Costly Content

Page 2 of 2

Insider Story
If and Motley Fool did it right, was a prime example of how not to contain content costs. Flush with venture capital money, Insider's founder Kurt Andersen also came to the Net with a tad of editorial hubris. After scoring a success at Spy Magazine, Andersen thought he could out-content traditional media and got burned. Soon after founding, he spent a bundle trying to outscoop entertainment staples such as Variety. Confident his stuff would be better, he charged for the service. After six months, ended up getting folded into Steven Brill's growing menagerie of magazines and Web site.

"They ( had high content costs, but they were high relative to the revenue opportunity, that is the crucial distinction,"observes Ambrose. "Who cares if it costs $1 million an episode to make a sitcom if it's worth more than $1 million on the advertising side? The real issue is understanding the revenue opportunity and getting content costs in line."

Content No Longer King? 
Even established and well-funded giants such as CNET, who have a well-defined tech audience, are struggling with content costs. Many of its reporters have jumped back to newspapers. CNET's profit center may not be its news scoops, but its product reviews whose content is created by much lower-paid techie personnel.

CNET spokeswoman Blaise Simpson says company executives don't want to discuss their content cost containment plan just yet, because a new technology platform is under development that will leverage content. The company has used various platforms in the past. Thus far, 10% of the company's staff has been laid off, but few cuts have happened in editorial, Simpson says.

San Francisco Chronicle columnist Dan Fost writes Media Bytes that tracks the ups and downs of traditional publishers and econtent companies. He follows CNET closely.

"I'm interested in CNET's and its merger with Ziff Davis news network, and it looks like some serious leveraging of cost between the two sites. They are sharing content," Fost observes. "The irony is they could afford to write for different audiences in the Internet's heyday, when CNET news was more for a mainstream person interested in technology and ZD was for the IT professional. Now they are getting the same stories, just in a different font."

The mantra that content is king seems to be fading. Content is overflowing and can be acquired from syndication services just like in the newspaper or television business. Editing it may be more valuable in today's glutted content space.

"We don't need more content, we need better ways to organize it, to get stuff you want when you need it. If you buy a bunch of content and pick and choose it in a unique way for your marketplace, then you are adding value by selecting the right stuff and showing linkages. Essentially, there is too much content out there right now," concludes Ambrose.

Page 2 of 2