanding between the two regarding sharing of ad revenue .

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