Content is no longer king. Although people are spending more time immersed in media than ever before, and despite common proclamations that content is king, the number of jobs in content creation is falling. To verify this, one can look at the number of content creation professionals in the media industry published by the U.S. Bureau of Statistics. Several professions focused on content creation are shrinking:
Reporters -11%
Editors -7%
Photographers -4%
At the same time, media jobs in marketing are growing:
Media jobs are moving away from content creation towards content monetization. As a result of this shift, we're receiving improved advocacy and deteriorating reporting. We're being persuaded instead of being informed.
What caused this shift? I'd argue it has been the demonetization of content that resulted in content's loss of power, leading to a reduction in quality, and finally, influence. This series of articles will explore the causes of content demonetization and propose solutions.
Demonetization means that the creator has lost control over monetization. A demonetized digital media property does not generate revenue directly on their website but instead somewhere else. Let's review the fundamental four sources of digital publisher revenue and how the publishers get the short end of the stick compared to their partners:
Advertising:
Every engagement with an ad redirects the reader away from the publisher's property. The publisher's visibility into subsequent actions of the reader is lost. Historically, publishers sold their ad space directly and took some responsibility for the ads. Now, ad exchanges sell ad spaces to the highest bidder automatically, and the publishers have to trust reporting. The market leader in 2001, Double Click, had a market cap of $1.7 billion, and it's now a part of Google -- a company with a $1.6 trillion market capitalization.
Affiliate marketing
Every engagement with the affiliate link redirects the reader away from the publisher's property. The publisher has no visibility into the readers' actions on the merchant's property, trusts the merchant's self-reported revenue, and receives funds indirectly from affiliate network operators. The leading generator of affiliate marketing revenue, Amazon, has seen its market capitalization grow from $2.2 billion in 2001 to $1.6 trillion in 2021.
Subscriptions
The publishers often sell subscriptions in a separate marketplace, such as the market-leading Apple App Store, which generated $64 billion in 2020 revenues, of which it keeps 30%. The Apple Store did not exist in 2001, but now it's approaching 20% of Apple's revenue. Apple's market cap is $2.1 trillion.
Licensing
The publishers may license their content to aggregators and social networks. The cost of licensing is minuscule compared to the social network revenue, given that 52% of adults rely on social networks as a news source. For example, in 2019, Facebook has been willing to pay as much as $3 million a year to license headlines and previews of articles from news outlets. Facebook's market cap in 2021 is $0.93 trillion.
The strategic implication for publishers is to regain control of their revenue and ensure that the value creation happens on-site rather than off-site. There is a new wave of technology companies emerging that seek to empower the content creators:
Advertising: Washington Post's https://www.zeustechnology.com is empowering publishers to sell their ad space directly.
Affiliate marketing: My own company, 1o.io, empowers publishers to host the merchant's shops on-site and allows readers to complete purchases without leaving the content. Publishers audit every individual transaction.
Subscriptions: Substack.com lets creators connect with their audience directly and monetize by the subscription model without a go-between.
Licensing: There is a fundamental gap in how copyright holders can enforce their license deals on behalf of copyright holders. Watch this space.
There is a significant upside: the computer game industry has not given up as much control over its revenue, and was worth $9.4 billion in 2001 and is now worth $175.8 billion.
In the following installments of this series, I will cover other weaknesses of publishers' currently available revenue models, proceeding to upcoming changes and opportunities. Subscribe to be notified of posts as they get published!
Thanks to Ash Kalb, Kristina Libby, Viren Oswall, and Allan Hoving for helpful comments and feedback!