Friday, February 11, 2011

Why Apple is like WalMart and Content is Still King

Image: Apple Corp.
It was Sumner Redstone who famously stated that “content is king,” a thesis being sorely tested these days. At the time he said it Redstone was running the family business, the movie theater chain National Amusements, which he parlayed through a series of acquisitions into the media giant Viacom. Redstone believed that content would become more important than distribution mechanisms, and so sought out content producers such as Paramount, CBS and MTV. It made him one of the hundred richest men in America.

Reading the news these days, it feels like we've come full circle. Today, the focus of attention is all on the devices that are delivering information, be they iPads, 3D Televisions or the latest 4G phones. In many ways they are the modern-day equivalents of the National Amusements movie palaces.

This doesn't feel right. It's as if we all suddenly became fixated with the copper pipes in our house, and forgot about the clean running water. Don't misunderstand me – there's no question that this plumbing is very sexy. My iPad feels like a sleekly engineered work of art, in the same way that a 1960s Ferrari does. And the ergonomics are so intuitive that my 6 year-old is an adept user, killing me at Angry Birds. But this isn't enough.

There's a fight going on to control the information supply chain, to become the new gatekeeper. This explains the move by Apple to make iTunes subcription billing mandatory; they want to become the focus of the relationship with consumers, relegating the content providers. In a sense Apple is emulating WalMart, with their relentless focus on supply-chain and market control. The difference is, WalMart is selling plastic crap from China, while Apple is trading on everything from the latest Black Eyed Peas hit to the news that informs an electorate.

Then I saw the news from The Huffington Post and AOL, along with the launch of News Corps' The Daily. In case you missed it, the ailing AOL put-down $315 million to buy the fast-growing Huffington, and pledged to continue to invest in new and original content. And News Corp released a new newspaper specifically for tablet computers, to be quickly followed by Yahoo's Livestand.

Seems like the news is all about the news; how it is created, distributed and consumed. Its not clear to me who will wind-up winning this war of words, images and ideas. I tend to think Mr. Redstone had it right all along and that content is still king, and not just royalties to the likes of Apple. After all, the iPad and its ilk are otherwise tabula rasa.

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