Eric’s POV

Meaning, I don't really think that Uncle Miltie pushing laundry soap is the where we'll land. Rather, the digital channels are fragmenting the audiences to the extent that you really do have to develop your own audience in order to sustain yourself as a content creator or publisher.

But can agencies or brands really achieve this? I’m not so sure, which is why I think the economics on both ends are worth looking at a little more closely.

For purposes of this blog post, I’m just summarizing. Mostly because I don’t have time to delve into the particulars of this, as neither side employs me to do so. This is a hobby of mine. A bit sick, yes. But there’s no accounting for taste, is there? (More beneath the video.)

Publishers

If the publishers commit to the “publish more types of content to get more audiences” model, it increases their development, production and distribution costs. However, there are potential economies of scale that can be achieved. Theoretically. But it may take a lot more capital to achieve this, which is a big turnoff when you’re trying to cap costs, encourage growth, and turn in higher profits for your shareholders.

If you ask Bob Iger, he may tell you that shuffling off production costs and taking on the costs of developing a new distribution platform is the way to go. (And since development really is defined as the work that goes into creating the intellectual property that is salable as a piece of finished content, this is also removed as a cost to the extent that Disney is unwilling to partner with content producers to identify and develop said content.)

This obviously complicates the calculations involved here, but essentially, Mr. Iger is betting it’s cheaper to pay some engineers to build a proprietary platform for distribution (high up-front costs but lower maintenance/upgrading costs), than to pour money into development of specific content—and I’d say he’s right there.

The higher risk is in fact guessing which content audiences will buy. So if producers of said content are shouldered with the fiscal responsibility of producing it, Disney now is able to focus its dollars on generating a new stream of income for its exclusive content, and it can build leverage as it negotiates the licensing of its non-exclusive content elsewhere on the web. That seems to be the theory here, and I think it’s certainly a viable one.

Brands/Marketers

For the marketer who is now asking their agency to assist in the development of their own audiences, the economics look a bit less encouraging, for the simple reason that you cannot predict what content is going to catch on with an audience.

Despite the “fear” that is voiced from The Economist’s multimedia editor Brendan Greely in this video about marketers developing engaging content that may steal audiences, it’s safe to say (or at least it was the last time I checked) that agencies are not in the business of content production for audience development.

The most basic reason would be that brands that employ agencies do not shower them with money and ask for a vague goal such as, “development of an audience” as Robert Davis speaks about later in the video. (To his credit, Davis does concede that it’s not all about audience development for agencies, and that there is a growing need to be able to do both.)

In the end, with any significant rate of failure to develop content that develops audiences, any agency with an eye on their bottom lines (which is all of them, last time I checked) will just leave it to those who have been doing it for a living: the publishers.

As much as this might disappoint marketers, the reality that reinforces the adage “money talks” does prevail here. So unless the CMOs of any consumer brand can really convince their companies to commit to building an entertainment arm, chances are this current shift in the marketplace will end up modifying how things are done, but not all that drastically.

Publishers will always have the leverage, until such time as people really can predict what content will “develop an audience,” and production companies can compete with the publishers. That would be an interesting development.

In the end, the direction that Bob Iger is pushing Disney toward seems like the most pragmatic of all, at least for the publishers. What about the production and development companies? Same as it ever was: have a good nose, and develop salable content that publishers will buy.

Unless…those content creators/production/development companies can figure out how to do what publishers do well. But that’s a whole other subject, and also (at least IMHO) unlikely to happen. The ecosystem that exists is there for a reason.

Platforms are juggling things around and opening up opportunities for innovation, but the models are relatively efficient the way they are, and I think that ultimately, marketers wouldn’t want to devote that much of their marketing budgets to content creation. Unless that’s the only strategy they’d employ for a brand launch and marketing campaign.

Alternatively, you could just create a virtual studio of hungry artists that will work for little pay, amass a huge amount of their content on any given subject, and rack up page views like there's no tomorrow, and monetize like crazy, since you've covered every conceivable topic. 

You scoff? Behold the future. As long as people click, and other people monitor, prioritize, and monetize by clicks, this is where we may be headed.