On Commoditization of Content

This a quote (long) from What Were They Thinking?: Unconventional Wisdom About Management by Jeffrey Pfeffer (2007), on commoditization of content

This raises the question of why one would buy a paper whose quality and uniqueness is declining because of inadequate investment in staff; why not just buy the paper from which the Chronicle gets a lot of its stories and which has invested in its own, unique news gathering and reporting? The point is that the more newspapers cut their quality, the less incentive there is for anyone to subscribe. So subscriptions fall, more cuts are made, and the death spiral continues, if not accelerates. The only thing that can possibly provide competitive advantage in a saturated media marketplace is the quality of the writing and the ideas. An undifferentiated, unoriginal product of low quality is not going to save any company in the newspaper, or for that matter any other, industry.

Prices of undifferentiated, unoriginal, non-unique, low quality content with unlimited supply will hurtle towards its marginal cost. In the case of digital content the marginal cost is $0. Facing commodotization, newspapers should not be lowering their price to $0 but stop producing such undifferentiated content.

The new media experts are right in saying newspapers cannot succeed by erecting pay walls for their online content – but only half right. If you are not adding unique value, you cannot capture value by erecting pay walls.