How will business cope with massive content inflation?

How will business cope with massive content inflation?

Summary: Even high traffic web sites could become economically unviable as inflation devalues all content, good and bad...

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TOPICS: E-Commerce
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My 2013 prediction warned of the continued fall in the value of online content which would lead to the production of ever more content as media companies tried to maintain ad revenues.

You can think of it as a towering tsunami of content, or as a massive expanding bubble of content inflation.

Just as inflation devalues currencies, content inflation is devaluing content.

Ryan McCarthy, Deputy Editor of Reuters.com, and the former Business Editor of the Huffington Post, comes to a similar conclusion.

In: Another blog post that won’t make any money | MediaFile | Analysis & Opinion | Reuters.com

He writes:


The dirty secret about the web media business is that there’s a massive oversupply problem. Everyday, content creators are producing more journalism, more think-pieces, more interactive graphics, more photo galleries, more tweets, more slideshows, more videos, more GIFs, and more deviously socially-optimized Corgi listicles...

This creates more supply for display ads, web media’s favorite and still growing revenue generator. All that supply, however, drags down ad prices.

He points out a troubling reality:

...if you’re working in media now you shouldn’t be worried about getting your website to hit 20 or 30 million uniques — if ad rates continue to fall, even websites of that size may not be economically viable. 

Keeping up is getting tougher

What's important to note is that new media companies could now be disrupted almost as fast as old media companies -- maybe faster because they don't have legacy revenue streams to provide some support.

To generate more traffic, more content is needed but that content has to be produced as cheaply as possible.

However, online advertising revenues for everyone are directly affected by the advertising rates set by giants such as Google, Facebook, Yahoo!, AOL, Microsoft, etc.

Their content production costs are tiny compared with traditional and new media companies, which have to use people, not just algorithms and user generated feeds.

Most online media companies can't compete on those terms because they need people to produce much of their content, and so their costs of content production are so much greater than advertising revenues can support.

What's the funding model?

So what's the solution? What's the funding model for journalism? We still don't have it. But we know that advertising is not it.

Reuter's Ryan McCarthy thinks it might be Gawker's affiliate links model.

Gawker’s move to blend its content with an e-commerce platform, where posts are a delivery system for links to products, seems like it could help reverse this.

I think it has to be a "Heinz 57" business model with multiple revenue streams from: ads, subscriptions, affiliate links, special marketing packages, events, membership packages, virtual goods, and more.

That's a lot of work to manage each stream. Plus, each of those media revenue opportunities is under its own threats of disruption.

The rise of corporate media...

We are witnessing a surge in corporate media as businesses step up their production of video, blog posts, articles, thought leader columns, online magazines, video shows, etc.  

Some of it is produced at a very high quality by former journalists and TV news show producers.

The corporate media is trying to fill a space left by the declining ranks of journalists and other professional media. 

But this corporate media is caught in a massive bubble of content inflation. Huge amounts of all types of content competing with each other.

No matter how good the quality of any one piece of content -- its value declines because of the inflating bubble of all online content. 

Corporate media will get less traffic, less engagement, less visibility, because it has to compete with so much of everything else online.

Which means it will become more expensive to reach the same results as before.

Smarter machine media...

The expansion of content will eventually slow but not for a good while. 

There are ever better ways of automating content production and raising its quality. We've only just begun in this area and it will help keep the bubble of content inflation expanding ever faster -- just like our universe.

Topic: E-Commerce

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6 comments
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  • Only a parallel

    With more and more fields being devalued, there is less incentive to learn or to take the risk. It's the one downer that, sad to say, at least appears to be increasingly inescapable.

    It's hard to contribute when you don't make enough to be able to eat in the process.

    There has to be a better way.
    HypnoToad72
  • very good article!

    for the last few years I have not watched the tv much... and For the last year or so I have noticed I no longer waste my time readings news on the Internet. too much of it, too much noise, no analysis, just an avalanche of information I don't need or want. to me this is a race to the bottom.
    Drakkhen
  • It's The Connectivity, Stupid!

    The Internet was never about content, but about connectivity. There were services before the Internet, full of valuable content, and with prices to match--anybody remember Compuserve, Prodigy, the original AOL, BIX, and many others? In the end, they either had to embrace the Internet, or die. Why? Because that's where the people were. Why did the people go there, when the valuable content was elsewhere? Because that was the easiest place to find other people.

    Look at the value in social networks today. Is there much valuable content on Facebook or Twitter? No, but there are a lot of people, and that is the value.

    In short, your content never had value anyway. If you want to build a successful business on the Internet, you must focus on connectivity, and use the content purely as a means to that end.
    ldo17
    • voided internet area

      FB and all other social media websites couldn't survive without the content in their backyard. After using FB for some time many FB members recognize that it's a huge waste of time since most posts are plain stupid. Get rid of serious content and the internet dies within a few years.
      Except for teenagers FB provides no value at all.
      EnticingHavoc
  • simple solution for large content generating websites

    Lock out Google, FB, Yahoo and all the other leeches. Google is actually producing nothing at all but makes huge profits simply from leeching.
    Well know websites like zdnet don't need the support from search engines and social medias. They can sustain themselves easily.
    Google is a search engine and should be treated as what it is. Instead Google sucks up more and more revenue without a return service. Youtube too sucks up all bandwidth with its mindless vids and makes all the profit. ISPs (mobile or landline) have to increase their bandwidth year after year but can hardly ask for more money. Youtube adds a new video codec (say 4k resolution) and bandwidth increase virtually explodes.
    EnticingHavoc
    • Take that high quality journalism to where the 'eye-balls' or, users are?

      On the contrary, EnticingHavoc. - Tom posts and rightly so, that Corporate media will get less traffic, less engagement, less visibility, and because it has to compete with so much of everything else online. (Google has played it's role in driving a certain amount of traffic.)

      ldo17 tells it as it is. And that if Corporate media isn't prepared to embrace social networks (where the 'eye-balls' or, much sought after users are) and accept - that without the likes of Google, FB, Yahoo et al, even fewer users would find their way to that (Tom's reported), surge in corporate media! (Being produced at a very high quality by former journalists and TV news show producers.) Many are already doing so and successfully it would appear.

      A recent move by Google (and other huge players - http://tiny.cc/nf3csw) I feel, telegraphs exactly what lies ahead. And that there's a need for all Corporate publishing to embrace a coming intersection of search and display.

      And that however the means that users are getting their media - be it on existing & new devices - PCs, laptops, tablets, smartphones, hybrid devices, mini-tablets, televisions and more (including DOOH), that the 'leader of the pack' is firmly anchoring the foundations of the future. Meaning, ALL devices, are to be treated as ONE and the same.

      Marketers (in particular, Big Brand who have been reluctant, to date) down to the smallest of advertisers will soon be able to (in real time), reach most 'in market' users - across the entire web. Be they on social sites or, any of the many quality corporate media sites.

      Those that haven't, may need to consider a start making 'like-minded' friends across all 'social', to (with links back to daily articles or, whatever), encourage more to click on links back to their content of interest. Where higher paying ads targeting each or, many users who may come, are more than likely to follow.

      The future is only about, the user. - Forget content and contextual. http://tiny.cc/uk4csw
      LookingConfident