A decade ago, digital’s pennies weren’t enticing enough for traditional media companies; today that slow footedness is haunting many of them.
Jeff Zucker, the former NBC executive and now president of CNN, coined the phrase “trading analog dollars for digital pennies” in 2008. At the time, leading investor Fred Wilson observed:
“Analog and digital, it turns out, are polar opposites. Analog has physical costs which lead to scarcity driven business models. Digital has zero marginal cost (or near zero) which leads to ubiquity driven business models.”
Which echoed my sentiment that digital media was the new software, and why content was indeed king (although distribution was Queen, and we know what that means).
Marc Andreessen boasted a decade ago that software was eating the world, he was right and everything that ensued reflected that. I have been saying since 2006 – and repeated in 2011, 2012, and 2013 (links below) – that content is the new software (watch my recent interview on Bloomberg on that theme):
- Is video content the new software?
- Content is Dead. Long live Content (more about future of marketing and content marketing)
- Content is consuming us.
How so? With close to zero marginal cost of distribution, all of these new distribution platforms usher new revenue streams for content owners. This is what Sumner Redsone meant when he said content is king (and which Bill Gates subsequently further popularized).
Indeed, early on, the revenues generated from accelerating web growth – especially mobile – has been far less lucrative than analog and has brought added financial challenges as legacy media companies retain higher overheads and cost structures.
At a conference some time around then, I heard then Revision3 CEO talk about how digital would keep growing while analog’s relative size would seem quaint. I felt like that was the presentation he gave Discovery brass when they were looking to acquire his company.
Rise of Mobile
By 2013, he had suggested that those “pennies” had grown: “We’re much further along than pennies, and we’re further along I think than dimes, and we’re probably a little north of quarters. You know, I don’t know that there’s 50-cent pieces, but somewhere between that,” he said.
Then just as digital on desktop matured, you had mobile, and the life cycle stages continued and the adage grew into: “trading analogue dollars for digital dimes for mobile pennies.”
As valuation of Google and Facebook soared, big media had no choice but to embrace the Web – hence why the battleground shifted from Pyramid to Spheres.
“Digital is the future of CNN, he said. “We don’t care what screen you are watching CNN on, as long as you can see the red logo on whatever screen you are using to access us. And to us, mobile is probably the most important part of our future, but digital as a whole is where we’re concentrating everything.”
Indeed, Covid burst the dam: with a viewer watching YouTube content on their connected TV and Game of Thrones on their mobile device, distribution platforms and screens have blurred, meaning that eventually, the price an advertiser will pay for a viewer will converge… there will be no more digital pennies vs analog dollars.