• by Ashkan Karbasfrooshan , Op-Ed Contributor, January 30, 2012

When Viacom founder Sumner Redstone said “content is king,” it was in the context that additional distribution outlets give rights holders new ways to monetize the content.  Indeed, thanks to the Internet, there are countless new outlets for content owners to distribute programming, but also thanks to the Internet, there’s an infinite supply of content, which drives advertising rates down. 

In other words, the former increases the value of content -- but the latter decreases it.  Since money is slow to follow audiences and does so in the long term, the negative impact of infinite supply is felt faster and more profoundly than the creation of new distribution outlets, making it harder than ever for incumbents to be in the content business. 

Seeing that historically new distribution platforms increase the total amount of media that is consumed, then challengers and startups can leverage not having any traditional business worth defending to create new, valuable companies. 

The explosion in content leads to more clutter, making it hard for content creators to stand out and nearly impossible for businesses to market themselves.  This is why many technology companies are evolving into content businesses: because it’s more effective to stand out by offering great content, whereas advertising tends to get lost in the shuffle.

Everywhere You Look, Companies Are Becoming Content Creators

Back in 2007, I made the case that Apple or Microsoft should just buy the record labels.  Today, Apple is sitting on $100 billion in cash, so you can make the case that Apple could buy the movie and television industry, as well. 

Ironically, the record labels have seen their businesses continue to shrink even though there are more and more distribution options made available to them.  Was Redstone wrong?  Maybe.  Or, as we alluded to earlier, there are more opportunities for new companies, not existing ones.

While Apple is seen as a white knight thanks to its booming balance sheet, it’s not the only possible suitor.

Microsoft is ramping up its home entertainment strategy through the XBOX Trojan Horse, and has long been a content creator through branded content at MSN.com.  Google isn’t idle, either, spending “north of $200 million” on content for its YouTube unit and acquiring Zagat.  A few years ago we would ask if Google was a media company or not.  No one asks that question anymore.

It doesn’t stop there: LinkedIn is already in the content aggregation business, and  think it’s a matter of time before it starts producing articles and videos (or simply acquiring a company to get into content creation).   Facebook has poached Dan Fletcher, the former social media director at Bloomberg, to be its managing editor.  With Facebook’s impending IPO and a war chest of over $10 billion, it’s a safe bet that some of that money will go into its content strategy, whatever it may be.  Twitter, meanwhile, is putting on DJ sets with the likes of Tiesto live from CES (HP and Intel were the sponsors).

Tell a Story or Get Drowned in the Noise

For years now, marketers have been urged to become content creators. Social media and online video (or, fragmentation and the so-called death of the 30-second TV spot) have forced marketers to rethink their strategy.  Content is the most obvious way for corporations to get more for their dollar.

But wait, is this really new?  Of course not: back in the day, Procter & Gamble financed soap operas.  The details and execution have changed, but at its core you are seeing the Web move from infrastructure, to platforms and now to content.

If I’m a content producer, should I be happy or scared?

It depends.  The glass is either half-full or half-empty.

On the one hand, even if tech companies get fully into content, they will still need to hire, invest or buy content expertise.

But, on the other hand, this makes it more challenging for pure-play content companies because it creates far more clutter across the content landscape.  While content isn’t a zero-sum game, there’s a limit to how much content the average user can consume. 

As such, existing content creators need to remain relevant one way or another as deep-pocketed businesses with existing clients and brands get into the fray. 

Ironically, for years, producers have tried to win over marketers through branded content, but to no avail.  Once businesses become more proactive with content, they may be the ones courting producers.  Now that’s one ending that might catch Hollywood off-guard.