Is Content Still King?
February 11, 2009 at 5:23 AM (PT)
Up until very recently, perhaps as recently as six months ago, the prevailing wisdom among analysts who covered the media industry was that "content is king," writes 247WALLST.COM. Movies, TV shows, magazines, radio programming and high-quality internet content were viewed as having a significant intrinsic value. The best content can be moved from one medium to another, increasing its value even further. TV shows can be played on TVs, PCs, and handsets. Newspaper content can run on a printed page or on the internet. Radio can be broadcast from satellites or radio towers.
Now, content is rapidly being devalued. The first people to press that case are accountants. They have insisted that companies from NEWS CORPORATION to THE NEW YORK TIMES to TIME WARNER to CBS write-down tens of billions of dollars in assets.
YAHOO! and TIME WARNER were downgraded by a WALL ST. analyst yesterday. His reason for cutting TIME WARNER is that, once its cable systems have been spun-out to shareholders, its crown jewels which include TIME, INC, AOL, and networks such as CNN were not worth the multiple at which the company trades. The essence of his argument is that content, even the best content, is losing its value.
The Internet has already proved to be an imperfect place for the film and TV industries to make money. YOUTUBE, GOOGLE’s video-sharing site, has always had the lion’s share of the online video audience. Virtually all of the content there is free. Visitors do not watch advertising or pay a fee. NBC has tried to set up a large video site that does capture revenue. HULU.COM only has high-end TV and films. There are commercials that run on every program. But, a number of the advertisements running at HULU now are free public service spots. The yield for the content owners is, in some cases, next to nothing.
No one knows to what extent content will be "re-valued" as the economy improves. The newspaper industry may not be able to get any of its value back. Magazines may face the same problem. To the surprise of many, some of the more valuable content, like expensive feature films, may only make a great deal of money in theaters. The yield from VOD on the Internet sales and syndication on the APPLE iPOD may turn out to be extremely modest.