Product is King. Content is Not.

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Photo by The Rocketeer on Flickr
Remember the bad old days of blog networks. Like when I was at b5media championing the idea of content as the great savior of the Internet, the bellwether of future journalism, the dawn of an era of online advertising as the dominant (and only) truly valuable means of creating revenue online?

Yeah… so about that.

I was wrong.

I was wrong about the idea of wide adoption of online advertising as a primary revenue source for the long tail. I was wrong about content not being a commodity. I was wrong to think that successful online startups could have successful advertising models. I was just wrong.

As recently as this week, AOL laid off it’s “freelance writer” staff as part of the recent Huffington Post acquisition and subsequent roll-up of AOL properties.

All you people thinking you can make money online using the standard advertising/content model… well, think again. You’re not.

Advertising is a commodity. Commodities, by definition, are resources that flood the marketplace, diluting the individual value of each resource. Advertising online is dominated by “remnant” advertising, which is cheap commodity advertising that costs the buyer little to purchase in bulk (think Adsense) and results in little payout to the publisher. There’s very little real money in commodity advertising. The real players are getting paid on direct sales advertising targeting big sites with high payouts (Think Apple taking out prominent advertising space on the New York Times for tens of thousands of dollars).

Content is a commodity. There are millions of bloggers. Millions of publishers. Hell, just this week, I migrated a site to WP Engine that had 11k+ sports blogs. Content is a commodity and, by definition, not valuable.

But if you want to keep thinking it’s valuable, go for it. You keep writing blog posts and giving yourself some sense of value. While you’re at it, take a look at the sky and convince yourself it’s actually orange.

Content companies are not likely to generate enough value in today’s economy. Certainly not for any kind of acquisition or exit.

I was wrong. I’m man enough to admit it.

In today’s internet economy, the real value and, in my opinion, the only viable model for successful online business is in product. Products. Real, tangible products. An iPhone app. A digital goods marketplace. A software product. A social network, perhaps. Something that has measurable customer acquisition and a real exchange of monetary value. You know, like the good old days where I pay you for something that I can, with certainty, validate receipt. I give you $30, you give me a text editor application for my Mac. I pay you $15/mo, I get an online invoicing service. I pay $0.99 and get a car locator app for my phone.

Content commoditization strategy says, I do something for you, Mr. Advertiser (put some code on my site), and you may pay me something if anything productive (click, action, impression) comes from it and, oh yeah, there’s no real measurements or guarantees for said exchange. Keep churning out content and page views will pay me.

No. That’s not how it works anymore. Why do you think Netflix built their model on a pay-for-service concept instead of intro/outro/in-video advertising? Why do you think Amazon continues to diversify their product offering with no real advertisement and certainly no content? Need a server? You can have 10 for cheap. Need music? We’ve got that covered at a competitive rate and now you can play it from anywhere. Need toilet paper? We’re partnered with retailers across the country to provide any essential product you might need and you can even have it shipped free if you pay for this other service we call Prime

See? It’s product… not content. Content is becoming significantly less valuable.

Time to pivot.