Distribution

The single content brand that I’ve had the longest relationship in my life is The New York Times.

Even though I grew up in New England, a highlight of the week was when my dad went and got the Sunday papers — the Boston Globe, the Providence Journal and The New York Times.

Five decades later, the New York Times is still a key element of my daily information routine.

I’m typing this post up in the small cottage my wife and I use for our Connecticut office. There’s snow everywhere, and I can see to the end of the driveway out my window. There’s a block of blue plastic propped up against the snow. It’s today’s copy of the Times.

Someone will probably bring it in later. But I’ve already had three interactions with my favorite newspaper.

The first was around 6am when I woke up and browsed the national and business stories on my iPhone. (I use the mobile browser version of the paper; their iPhone app is overly busy and slow.)

About an hour ago, I stopped for a cup of coffee and went to NYTimes.com to check out the sports and arts headlines. I read a couple of stories and then shifted over to my RSS reader (I’m a fan of the Firefox add-in Feedly.) I caught up on some of the economics writers that I like to follow.

The New York Times doesn’t have to worry about my loyalty to the brand. It stands out for its quality and its breadth.

But the New York Times does need to worry about its economics.

The change in how I access the Times is a good example of how its business model has shifted. Its audience is no longer a cohesive entity which it can leverage for commercial benefit. The audience has fragmented into distribution channels that don’t offer the same advertising payback.

As a consumer, I’m still paying a lot to get to the Times. I spend more than $1000 a year on my internet access and more than $1000 a year on my wireless access. I’m paying for the distribution pipe.

How does the NY Times turn its brand equity with me into money? The brand doesn’t have a consumer problem and it doesn’t have a content problem. The problem is in the relative economics of distribution and advertising in the new channels that I am reliant on.

There’s not a lot of advertising on the pages I’m encountering during my interactions with the Times. And the advertising that is there is nowhere near as lucrative as the advertising in the print version of the paper.

This is a shift from being a MEDIA brand to being a CONTENT brand.

When you’re a content brand, you need to be able to extract a significant amount of your profit from the value of your content. That payment will come either directly from the consumer or from the distribution pipe (think of Premium versus Basic cable channels.)

But in this ubiquitous information world with broad redistribution of content, the distribution pipes aren’t looking to pay to subsidize content creation.

And, if the New York Times wasn’t available on my iPhone or on the web, would I change carriers? Nope. I like the content and I’ve got a long-term relationship with the brand, but I don’t think that would be enough to change my communications and internet infrastructure.

This is a problem that challenges the economics of paying people to create quality content.

Interestingly, I think it’s where the content curation discussion becomes most relevant.

A brand like the New York Times, which has tremendous reach and authority, needs to find ways to expand and deepen its relationship with its consumer across the wireless and wired web. Curating content, building applications, creating micro-communities, turning its top journalists into entrepreneurial brands, picking and choosing where to invest money in highly differentiated and traditional reporting…this is the mix of content, focus and activity that can make the digital connections into increasingly profitable areas.

Here’s how the head of the NY Times is looking at it. The key business focus is finding ways to recover the content costs. I think there’s a bigger web to spin, which will help to support the cost of original content in a different way.

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