Wednesday, September 20, 2006

Free content subverts a paradigm

For those of you who can remember when AOL and Compuserve seemed cool, think back for a moment to those halcyon days. Perhaps you put together your first computer at home, and AOL and Compuserve were the ways you created an online "community". At its peak, AOL was predominant. Everyone I knew who was online was using AOL or Compuserve to get an email address or participate in online communities.

AOL was disrupted by two different attacks on its business model. First came the low cost email offerings - NetZero, HotMail and so on, chipping away at a fairly expensive email offering from AOL. Note that NetZero, HotMail and the others offered far less in terms of content and services, just basic email, but they opened up the lower end of the market and demonstrated there was demand for personal email at the lower end. Now, of course, email from Yahoo! or Google is free. In less than 15 years we've moved from a model where personal email was fairly expensive to the point where it can be free.

The second attack on AOL was on its content. At one time AOL was powerful because it had content that you could "surf" to within its confines. This was professionally developed content and communities of other AOL users could participate in that community. As the internet grew more popular and methods to create new websites and content grew, the closed communities of AOL seemed much less appealing.

Finally, the eventual nail in the coffin for AOL and some of the original internet pioneers is YouTube. You knew I was going to have to address YouTube at some point. YouTube takes everything that AOL was originally - closed, professional content, expensive, exclusive - and turns it all on its head. Anyone can publish just about anything to YouTube, and anyone can watch the content and interact with it - at no charge. Where's the marketing model? Well, from what I can see it will be either advertising or a "basic" free channel with some paid channels.

Two days ago a radio show noted that YouTube has 100 million hits a day. I checked this out and found several sources for the figures. YouTube has at least 5 times the number of hits a day as AOL has subscribers! To put those figures in perspective, in 2005 the movie industry in the US totaled approximately 9 billion dollars. Assuming an average ticket price of $10, the number of tickets purchased to watch movies in the US was about 900M - or the number of movie views YouTube averages in about 10 days. I doubt the YouTube guys planned to disrupt or subvert AOL or other content providers when they started their site, but that's what's happened.

Over the last ten years, content has mushroomed and become the driver for eyeballs and traffic. Content is king - no one really seems to care what the platforms are - email is taken for granted as a feature that's thrown in. Blogs are exploding and everyone who wants to can become a publisher and attract an audience. Why?

People are searching to reconnect and regain something that's been lost - the bowling league or the Kiwanas. We've lost to a certain extent the ties that bound us together in smaller groups and civic organizations. All this content, all this publishing allows a person now to define themselves and group themselves by the content they track. For example, I read other innovator blogs and feel as though some of those writers are my friends (I happen to have had the chance to meet some of them in person). This gives me an online sense of community.

There are a lot of smart people writing and publishing a lot of very intelligent, witty and funny stuff on the web, and that figures only to increase. Free publications used to mean low quality, and there is a lot of that out there. But a lot of what's being written and developed is great quality stuff and the trend will continue - free content will eventually subvert all of the original content providers - even Hollywood and the newspaper of record is not safe.
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posted by Jeffrey Phillips at 4:45 AM

25 Comments:

Blogger James V Reagan said...

And don't forget it was AOL that disrupted Prodigy and Compuserve with content (Prodigy tried but missed the mark).

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What? You missed it my friend. The innovation that killed AOL is called broadband. I hope you are new to the innovation space.

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