17. July 2014 · Comments Off on Is Content Creation a Loss Leader? · Categories: WEM

Ever since Napster opened the digital door to sharing and downloading music and movies, content producers have been fighting one battle after another in a war to slow the inevitable disruption of their industry.

While some point to iTunes and other legal downloading sites as proof that content can capitalize on online distribution,industry financials paint a clear picture to the contrary. In 2013, digital track sales fell 5.7% and album sales fell 8.4%, according to Billboard. Total U.S. music industry revenues were $7B in 2013, compared to $18.5B in 1997 adjusted for inflation (thanks Yahoo!).

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Today, the most successful content creators actually don’t make their money through their “art” – they, leverage it to build cross branding licensing opportunities. Bobby Kotick, the chief executive of Activision recently announced that Aerosmith made far more in revenue off of its Guitar Hero: Aerosmith video game than from any of their albums.  LeBron James may have just signed a new $21M annual deal in Cleveland, but he made more than double that in endorsements last year ($53M to be precise). Oprah – the women who leveraged an engaging on air persona to go from Chicago morning show host to the “queen of all media” is worth an estimated $2.9B.  She has her own television network and magazine,has created best selling authors just by mentioning a book on air and even has her own line of tea at Starbucks.

The value of affiliating brands and products, clear for so long with celebrity and amplified by digital disruption, has impacted the way companies market to consumers online.

Content marketing (attracting and retaining customers by creating and curating relevant, valuable content) is not an entirely new trend, but it is an expanding one and an area where many startups are developing products.  Two interesting companies which I have looked at in this space are TruCentric (recently acquired by Acquia) which tracks user behavior to offer highly customized content experiences (even to anonymous users) and ThisMoment.  ThisMoment is particularly noteworthy as it integrates socially generated content in real time to create what it believes consumers will see as a more authentic brand experience.

Selling content in a digital world is a tough value proposition with many challenges and threats, but content has also never been more important to building a successful brand. Technologies which allow brands to scale, automate the marketing process and more accurately deliver engaging content are onto something big.

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