In recent weeks I've written a number of posts on online publishing and aggregation. In different ways and from different angles, what I've tried to say boils down to this:
News consumers are mainly interested in news coverage, not content. Coverage is a service that promises to keep its users "in the loop" about what is relevant to them and their peer groups. It is delivered by selecting content on readers' behalf – i.e. through aggregation and curation – and while it relies on content it is more than that. Because it is an ongoing, day-to-day service, coverage is all about loyalty: once consumers find a provider they like, they come back to it. And because of hyperlinks, in the web coverage providers need not be content providers (and vice-versa). This means that media brands' power – including their pricing power – will increasingly be a matter of how well they aggregate content – whatever its source – and not just how good their content is.
Note one more thing about this. As the split between publishing and aggregating gathers force, the focus moves from those whose craft is to make the core product (content), and towards those who can understand their audiences exquisitely and bring them exactly what is right for them, wherever it may come from (think the Drudge Report). By analogy with other industries, this is the classic move from an engineering/product focus towards a marketing/customer focus.
This analogy goes a long way. In his seminal study of disruption in technology industries (see the books The Innovator's Dilemma and The Innovator's Solution), Clayton Christensen asked whether firms should integrate vertically and own the entire value chain involved in a product, or just concentrate on what they do best and let others build the final thing that consumers pay for. The answer depends on how evolved a given industry is.
In the early days of car manufacturing, car makers made most of their core components – the engines, the radiators, etc. But as the industry matured, firms emerged that specialized in making these components and sold them to a variety of car makers. Eventually, success in the car business became a matter not of technical performance (since any manufacturer could buy the same components at the same price) but of how well car makers could respond to their consumers' changing demands – in terms of lifestyle-fit, look-and-feel, brand associations, values, distribution, etc. According to Christensen, the catalyst for this shift is always the emergence of industry standards for the interfaces between components and finished products. Today, any car maker can say that it wants a radiator of X and Y characteristics (where X and Y are specified in a standard way) and find a variety of suppliers ready to sell it exactly what it needs.
If you were an integrated car manufacturer when the industry was going through this change, you had to tread carefully. If you chose to stay in the car business you needed to make sure you had what it takes to succeed there – and your prowess in making engines may not be an advantage anymore. Rather, you needed marketing excellence – a good brand, a good understanding of your customers, a good distribution network, etc. If your strengths were in engine-making and not in marketing, you would have struggled to create value and make any money as a car maker: your competitors would make cars that consumers prefer over yours, with lower costs and without the distractions of running an engine operation. So a better option could be to leave the car business altogether and become an engine supplier to car makers. The moral: concentrate on the area where you have a unique competitive strength and leave the rest to others.
Now back to publishing. Here the engine is the content, the car the aggregation, and the engineer the journalist. Tim Berners Lee's invention of the hyperlink created the perfect frictionless interface between two formerly integrated industries: publishing and aggregation. It does not matter that this did not come about in the gradual way that Christensen describes (i.e. through a slow process of industry evolution) but as a quantum leap, before the industry was ready. The fact is that the interface is here, with all the consequences that Christensen studied. Suddenly, being in publishing and aggregation at the same time looks dubious.
It is telling that in this new ecosystem, while integrated publisher-aggregators (i.e. newspapers) are struggling, pure-play content (e.g. Reuters) and aggregation (i.e. Drudge) players are thriving. The key question is how can the old integrated players survive – what I have called the publisher's dilemma. Murdoch seems to be trying to stop the clock, choosing to focus on loyal customers who get their content and their aggregation in the same place and refusing to accept readers who use other aggregations. But if the industries that Christensen studied are a guide, this effort may be doomed.
The challenge is clear, even if the solution is not. And as they look for answers, publishers would be well advised to listen to Judy Sims' advice on where to look (hint: it's not content):
It's time to break the cult of the editor and publisher and bring in product development expertise. Not just someone from advertising or editorial or a committee of cross-departmental managers, but honest to goodness professional product people. Product people who will examine the market data, study the demographics, lifestyles, challenges and habits of potential readers and then bring together editorial, advertising, technology and marketing to create digital products that serve users and advertisers and do so profitably.
