The Great Commoditization

It's no secret that we've transformed ourselves into a service-based economy. This is often expressed indirectly through the lament that as a nation, "we just don't make anything anymore." And it does certainly seem that more of us are engaged in marketing, managing and monetizing than manufacturing these days. But this shift doesn't just apply to clothing, automobiles and consumer electronics; it also applies to content.

There's no agreed-upon single definition for Web 2.0, but the commonality I saw in new ventures commonly labeled as Web 2.0 was a focus on aggregating, manipulating, presenting and (occasionally) licensing content, but rarely if ever creating any content. Where content was created, more often than not it was via user-generated content. In short, while these ventures needed content, few if any wanted to be in the business of creating it themselves. This no doubt explains the amazing proliferation of Web 2.0 ventures. There are lots of talented programmers out there, and (seemingly) unlimited funding for websites that can be developed quickly and have none of the cost or complexity of proprietary content associated with them.

We're seeing the same thing now in the news business, with the growth of so-called "content farms." These are companies that employ legions of underpaid writers to crank out timely, "SEO friendly" stories that are piped to subscribing websites that need an endless supply of new content but don't want the bother of creating it themselves.

Perhaps you see where I am headed. With everyone re-purposing a large but ultimately fixed pool of content, said content ultimately gets commoditized. All this "plug and play" content is incredibly convenient, but value goes down as availability goes up.

This leaves those of us with high-value, proprietary content in an enormously strong position. We are the remaining few who still are making something distinctive, unique and valuable. And as those who prefer to distribute content rather than create content begin to feel the effects of "The Great Commoditization",  I am predicting there will be huge pressure to obtain valuable, distinctive content. Data publishers may or may not choose to work with these companies, but there's no feeling quite like a bunch of people banging on your door, checkbooks in hand. Building and maintaining quality databases has never been easy work, but it is poised to become even more rewarding.

Comments

[Barry Graubart]

No doubt, there is some, select content that may increase in value as other content is commoditized. We still need investigative reporting, analytical market research, etc.
But "valuable" goes beyond simply being unique. That unique content has to offer the user a true advantage over what they could get for free. In the b2b world, it's often actionable information that commands a premium.
Unfortunately, that remains a very small subset of the premium content out there. As free or inexpensive content continues to improve, the gap between free and premium continues to erode.
What I find is that TOO many publishers rely upon the argument that "our content is unique" or worse, "our quality is higher because of our processes" as their value proposition. Yet, when you speak with their customers (or former customers), you hear again and again that the premium publisher did not deliver any value-add over what was available for free. A good example of this comes in the "prospecting data" market where the free or inexpensive entrants such as Jigsaw or Zoom often deliver a higher level of quality (and greater frequency of updates) than those "premium" databases which are updated by humans.
So, yes, truly unique content (especially that containing deep analysis) will command a premium. Yet many other publishers will watch their business decline while hiding behind the false belief that their content is truly unique.

[Craig Harris]

Russel,
I always enjoy reading your posts, but this one was a real gem. Thank you so much for sharing your insights on the trending of premium vs. commoditized content.

Craig Harris
President & CEO
NOZA, Inc.