The Value of Content, Part 1: Adam Smith never expected this
At lunch the other day a friend asked me, "Where can I find somebody smart, but really cheap, to be my ghost-tweeter?" A guy next to her obviously thought she was loony. Not me; I'm used to it.
Twitter-as-content-commodity was a new twist, but her conundrum was very familiar. What she was really saying was, "I know I need smart content, but I don't want to pay for it." On a grander scale, many organizations have the same attitude.
Most people understand that content has value. Big value. They just can't prove or measure the ROI. And, therefore, they have no concept of how much content is worth.
Proving and measuring the value of content is complex. But, as content professionals, we have to do it. I have some ideas about how to do it, but before I even go there, let's talk about why everybody is so confused in the first place.
Brace yourselves, content folks. We're going to talk economics. I promise there will be no math involved.
1776: Defining product value, Adam Smith style
I'm no expert in economics, but I know this much: Adam Smith was a smart dude. Back in 1776, he wrote The Wealth of Nations, a book that basically defined economics as we know it. His ideas still influence the way we assign value to things today.
For the market economy to work, Smith said products of value have three characteristics:
Excludability: The seller can "exclude" you from owning or using the product unless you pay for it; the product is difficult to replicate so you have to buy it from the seller.Rivalry: It's more expensive for two people to use the product then one person (So, I can buy a pair of shoes for $10, but if we both want to have shoes it'll be $20).Transparency: Customers can see exactly what they'll get before they buy the product.
These rules work pretty darn well for things like apples, shoes, or kazoos. Those are the kind of tangible products people bought in 1776. (Well, kazoos weren't invented yet, but apples and shoes surely were.)
1956: A funny thing happened on the way to the factory
Smith's theories worked pretty well for 180 years, but in 1956 something happened that would have surprised Adam – in the U.S. the number of white-collar jobs surpassed blue-collar jobs.
So, instead of people working in factories and farms making tangible products, people were sitting behind desks making ... information. Accountants creating reports, lawyers creating legislation, advertisers creating TV spots, etc., etc. In 1956, content/information was red hot. The first computers were up and running (Check out the photo below of a home computer in 1956 for proof). Heck, Marilyn Monroe even married Arthur Miller, a playwright (you may have heard of him).
The industrial age was over. The information age had begun. Information was in demand in a way it had never been before -- and Smith's three pillars of economic value had started to blur.
1990s: Content breaks all the rules
Until the 1990s, Adam Smith three pillars seemed to be adequate, if not perfect, even for content. Before then, if you wanted some information, you bought a book or newspaper (tangible items). Sure, you could lend your book to a friend, who would get the content for free, but content creators were largely paid for their work.
But, with the advent of the internet, the pillars of value for content collapsed.
Excludability: Content is now easy to create, use, and replicate.Rivalry: When content is posted online – even if you make me pay for access – I can easily share it with millions of friends without paying a cent.Transparency: Once you've looked at content in-depth, you really don't need to buy it, do you?
Simultaneously the business importance of good content went sky-high AND the value of content tanked (according to Adam Smith). On top of it all, the internet movement suggested that all content should be free. And society agreed.
2009: Classical economics is toast
So, let's recap. Today, content is one of the most important business assets in the world. AND, according to traditional economics, content has little value. AND people expect to get it for free (see newspaper industry stats). AND we're experiencing the worst recession in 80 years.
The economic system is just plain out of date.
I wish I could tell you about the economic model of the future. (Not only would that be nice for you, but I'd make zillions.) Lots of brilliant economists have been trying to figure it out for years.
No wonder people are confused about what to pay for content strategy and creation.
Coming soon: The Value of Content, Part 2 (The Sequel)
Here's what I do know. Content makes money. Content saves money. And, ROI of content can be measured. That's what my next blog post will be about in a few weeks. (It's just like when the Brady Bunch went to Hawaii – two whole episodes of non-stop fun! Just. Like. That.)
Until then if you have any great examples or ideas about content ROI, send them my way (firstname.lastname@example.org). I'd love to hear about them, and I'll include them in the blog when I can.