Why You Should Refuse to Build a Startup on Content
As web business models go, content is well understood: you produce something of value and then monetize through ads, lead generation, or just charging for what you produce. I refuse to start a new business based on selling content and so should you. Here’s why:
1) It Doesn’t Pay
The web has produced such an abundance of content, and simultaneously failed to fix micro-transactions, that the expected value of any specific information has fallen to zero. There are isolated niches in which content is still worth money, but they are becoming fewer and father between . As a test of this mindset: would you be reading this right now if I had asked you to pay me even $0.10 for the privilege?
The result of this change is that the average piece of content is worth almost nothing. This means that most people in the US can’t make a living wage producing content. If you are a good developer, for instance, your time is worth many times more producing code than it is producing content of almost any type.
2) Producing Content is Unpleasant Work
Some people have realized that content has become too expensive to have people keep producing it. These new content companies (like Demand Media) are highly profitable while traditional content producers (like newspapers) wither and die. Algorithms will be increasingly important in content creation, and they do it just well enough to invite a click and then frustrate you into (hopefully) clicking an ad. Sites like About.com and Mahalo flood search results with just-good-enough information at scale and it’s hard to beat companies that wield hundred of millions of links.
With that as your competition, you are forced to create bad/mediocre content as quickly as possible. Producing content is therefore a race to the bottom in which you must compete with the lowest paid global workers to produce bad content as quickly as possible. I don’t want to make anything that sucks, much less in large quantities.
3) There Aren’t Any Interesting Problems
You could argue that monetizing content in a sustainable way is an interesting problem, but I would beg to differ. Creating ever-more complex link farms at scale isn’t my idea of doing great work. And past that problem, producing content is essentially the same process as it was 500 years ago. I do not mean to imply that creating good content is easy, but the problem is well understood, labor intensive, and has reached a level of development where success is defined more by cutting input costs than by creating better outputs.
4) Piracy Exists
But just for the sake of argument, let’s ignore everything above. If you have a real itch to write the next revolutionary book of jQuery tutorials, there’s the issue of piracy. Despite misguided legislation attempting to curb the behavior, piracy is easier today than it was when I downloaded my first MP3 on Napster in 2001. If it’s easy to take from you and all you have is takeable, you are in a position of extreme vulnerability.
Again, there are content businesses that make money, but you’ll notice such businesses are almost always established B2B companies operating in specialized markets where the liability of piracy is higher than the cost of acquiring material.
This Situation Is Deplorable
I say all of this with the greatest sadness. If people can’t make ends meet producing good content, the world is a poorer place. I won’t really miss another review of the iPad 9, but I will miss proper journalism. I just finished reading the book 1491. It was both enthralling and breathtaking in the scope of research that went into it. But reading it was a guilty pleasure because I knew the author had to take a huge gamble to write the book, and his odds of making money on his investment were poor. If societies lose people that make it their business to seek truth and produce content, those societies become worse. Just as one example, Watergate was only exposed because 2 Washington Post journalists spent more than three years researching and seeking truth full time. I want to live in a world where people like that can feed their children.
At the same time, I realize I’m not prepared to devote 10 years fighting this issue, and so I refuse to start a company based upon content, and I think if you realistically evaluate the costs, you will too.
 I can imagine a number of niche B2B content business models in which you charge for access to highly specialized technical information that changes a great deal. Perversely, one such content business model is law, which doesn’t produce any economic value, merely re-allocating resources between parties.
This entry was posted on Thursday, February 16th, 2012 at 9:01 pm and is filed under Startups. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.