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Publishers and the Smiling Curve | stratechery by Ben Thompson

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I guess the bottom line is, across industries, you don't want to get caught smiling. 

smiling curve chart

The middle of the road is where people get run over. 

The money is in creation, curation, and discovery:

Here’s the thing: the shoe has in many respects already dropped. When people follow a link on Facebook (or Google or Twitter or even in an email), the page view that results is not generated because the viewer has any particular affinity for the publication that is hosting the link, and it is uncertain at best whether or not their affinity will increase once they’ve read the article. If anything, the reader is likely to ascribe any positive feelings to the author, perhaps taking a peek at their archives or Twitter feed.

Over time, as this cycle repeats itself and as people grow increasingly accustomed to getting most of their “news” from Facebook (or Google or Twitter), value moves to the ends, just like it did in the IT manufacturing industry or smartphone industry:

On the right you have the content aggregators, names everyone is familiar with: Google ($369.7 billion), Facebook ($209.0 billion), Twitter ($26.4 billion), Pinterest (private). They are worth by far the most of anyone in this discussion.

Traditional publishers, meanwhile, are stuck in the middle. The New York Times, the most august publisher of all, is worth a mere $2.03 billion.4 Gannett Company, the largest publisher in the United States, is worth $7.14 billion, but the vast majority of that value lies in their broadcast and digital advertising holdings; most of the newspapers are worthless. I recounted the problem for newspapers in Economic Power in the Age of Abundance:

One of the great paradoxes for newspapers today is that their financial prospects are inversely correlated to their addressable market. Even as advertising revenues have fallen off a cliff – adjusted for inflation, ad revenues are at the same level as the 1950s – newspapers are able to reach audiences not just in their hometowns but literally all over the world.

The problem for publishers, though, is that the free distribution provided by the Internet is not an exclusive. It’s available to every other newspaper as well. Moreover, it’s also available to publishers of any type, even bloggers like myself.

In short, publishers (all of them, not just newspapers) don’t really have an exclusive on anything anymore. They are Acer, offering the same PC as the next guy, and watching as the lion’s share of the value goes to the folks who are actually putting the content in front of readers.

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