Why Content Isn’t King

Jonathan Knee, writing in The Atlantic, looks at how Netflix came to rule online video. Here’s the part that stood out:

Netflix is primarily in the business of aggregating entertainment content created by other companies and selling access to it as a subscription service to consumers. In a media culture committed to the proposition that “Content is king,” the robust success of a mere redistributor is something incomprehensible and, frankly, a little unnerving, especially while those responsible for the creative lifeblood that flows through its veins struggle for profitability.

In fact, the dirty little secret of the media industry is that content aggregators, not content creators, have long been the overwhelming source of value creation. Well before Netflix was founded in 1997, cable channels that did little more than aggregate old movies, cartoons, or television shows boasted profit margins many times greater than those of the movie studios that had produced the creative content.

It’s funny to think of cable channels as nothing more than content aggregators, the blogs of the television world, but it’s true!

In this sense, perhaps the entertainment industry and journalism industry should have foreseen the disruption on the horizon because essentially blogs and streaming video were the same business model they were using applied to a different medium.

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