Why Content is King
by Nathan Baschez
I highly suggest consuming the full piece here (15 min. read time)
“Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting.” — Bill Gates, 1996
“…content can create incredibly strong moats. There are properties inherent to narratives and ideas that make them naturally powerful — kind of like how social networks, marketplaces, and platforms are inherently power-prone.” — Nathan Baschez
Nathan uses Hamilton Helmer, 7 Powers to structure his exploration of why content is king:
- Scale Economies: “Content can be infinitely copied and distributed for free. There are basically no variable costs — it’s all fixed. This creates a situation where scale economies rule the day. The bigger you get, the more you can invest in creating ever higher-quality content. And the better your content, the more cash it generates, the more you can reinvest to increase the quantity and quality of your output. It’s a positive feedback loop.” — Nathan Baschez
- Network Economies: “…each new unit of content is a new unit of culture. The more popular the unit becomes, the more it gets woven into the basic fabric of society, the harder it becomes to avoid knowing it.” — Nathan Baschez
- Counter Positioning: Examples Nathan gives is ESPN vs. Barstool Sports or People vs. TMZ. Although, Nathan believes this law isn’t the strongest out of the 7 because successful media companies are always changing with the times/attracting new audiences.
- Switching Costs: “Businesses with high switching costs tend to be highly profitable, because it’s so painful for their customers to leave that they’re willing to stay and pay a premium, even if an attractive new option comes along,” says Nathan. The same goes for content. Consumers invest their attention into a creator’s worlds and are less likely to switch to learn about new worlds/characters/ideas.
- Brand: “Brands are the sum of the perceptions people have about products and companies. They can be a source of power in two main situations:
- When quality is uncertain
- When people want to associate with the brand in order to signal something about themselves
- Cornered Resource: “With content, the ultimate cornered resource is creative talent. Creators can’t be separated from their creations.” — Nathan Baschez
- Process Power: “Companies that master a complex, opaque process to create superior value are said to have ‘process power.’” — Nathan Baschez
My two cents: I’d never been introduced to power laws in business before reading this essay. Nathan does a great job of making them easy to understand. It makes me want to check out the other power law theories and try to apply them to various companies and maybe even my own.
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