Dumb Pipes, Devaluing Content: It’s All About Context

Snake Oil Tonics By Wesley Fryer
Snake Oil Tonics By Wesley Fryer

In fact, the dirty little secret of the media industry is that content aggregators, not content creators, have long been the overwhelming source of value creation. Well before Netflix was founded in 1997, cable channels that did little more than aggregate old movies, cartoons, or television shows boasted profit margins many times greater than those of the movie studios that had produced the creative content.

“Why Content Isn’t King,” Jonathan A. Knee, The Atlantic

Netflix is the media’s disintermediation darling du jour for its undeniable success over the past couple of years in aggressively transitioning into video streaming and growing its subscriber base, and Knee’s Fluffpo-esque fawning in The Atlantic is an interesting read for its combination of mixed metaphors, illogical conclusions, and awkward boosterism that feels rather unseemly coming from an investment banker. The biggest annoyance, though, is his myopic embrace of the technophiliac’s vision of the world, where “dumb pipes” rule and the content that flows through them is irrelevant, as if Netflix’s surge in popularity isn’t equally attributable to its savvy content deals, something he specifically notes as one of Amazon Prime’s challenges in fielding a viable competitor.

On the publishing side, the devaluation of content isn’t anything new, with publishers themselves as guilty of it as the technology vendors they often rush into bed with without thinking through the ramifications (eg: $.99 apps vs. $9.99 ebooks and subscriptions?!?!), so it was heartening to see Steve Jobs forced to back off last week on Apple’s proposed in-app subscription rules, at least partly thanks to a few publishers refusing to play along, including the Financial Times, who announced an HTML5 “app” that would circumvent the app store and Apple’s 30% extortion fee.

(Interestingly, Dark Horse Comics boldly announced a similar plan last year, but for undisclosed reasons abandoned that approach, despite having a stable of well-known brands that arguably don’t need the extra boost offered by the App Store.)

In backing down, I suspect Jobs saw the HTML5 on the wall and realized he was fighting a rare losing battle, playing hardball with major content producers whose early, enthusiastic and unabated promotion of the iPad — as inherently a consumption device as has ever been conceived — helped demonstrate its value to consumers. It was, theoretically, a mutually beneficial relationship until his reach finally exceeded his grasp.

Established brands are better positioned to drive their audiences to specific platforms, while established platforms can expose unknown brands to their own audiences. Not surprisingly, the ideal scenario is a hybrid of the two that results in a vibrant ecosystem of, wait for it, content.

A “dumb pipe” without quality content is useless, no matter how much money VCs pump into it, or pundits praise it as the next big thing. Whether it’s Amazon’s formal move into publishing, Netflix’s producing of original content, or even the Fluffington Post’s steady hiring of professional journalists to balance their signal:noise ratio, content remains King while “context” defines its authority and power, and even Knee acknowledges, if obliquely, that creating the latter is the easier part of the equation.

2 thoughts on “Dumb Pipes, Devaluing Content: It’s All About Context

  1. I wouldn’t say a dumb pipe is useless. A dumbpipe us all I want from my internet and mobile providers. However, when it comes to content, curation and properly organized verticals are important. As is metadata that allows for searchability and discovery of content from outside sources. The pipe can be dumb as all getout as long as I can find what matters to me and mine.

    Oh, and dude, HTML5 is cool and all, but without a JavaScript, it’s still lacking on the whizbang frontend stuff.

  2. Thought provoking article.

    If I didn’t have a “dumb pipe” feeding me my daily content how and what would I be consuming?

    I’ve tried RSS and selecting email newsletters but there’s too much content and there’s too little time to manage it all.

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