In the linear video business, there long has been a running debate over where “value and power” lie in the value chain, even if both content and distribution matter.
At times, it has been argued that “content is king,” (while at other times it seems “distribution is king” (Netflix now; Comcast at the height of linear distribution).
But these days, across many industries, it might be the case that “platforms” have blurred the older distinctions between content and distribution as value drivers, across media, software and internet value chains.
Those strategic differences arguably also have applied during the internet era, when at times internet access (distribution) has appeared to drive more value, and other times when apps or services have arguably driven more value.
The twist for the internet value chain is the role of “platforms,” which do not neatly fit the “content versus distribution” dichotomy.
Platforms have blurred the lines between content creation and distribution, making the distinction less clear-cut than in previous eras. Many platforms now act as both content creators and distributors. For example, Netflix and Amazon Prime Video produce original content while also distributing third-party content.
Social media platforms such as YouTube, TikTok, and Instagram also raise different questions about the value of content versus distribution. Facebook’s platform both enables user-generated content, but also provides the value of distribution, simultaneously.
In fact, the whole disruption of most value chains by the internet was precisely “disintermediation,” which removed some distributors from value chains (e-commerce disintermediated retail stores).
And platforms (marketplaces) now essentially create new forms of distribution that are advantageous for many asset owners (owners of short-term lodging assets), compared to legacy providers that are displaced (hotel chains).
The sorts of dynamics might be inferred for the software business as well, where at different times it has seemed that “apps” drive value, where at other times “distribution” arguably drives more value.
The key observation is that older dynamics (content versus distribution) still exist, but within a context where platforms now are increasingly important gatekeepers and value generators. At the physical layer, data centers and transmission networks and internet service providers remain “distribution.”
At the business and revenue layer, platforms have emerged as the key drivers of value (Facebook social media, Amazon e-commerce, Google search, Uber ridesharing, and all those embody value creation roles similar in some ways to “content” and also similar in fundamental ways to “distribution.”
That explains why it is easier to say that “hybrid” models now predominate. For “hybrid,” substitute the word “platform.”
Platforms such as YouTube, Facebook, TikTok and Spotify might be thought of as intermediaries--neither traditional content creators nor distributors--that aggregate content from various creators and curate it. But in some ways the platforms also act as distributors of that user-generated content.
So “platformization” more accurately modifies former content and distribution functions in some ways, while displacing each of those functions in some ways, as exemplified by “direct to consumer” sales models.
Perhaps the best example is Amazon, which, in its function as an e-tailer, connects buyers and sellers. In that role it essentially replaces the traditional distributor (retail stores). But Amazon also curates and funds the creation of actual content as the provider of the Amazon Prime streaming video service.
In its role as the provider of Amazon Web Services “computing as a service,” Amazon acts as a software supplier in its own right as well as a distributor of those products.
But if we really have to choose, we’d likely argue that platforms have usurped distributor roles more than app and content provider roles, even in instances where the platforms do a bit of both.
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