It was never supposed to be this profitable

The next big change in online content is coming: Univision will be selling the Gawker and Onion properties. Isn’t Gawker the Hulk Hogan tape place that was taken down using a strange back-channel style of defamation qua privacy lawsuit? Why yes, yes it is. The Gawker properties are all the other companies that were a part of that content core, namely Jezebel, Jalopnik, and Deadspin. Each alone has a core identity and a solid basic value proposition. The Onion and affiliated project Clickhole are powerhouses in the online comedy content world. Shouldn’t this have been, you know a killer lineup of content? And this is not just about Univision, Buzzfeed and Vox have already run through rounds of layoffs. Content is changing.

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A recurring piece of powerful commentary

Content is King, Long Live the Dead Mediocre King

Content is important. Really important. Without content there is nothing to but between all the ads and nothing to try to match the affective frequency of those ads to. Here is where it gets tricky — absent a mechanism for producing artificial scarcity, the media industries are subject to the ars longa problem. For the most part, our goods don’t spoil, and given nearly non-existent transport and warehousing costs, an infinite library of our goods can be provided to potential customers. Thus massive stocks of old content can be fed back into the feed machine. The supply of content is truly massive.

Worse, the market is self-disrupting. There are a nearly unlimited number of writers of jokes, memes, essays, limericks and whatever else you want to read or watch out there making content continuously. Some of this content is really good, a lot of it is really bad. The problem is that the public is just as likely to abide by the bad content as to seek out the great content. Instead of the market selecting the top properties and showering them with cash, mediocre properties are just as likely to be rewarded.

At the same time, people like strange things, perhaps Bazooka Joe comics are crown jewels? It is entirely possible that many niche content genres are now viable. There could be low production value content being deployed for publics that never would have been serviced before.

Disintermediation by the Duopoly

A second critical factor is that news and other content were once a part of the same business organizations that distributed content. Business transactions are for the most part managed by the distributor. In-house content production was not necessarily required buy was important to buttress the distribution network. You need a really good wrapper for the classified section.

The online advertising market is really quite narrow, with Google and Facebook functioning as a duopoly. Worse, if you consider platform dynamics in the calculation, each is a monopoly. Facebook is the only game in town for affinity in feed advertising. Google dominates search advertising. These firms have no real reason to pay content producers handsomely. Facebook in particular can subsist on user generated content, pictures of lunches, babies, and beers. For many advertisers, this is a better context than hard news in the first place.

After Advertising

There is so much content today. Even if users are less interested in Facebook, mountains of online content are appearing, such as this lovely post on medium. The key for great content is to act like the content is great. Paywalls work: the New York Times now is a majority subscription revenue operation. Wired Magazine, the cyber-utopian magazine with a love of creative destruction, has also deployed a paywall.

Instead of seeing this as a bleak moment, it is time for organizations with truly valuable information to double down. For The Onion, that means reinvesting in high value added content that other comedy sites simply can’t produce. In the 1990s, the Onion wrote full feature articles, then full feature video. The cheaper alternatives, headlines with images or one paragraph slug articles, are too easily coopted by other comedy sources.

Organic reach needs to be organic again. The fact that Onion has a really well liked Facebook page doesn’t mean that they should post all of their content there. If anything they should post less. Allow organic clicks to draw people to the page when those links are deployed by friends. The deep well of content available on the site can then be the basis of the advertising experience.

Unfortunately, this strategy is unlikely to work for sites that are closer to tabloid style. Those sites should also get back to drawing readers to their primary sites and should consider paywalls.

One final takeaway is that our core publication companies: Google and Facebook are simply too lean. Pure distribution companies working with freely provided content are the ultimate disruptors. When an axis is involved in the system, you can’t compute a positive intercept between two lines. We can only expect the major players to continue along this trajectory, unless a bunch of major players decide to start paying for content, the wide open world of the online internet content website is coming to a close. Replaced by crappy feeds and paywalls.

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