The content game

In this week`s column, I will discuss some of the peculiar aspects that characterise the content publishing industry. While the examples I mention are South African, I think the general set of ideas applies worldwide.

Due to the unproven nature of the content industry`s revenue models, two things seem to drive investment and demand: marketing and people.

Content publishing or publishing information on the Internet (rather than running commerce or other services) is a curious enterprise in that it is even newer than the Internet access industry, which appears to be exploring a fixed but broad set of similar business objectives everywhere in the world.

The content business has few proven business models, and it has become the accepted wisdom of the day that it`s a loss-making enterprise on the whole. Technology investment booms, on the stock exchange or outside of it, seem to happen in waves, however, and right now there is some reason to assume that Internet media companies are on a rising curve of performance assumptions, while, for instance, Internet access shares may not be as popular anymore. But this, too, is hard to assess in a market that`s mad for technology and networking-related stocks, period. Call it a hunch.

Due to the unproven nature of the content industry`s revenue models, two things seem to drive investment and demand: marketing and people.

Marketing further breaks down into `soft` values such as brand perception, amount of print/other advertising and what I`d like to call the "captive audience" element that many content providers (eg America Online) still rely on (they operate content and access businesses that depend on each other for reach and distribution).

People, perhaps strictly speaking, are a factor of marketing; but in an industry strapped for good talent and business experience, people are an important factor in driving up the value of content enterprises. Talking heads in the traditional media are one part of the equation. The continual solidity of a company`s performance often depends largely on the staying power of its people as well as the sheer creativity that content teams display when faced with competitors that often have much higher capital investment to deploy in the marketing battle.

The content industry, it would seem, is an industry that relies almost entirely on knowledge workers to produce the goods. Someone has to write the stories, design the sites and place the advertising. Because of the small-scale deals that often characterise the operation of a content portal, many hands are needed to keep everything running smoothly. Some local larger-scale content providers employ more than 50 people whose sole focus is the creation and selling of online information of one kind or another.

There is a perception divide in the Internet industry between access or primarily technology-focused businesses (ISPs, Web development companies, systems integrators) and the content industry. Content people are seen as "artsy" folk who do flashy things without making any money. The closest analogy I can think of is the way that marketing people are treated in traditional companies: marketers, it is thought, primarily spend money in unmeasurable ways without having many spreadsheets with black figures to show for it.

I think this gap is beginning to close, perceptibly at the moment, because many of the market-leaders in the content industry have started driving their companies` business models from an angle that took several years to emerge. They have started building their activities, their sites, around technology, thus creating a technology-driven business from the outset, as opposed to simply increasing the number of people required to scale a traditional, "hand-made" content operation.

During the past year or two, Internet publishers have started to make often expensive technology decisions early on in the game. This has led them to deploy and develop on top of proven Web publishing platforms instead of going the "old content industry" route of hacking together scores of manually developed pages and applications on open-source platforms. There is a precarious balance between people and skills on the one hand, and technology and changability and scalability on the other.

What I mean is that developing a site on top of your own platform, developed from free tools and held together by the sheer knowledge of those who developed it (some might say, sticky tape and superglue) is no longer a cost-effective way of building a content enterprise. Instead, companies are deploying larger-scale, scalable Web publishing systems which are properly supported and for which it is easy to find new, replenishable development heads.

Two cases in point are my hosts for this column, ITWeb, and M-Web Interactive`s 24.com portal. It was clear from the outset of each project that it could only be achieved in a sustainable manner if all content was published out of a database. Live publishing of stories and other content in this manner means that the operation can scale limitlessly and very rapidly: both sites grow at an exponential rate during every month of their existence.

It also means that fewer generalist skills are required in the organisation. While I would be the first one to suggest that multi-skilled people are important during the start-up phase of any business endeavour, the solid publishing backends to both ITWeb and 24.com allow their respective owners to target the right skills to the best-matched task: editors do what they do best (making content decisions), as do developers.

In the case of developers, another gain from deploying a solid publishing platform is that it is backed up by proper support and training from the vendor - skills upgrades are no longer rooted in personal pursuit but planned training.

In short, activities that once took a long time to perform and seemed almost insurmountable in complexity (especially for a cash-strapped small business) can now be performed with ease.

I predict that during the next 12 months, the content game will continue along three defining business metrics:

1. People.
2. Marketing investment.
3. Early technology decision.

I suspect that in real terms, the order of the above list should be reversed. I think that technology is, after all, the driving factor in the Internet content industry, while people and marketing investment are close seconds and thirds, as the case may be. Investors should likely start evaluating investment opportunities with these three metrics in mind.

Taking in the bigger picture, I think that the real convergence of technology and the media is still in the future. The determining factor in whether we`ve "arrived" at true convergence will be how effortless it is for online publishers to publish content on the Web.

Wealth of content, the ability to personalise a site and personal relevance will be the deciding factors for the site-visiting masses. Ease of scale and modularity in the back office will determine the success or failure of any content enterprise.