Economics of content creation focus of SIIA Summit

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The changing economics of content creation was a major theme at last week's Software & Information Industry Association (SIIA) Information Industry Summit in New York.

During a session titled “CEO Outlook: In Search of New Business Models,” Andrew Lack, CEO of Bloomberg LP's multimedia group, said bluntly, “If you allow your content to be commoditized and you cannot create a customer value proposition, you will fail.”

For publicly held media companies, “business models are trapped in quarterly returns” and staffs of reporters are seen as a tremendous cost, Lack said. As a private company that makes most of its money leasing its data terminals to financial firms, Bloomberg “doesn't have to rethink its cost structure” to support a team of 2,000 reporters “who create great content and add value that the customers who use our service want,” he added.

Speaking on the same panel, David Eun, VP-strategic partnerships for YouTube, said Google's acquisition of YouTube was driven by “a longer-term view” of the potential of online video rather than revenue production in the short term. Google's long-stated mission is to organize the world's information and make it accessible and useful, he said, and YouTube is part of the company's effort to organize the ever-growing amount of video content on the Web.

“People will pay for content that's useful to them, either with money or with their time and attention, which is monetized by advertising,” Eun said. YouTube will be able to offer content owners a choice of monetization models, including advertising and user payment, he said.

Meanwhile, traditional media in general and newspaper companies in particular will continue their struggle to find business models to support vast reporting organizations, said Ken Doctor, a news industry analyst for Outsell Inc. and author of the newly published book “Newsonomics.” He estimated there will be 1 million fewer news stories written this year than in 2009 due to the shutdowns of newspapers and the elimination of reporting jobs. Most of these will be local news stories, he said, adding that there is no way “to know what we don't know” when those stories aren't reported.

Doctor noted that major media organizations are increasingly pairing up with low-cost online upstarts such as to expand their reporting capabilities without adding staff.

Gaby Darbyshire is COO of online-only Gawker Media, which pays its writers based on page views and the visitors their stories attract. She said media companies can no longer afford to duplicate one another's efforts in the “commodity facts” of basic news events. “Newspapers have to cut their costs to survive,” she said.

The Information Industry Summit is an annual event produced by SIIA's Content Division, whose members publish and distribute online content or offer technologies and services to facilitate licensing, presentation and distribution of digital information products.

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