The Curse of the Media Mogul

An important article has just appeared in the October 2009 issue of The Atlantic, entitled “The Moguls’ New Clothes”, by Bruce C. Greenwald, Jonathan A. Knee and Ava Seave, taken from their book – just published in the USA (October 15, 2009) entitled The Curse of the Mogul: What’s Wrong with the World’s Leading Media Companies.

Jonathan A. Knee is an investment banker and an adjunct professor and director of the Media Program at Columbia Business School.  Bruce C. Greenwald is a Professor of Finance and Asset Management at Columbia Business School.  Ava Seave is principal and cofounder of the consulting firm Quantum Media and has held management roles at Scholastic Inc. and The Village Voice.

Here is an interesting quote from their article and book:

A number of highly profitable media companies provide so-called must-have content to professional markets, like the legal, medical, or financial communities.  But even here, the actual content rarely creates the competitive advantage.  Indeed, much of the content is not even owned by the media company—for instance, public legal decisions, or the price at which two parties trade a security on an exchange.  The barrier to entry raised by these companies comes instead from how they integrate, analyze, and deliver multiple sources of diverse content, much of which is widely available.  Put simply, the core of any competitive advantage more often than not derives from the manner of aggregation rather than the creation of content, continuous or otherwise.  It is no coincidence that Google, the most profitable and successful new media company, is an aggregator, not a content creator.

Being economists, they go on about the “barriers to entry” and “competitive advantage”, but their analyses – not especially complimentary to media moguls (presenting various myths which the moguls operate on, and demolishing them) – are particularly valuable.  The Google competitive advantage has been hashed and re-hashed many times (and will again shortly, with Googled – The End of the World as We Know It by Ken Auletta – early November release in USA and a 1 December release in Australia).  And it is easy to say that “Google is an aggregator” and therefore so much more powerful than a simple producer of content.  But it is awfully hard to become a financially successful aggregator of content.

Postscript:  Ken Auletta has just published an article entitled “Searching for Trouble: Why Google is on its guard”, in the October 12, 2009 edition of The New Yorker, which draws from his upcoming book.  (Note not all of the article is currently not all available online.)

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