Publishers vs. Agencies: Larger Brands Causing A Shift In The Media Model?

While the con­text of this con­ver­sa­tion makes com­plete sense to me (as I have in point of fact been talk­ing about this with clients for years now), I am inter­ested in fur­ther­ing the dis­cus­sion to explore this topic more deeply.

Mean­ing, I don’t really think that Uncle Miltie push­ing laun­dry soap is the where we’ll land. Rather, the dig­i­tal chan­nels are frag­ment­ing the audi­ences to the extent that you really do have to develop your own audi­ence in order to sus­tain your­self as a con­tent cre­ator or publisher.

But can agen­cies or brands really achieve this? I’m not so sure, which is why I think the eco­nom­ics on both ends are worth look­ing at a lit­tle more closely.

For pur­poses of this blog post, I’m just sum­ma­riz­ing. Mostly because I don’t have time to delve into the par­tic­u­lars of this, as nei­ther side employs me to do so. This is a hobby of mine. A bit sick, yes. But there’s no account­ing for taste, is there? (More beneath the video.)

Pub­lish­ers

If the pub­lish­ers com­mit to the “pub­lish more types of con­tent to get more audi­ences” model, it increases their devel­op­ment, pro­duc­tion and dis­tri­b­u­tion costs. How­ever, there are poten­tial economies of scale that can be achieved. The­o­ret­i­cally. But it may take a lot more cap­i­tal to achieve this, which is a big turnoff when you’re try­ing to cap costs, encour­age growth, and turn in higher prof­its for your shareholders.

If you ask Bob Iger, he may tell you that shuf­fling off pro­duc­tion costs and tak­ing on the costs of devel­op­ing a new dis­tri­b­u­tion plat­form is the way to go. (And since devel­op­ment really is defined as the work that goes into cre­at­ing the intel­lec­tual prop­erty that is sal­able as a piece of fin­ished con­tent, this is also removed as a cost to the extent that Dis­ney is unwill­ing to part­ner with con­tent pro­duc­ers to iden­tify and develop said content.)

This obvi­ously com­pli­cates the cal­cu­la­tions involved here, but essen­tially, Mr. Iger is bet­ting it’s cheaper to pay some engi­neers to build a pro­pri­etary plat­form for dis­tri­b­u­tion (high up-front costs but lower maintenance/upgrading costs), than to pour money into devel­op­ment of spe­cific content—and I’d say he’s right there.

The higher risk is in fact guess­ing which con­tent audi­ences will buy. So if pro­duc­ers of said con­tent are shoul­dered with the fis­cal respon­si­bil­ity of pro­duc­ing it, Dis­ney now is able to focus its dol­lars on gen­er­at­ing a new stream of income for its exclu­sive con­tent, and it can build lever­age as it nego­ti­ates the licens­ing of its non-exclusive con­tent else­where on the web. That seems to be the the­ory here, and I think it’s cer­tainly a viable one.

Brands/Marketers

For the mar­keter who is now ask­ing their agency to assist in the devel­op­ment of their own audi­ences, the eco­nom­ics look a bit less encour­ag­ing, for the sim­ple rea­son that you can­not pre­dict what con­tent is going to catch on with an audience.

Despite the “fear” that is voiced from The Economist’s mul­ti­me­dia edi­tor Bren­dan Greely in this video about mar­keters devel­op­ing engag­ing con­tent that may steal audi­ences, it’s safe to say (or at least it was the last time I checked) that agen­cies are not in the busi­ness of con­tent pro­duc­tion for audi­ence development.

The most basic rea­son would be that brands that employ agen­cies do not shower them with money and ask for a vague goal such as, “devel­op­ment of an audi­ence” as Robert Davis speaks about later in the video. (To his credit, Davis does con­cede that it’s not all about audi­ence devel­op­ment for agen­cies, and that there is a grow­ing need to be able to do both.)

In the end, with any sig­nif­i­cant rate of fail­ure to develop con­tent that devel­ops audi­ences, any agency with an eye on their bot­tom lines (which is all of them, last time I checked) will just leave it to those who have been doing it for a liv­ing: the publishers.

As much as this might dis­ap­point mar­keters, the real­ity that rein­forces the adage “money talks” does pre­vail here. So unless the CMOs of any con­sumer brand can really con­vince their com­pa­nies to com­mit to build­ing an enter­tain­ment arm, chances are this cur­rent shift in the mar­ket­place will end up mod­i­fy­ing how things are done, but not all that drastically.

Pub­lish­ers will always have the lever­age, until such time as peo­ple really can pre­dict what con­tent will “develop an audi­ence,” and pro­duc­tion com­pa­nies can com­pete with the pub­lish­ers. That would be an inter­est­ing development.

In the end, the direc­tion that Bob Iger is push­ing Dis­ney toward seems like the most prag­matic of all, at least for the pub­lish­ers. What about the pro­duc­tion and devel­op­ment com­pa­nies? Same as it ever was: have a good nose, and develop sal­able con­tent that pub­lish­ers will buy.

Unless…those con­tent creators/production/development com­pa­nies can fig­ure out how to do what pub­lish­ers do well. But that’s a whole other sub­ject, and also (at least IMHO) unlikely to hap­pen. The ecosys­tem that exists is there for a reason.

Plat­forms are jug­gling things around and open­ing up oppor­tu­ni­ties for inno­va­tion, but the mod­els are rel­a­tively effi­cient the way they are, and I think that ulti­mately, mar­keters wouldn’t want to devote that much of their mar­ket­ing bud­gets to con­tent cre­ation. Unless that’s the only strat­egy they’d employ for a brand launch and mar­ket­ing campaign.

Alter­na­tively, you could just cre­ate a vir­tual stu­dio of hun­gry artists that will work for lit­tle pay, amass a huge amount of their con­tent on any given sub­ject, and rack up page views like there’s no tomor­row, and mon­e­tize like crazy, since you’ve cov­ered every con­ceiv­able topic. Behold the future. As long as peo­ple click, and other peo­ple mon­i­tor, pri­or­i­tize, and mon­e­tize by clicks, this is where we may be headed.

But I think there is a third way, and we’re all work­ing very dili­gently right now to fig­ure it out. I have some more thoughts that I will be post­ing on this very soon.