The Moguls’ New Clothes - The Atlantic (October 2009)

The Moguls’ New Clothes - The Atlantic (October 2009).

Although Sumner Redstone likes to claim that he coined the phrase Content is king, it was originally popularized in connection with a series of ill-considered and now widely repudiated media deals undertaken by large Japanese consumer-hardware makers. This undistinguished pedigree has not dissuaded most major moguls of the intervening decades from continuing to parrot the slogan.

In addition to its alliterative allure, the idea that content is king has great intuitive appeal. I consume media content based on what I enjoy or find useful—surely the best company is the one with the best content! Reinforcing this simple observation is the intense emotional response that the most-powerful media can elicit. We all associate many turning points in our lives or in our understanding of the world with our exposure to a particular film, song, or book. Regardless of any developments in technology or distribution, the argument goes, the owners of this kind of precious intellectual property will also own the keys to the media kingdom.

But content cannot be king, because the talent required to create it cannot provide a sustainable competitive advantage. Even if the ability to produce compelling content perennially inhered in certain individuals or groups, there is no efficient way to monetize this skill for the benefit of shareholders rather than for the producers themselves. Big media companies may consistently exploit some creative artists, but over time, that exploitation does not produce superior corporate value. For starters, where the media companies have executives clever enough to consistently exploit the talent, these executives are typically clever enough to ensure that they are paid enough to reflect that skill. Furthermore, when particular brands seem like sure things, as in the case of a popular film franchise, more often than not a well-represented creative artist essential to that level of certainty ends up appropriating much of that value.