Monthly Archives: September 2015

Silicon Valley once steered clear of original content. What changed?

apple tv

By the time news outlets began reporting that Apple is actively negotiating with Hollywood executives to produce exclusive programming for its fledgling television platform, none of us seemed surprised that a major tech company would invest so much money in original content.

If anything, Apple is late to the party. In 2011, Netflix, which until then had been just a tech platform that allowed one to stream already-released movies and old seasons of television shows, plopped hundreds of millions of dollars into the creation of premium shows, greenlighting them before even seeing a pilot. Amazon wasn’t far behind, launching a bevy of shows to mixed reviews. In 2012, YouTube shelled out $100 million to both lure established media companies onto its platform and allow its already-existing stars to up their games. These days, not a week goes by without a major tech company announcing a major content play, whether it’s Yahoo’s resurrection of the show Community or Facebook’s offering of huge advances to YouTube stars in order to entice them onto its native video platform. Twitter recently attempted to purchase the millennial news site Mic, and prominent venture capitalists have bought huge stakes in companies like BuzzFeed, Vice, and Vox, valuing these news outlets in the billions of dollars.

Viewing all this activity, it’s hard to believe that, a mere decade ago, the tech sector considered original content anathema to everything it stood for, a vestigial hangover from the days when the barrier to entry for content production and distribution was relatively high and therefore lucrative.

Circa 2007 – 2008, the practice of creating original content seemed to be a dying profession. The music industry had been completely eviscerated in the wake of Napster and other file-sharing programs. Newspapers were well into their decline, already kneecapped by Craigslist and facing a print advertising exodus. Magazines weren’t far behind them. The book industry, while not exactly suffering, wasn’t thriving either, with most sales coalescing into a handful of conglomerates who were already bracing themselves to have their asses handed to them by Amazon. The television industry seemed relatively sturdy but most assumed its day of reckoning would eventually come.

This is when we saw the rise of platforms that were fueled primarily by user generated content. First Myspace, and then later Facebook, YouTube, and Twitter. Media companies that were suffering looked at Keyboard Cat and assumed that this was the future of content, and Silicon Valley didn’t seem to disagree. Original content was expensive and difficult to scale effectively; why hire 60 journalists to create content when you could spend that money on 30 engineers who would then build a platform on which millions of users would generate content for free?

So what changed? Why are we seeing the sudden emphasis on premium programming in a world where everyone with a GoPro seems willing to upload their videos for no payment?

Well, it turns out that original content actually is scalable, particularly when it’s hosted on the right tech platform. Netflix just announced in July that it had reached 65 million subscribers, a number that would have been difficult to attain when it was merely licensing reruns, especially as other low-cost streaming services have entered the market. And sure, it’s possible that your amateur video of cat could hit the viral stratosphere, but most don’t, whereas YouTube stars can guarantee millions of views for each video posted. The majority of BuzzFeed listicles reach at least a million views, which means that your average BuzzFeed staffer can reach an audience that’s similar in size to The Daily Show’s.

And though viewers have flocked to user-generated content, advertisers still prefer premium programming, especially if it attracts hard-to-reach demographics. The critically-acclaimed USA Network show Mr. Robot only attracts about 3 million viewers per episode, a mediocre turnout when compared to the network’s other hit shows, but it’s having to beat away advertisers with a stick. “It’s a hot property right now,” network president Chris McCumber told New York Magazine. “We have more demand than we can handle for Mr. Robot, and it’s bringing in new advertisers.” And with brands increasingly shifting budgets toward native advertising and away from display, it suddenly behooves tech platforms to have in-house content expertise.

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Finally, tech companies have discovered that exclusive content is a great way to lock users into a platform. A decade ago, there were only a handful of social networks that had the millions of users needed to effectively scale user generated content. Now let’s consider the number of platforms today that have at least 50 million active users: Facebook, Twitter, Google+, LinkedIn, Pinterest, Instagram, Snapchat, Tumblr, WhatsApp, Foursquare, YouTube, Flipboard. I’m likely just scratching the surface.

We now have dozens of networks competing for our attention, and our loyalty to any one platform is tenuous at best. Exclusive content, even if it makes up a relatively small percentage of the content posted to the platform, gives us that much more incentive to choose one platform over the other. Medium, the blogging platform launched by Twitter co-founder Ev Williams, employed this strategy well when it hired top-tier freelance journalists to write on its network before opening it up to the masses (I and call this the “mullet strategy”). Of course, nobody has capitalized on this approach better than Netflix, which is now spending north of $700 million on content you can’t watch without a Netflix subscription.

The question now is how traditional media companies, many of which have been producing original content for decades, will respond. Already we’re starting to seeing seismic shifts in the media landscape, whether it’s HBO launching a standalone app or magazines like Forbes transforming themselves into platforms. News companies are also inking content distribution deals on platforms like Facebook and Flipboard with promises of revenue sharing.

Perhaps the late David Carr was right when he said, in 2012, that “big news is still the killer app,” by which he meant original content. Given how much we keep hearing about the current “golden age of television” and the rise of millennial-focused news companies that are reaching billion dollar valuations, I can’t help but agree. A new dawn is upon us, and if you’re a content producer like myself, then take a few moments to rejoice.

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