A long time ago, in a publishing universe far, far away, publishers had it good. They controlled content, distribution, and manufacturing. They became experts at using the postal system, and charged for it. They became experts at making beautiful vessels for content, and charged for them. And whether the content they sent was ephemeral (news) or enduring (books), they charged for it. Everything they did cost money, and because they owned the addressable audience by virtue of controlling distribution, they could charge for that, as well — and advertisers paid.
But during the initial days of online fever, publishers became convinced to two fallacies — distribution would be free, so it wasn’t going to be a major commercial factor; and the containers for content wouldn’t matter since they’d just be network terminals and devices.
These notions were summed up in the meme of the time, “Content is king.”
Hindsight shows how wrong that was.
The digital revolution wrested two major aspects of publishing from publishers — distribution and manufacturing (and, increasingly, the attention of the audience). Publishers still mail stuff and print stuff, but print’s not nearly as sexy as it used to be and the mail’s slow and inefficient. It’s like a slow-motion liquidation sale, watching these two former advantages deplete themselves of value.
Losing 2/3 of their advantages has led to some predictable shifts in profitability for publishers — namely, far less of it. There’s just less to mark up.
But it’s another story entirely for the new distributors and device manufacturers, because people are more than willing to pay for digital distribution and sexy content vessels — fast connections, portable connectivity, and cool toys. A recent article in the New York Times shows how quickly costs for information have skyrocketed, mostly because people are paying for broadband and devices:
It used to be that a basic $25-a-month phone bill was your main telecommunications expense. But by 2004, the average American spent $770.95 annually on services like cable television, Internet connectivity and video games, according to data from the Census Bureau. By 2008, that number rose to $903, outstripping inflation. By the end of this year, it is expected to have grown to $997.07. Add another $1,000 or more for cellphone service and the average family is spending as much on entertainment over devices as they are on dining out or buying gasoline.
Even radio — a “free” medium — cost the average American $12.25 this year, up from $1.19 in 2004.
Nicholas Carr picked up the article and extended his “Information wants to be free my ass” post, offering the following chart of just Internet access fees to show how much all this free information is costing. Remember, we used to charge for distribution — boy, what a bargain print distribution prices seem now!
If he who pays the piper calls the tune, and content providers are essentially the pipers now, it looks like the distributors and manufacturers of the Digital Age will be calling the tune.
Where does this leave publishers? It’s clear to me — they have to recognize that all they’re left with is their content, and they should charge for it. The piper can still make a good living. Arguments about how that pricing should be determined will run rampant, but there is no right or wrong answer here. There’s no price point we can know a priori. Price will continue to be what the market will bear.
Based on the price elasticity the device and distribution market has been able to carve out by embracing digital strategies, the future for content providers may be bright, as well — if we play our tunes well, using modern instruments.
And that posture differs greatly from the arrogance of a king.