BUSINESS BLOGS
BUSINESS BLOGS
category: business
20 Jun 2007

America is undergoing a civil war. No, not red vs. blue (though that could be argued too), rather, technology vs. content.

When Sam Zell bought the Los Angeles Times and said something to the tune of Google is ripping us off, he might not have had the 100% support of all publishers, but he sure had the sympathy of many amongst them.

America, today, is undergoing a civil war.

Last night, Yahoo! Chairman and CEO Terry Semel resigned from his post. Michael Arrington, an influential blogger, added: “personally, I’m glad he’s gone, the Valley will take over Hollywood, not the other way around.”

Some raised eyebrows, because comments such as those reinforce content producers (including those in Hollywood) who claim that technology firms north of the Californian coastline are gunning for their business.

A few years ago, Hollywood’s brethren in the music industry had Napster’s Shawn Fanning to contend with. They shut his venture down, and today fare worse because of that. But the core of their argument: that they should be compensated for their intellectual property, was not wrong, either in principle or in practice.

Today Hollywood is being bombarded by technology, social trends and consumer tastes. While it has been slow to adapt, being ripped off should not, it would argue, be par for the course or the price to pay.

Today Dave Winer, the man credited by many to have invented or pioneered a form of syndication called Real Simple Syndication (RSS) came out and argued that Silicon Valley has never been, is, or will be about publishing, but rather, about the management thereof. In other words, “we won’t pay for the production of the asset in question, but we choose to harness tools that can exploit it.”

And as we pointed out in a follow up post: Silicon Valley will also choose how to divvy up the proceeds.

It’s a daunting proposition for content owners/producers.

The simple truth is that content will be produced one way or another. Today tools exist that render its marginal cost be almost inconsequential, yet the potential profit thereof so large that many venture. The bottom line is that traditional content owners have the wherewithal to produce above average content, but it remains to be determined if anyone will pay the premium historically placed on such content to produce it. Indeed, think of the Wall Street Journal, The Economist or Financial Times: three of the only publications that still generate material revenues from subscriptions at a time when most publishers have adopted the “print is free” mantra to generate ad revenues.

Of course, when people spend 25% of their time online yet marketers only allocate 5.9% of their budgets to the Web, one can imagine the such a disequilibrum fosters the free content argument.

But as every day rolls by, it is clear that technology companies are churning out innovative tools to crawl, index, parse, list, syndicate and monetize content but there seems to be less quality content online.

Ask yourself how badly you yearn for new content, or how happy you are when you find something innovative and new.

The reason for that, frankly, is that those who have produced historically do not really have an economic incentive to move online due to the abovementioned factors.

As these forces take shape and gather strength, I personally think that you will see some radical moves by both content producers and technology companies to reshape the landscape.

After all, as it stands now, technology companies such as Google have created tremendous value and gained a foothold in otherwise gardened walls by pretending they are not in the content space - and thus skipped over the historical barriers to entry - even though they have benefitted from the exact upside that publishers have gained from: advertising.

Trust me, as someone who day in and day out talks and works with both technology companies and content producers, I can tell you that come hell or high water, beneath the veiled camaraderie is brewing a potential clash of civiliations between content and technology firms that will make the first American Civil War look rather cordial and civil.