• by Ashkan Karbasfrooshan , Op-Ed Contributor, November 28, 2011

In my earlier article on exclusivity, I argued that we were about to enter a period of exclusivity in which distributors paid content creators for access to exclusive content for a limited time.  Since the article, we have seen YouTube spend up to $250 million on exclusive content, and Netflix announce it would be bringing back “Arrested Development.”

Meanwhile, Australian ISP Internode is the latest distributor toying with offerings its viewers exclusive content.  The practice is nothing new, but it begs the question: Does exclusive content matter?

It’s Complicated

In the same earlier article, I also said that “content is a woman and distribution is a man,” because distribution companies

-      never make any promises,

-      have no-strings attached offerings,

-      make no commitments,

-      rarely seek exclusivity, and

-      when they do, it’s usually too good to be true.

Content producer, meanwhile,

-      enter distribution deals with expectations,

-      believe the promises they hear,

-      expect a commitment, and

-      want a guarantee.

If only the relationship was this simple.  Realistically, once you add the other two parties (the viewer and advertiser), you realize that you’ve not only walked into a potential ménage a trois, but you’re actually living a swinger’s lifestyle, where producer, distributor and advertiser all try to have their way with the viewer.  While viewers are willing to chase the right producer, they’re generally a challenge and play hard to get -- which explains why they have all of the power in the big picture.

The Advertiser As Sugar Daddy

If you thought the content producer and distributor had a dysfunctional relationship, the bond between viewer and advertiser is even more sordid.  The advertiser has emerged as some kind of sugar daddy over the years, offering a litany of free “experiences” (content, services and applications) with the viewer naturally taking it all for granted and expecting more over time.  What was intended to be a privilege has become a right, it seems.

Ironically, both the producer and distributor have forever tried to bypass one another and win over the viewer and advertiser, but to no avail.

With branded content, the advertiser and producer are trying to give it a go in awkward one-on-one -- but without the distributor having an open mind about the offspring; viewers historically haven’t shown an interest to participate in that kind of experience, even if they’re invited and the guest of honor.

Distributor Becoming the New Sugar Daddy

In fact, with viewers not being all that into most advertisers, we are seeing some producers eyeing the distributor as the one who will foot the bill, hoping that those who aggregate the most eyeballs will open up their wallets and pay for the producer’s wares, thus becoming the modern sugar daddy.

Of course, some distributors are considering this, with YouTube leading the way with a $250 million check -- provided the producer drops the alternative lifestyle of hyper-distribution and embrace a more traditional form of courtship: the exclusive relationship (albeit for a limited period; hey, you’re only young once).

Following in YouTube’s footsteps is Netflix, and its push into original content with the likes of “House of Cards” and “Arrested Development.” 

Depending on how the YouTube and Netflix experiences work out, I think you will then see more and more distributors receptive to the practice.  I can see gatekeepers like Verizon, Comcast, DishNetwork etc. entering the fray and trying to woo the producers, too.  It’s really only a matter of time: the backbone can handle it, the pipes can deliver the goods; what’s lacking is the content.

If that happens -- and Apple, Hulu, etc. continue to fight for content rights -- then it’s entirely possible that content’s value will continue to soar, even as distributors maintain their Svengali-like grip on the belle of the ball: the viewer.

Now don’t get me wrong, while content is king, monarchies are no longer in vogue; indeed the distributors have the power.  Any producer that doesn’t “get this” is living in the past.  But to ensure that advertisers keep the system running, distributors need to please viewers. To do that, you have to give viewers the content that they want when they want it.

The lesson is that producers are still paying the price for giving away too much, too easily, too fast.  That kind of reputation is hard to shake.  But once they realize they can have the upper hand if they play the game right -- then maybe, just maybe, they can get the diamond they deserve.