Apparently, all of us are working for Google or Facebook. Not the organizations themselves but even as readers of the top news sites in the world, we’re contributing to Google and Facebook’s bottom lines.
According to a report in the New York Times based on a study, Google made $4.7 billion from the newspaper industry last year. The entire newspaper industry, comprising of more than 2000 newspapers made $5.1 billion. Update: There’s a rebuttal from Neiman, saying that this figure is not based in fact and imaginary
The way the newspaper industry sees it, they are the ones creating the content. And Google or Facebook are the ones profiting off it – by providing efficient channels of distribution.
Here’s how it works. Content is big business. Videos, blogs, articles are being churned out at a frenetic pace. But we still spend most of our time consuming and complaining
Here’s one visualisation
There’s something strange about the biggest companies on the internet. They specialize in distribution. It’s almost as if the most profitable business in the world is building connections and creating the glue that holds it all together.
The Giants of Digital Distribution
They run as a layer on top of the attention economy. Multiple sources of content streams attract attention and these companies enable you to look for it, find it and have it appear on your screen. Amazon is the only one that distributes physical goods in addition to virtual. All others, Pinterest, Instagram, YouTube, Netflix, TikTok and Twitch are in the digital distribution business
Extending the analogy further. Pinterest does not make any arts and crafts and even relies on its members for curation.
Instagram owns no studios, equipment or cameras but distributes the largest library of photography in the world on a daily basis
YouTube has recently ventured into creating programs and is the world’s largest repository of videos. Every minute, more videos are uploaded than is possible to watch in a human lifespan.
Twitch does not develop a single game. It merely enables you to watch expert gamers play popular titles
TikTok creates video challenges and makes participants look amazing with some deft camera software. They have millions of people posting videos and don’t pay a single participant.
These companies own server farms and develop proprietary algorithms to mine specific points of attention. They have perfected the art of capturing and distributing to streams of interests.
How will this evolve?
We spend insane amounts of time navigating screens – from 6-inch smartphones to 55 inch smart TVs!
We read on screens, we message on screens, we interact with screens practically every waking minute of the day.
There is already more amazing TV, streaming serials and movies that we have the time for.
More tournaments in cricket, football, tennis, golf, baseball, and basketball all through the year – and viewership is waning in the traditional channels but growing in the gaming tournament business.
Who does Netflix think its biggest competitor is? Sleep! Reed Hastings has admitted that his biggest worry is people won’t be able to enjoy content on which billions have been spent when they are asleep.
Huge amounts of money are being spent on Virtual Reality and Augmented Reality research to create immersive and imaginary realities to be enjoyed with the push of a few buttons.
This is one approach to the future of banking:
If the only change is invisible screens, there’s no incentive to shift. Like the transition from theater to cinema, the change is going to come from a new generation of users who see other possibilities.
The role of marketing and advertising in a scenario as fluid as this one is yet to be determined. But whether we like it or not, people will need to be informed and attracted through the very devices and screens they are already immersed in.
The speed with which change has happened has caught the world unawares. Crowdsourcing has worked – up to a point. But these companies are coming up against headaches they never anticipated – being seen as threats to democracy and vehicles for hate speech would be the hardest things to imagine even for the most cynical capitalists. But that’s the scale of problems they are up against.
When content is created for free, how can business models shift to accommodate paying creators? How will the pie be divided, even if it had to be?
We have interesting decades ahead.