Monetizing the written word, to state the obvious while also attempting to do just that, is anything but easy thanks to falling ad rates, a crowded landscape and other variables.
It doesn’t take more than a glance at recent headlines to find proof, whether it’s in the form of tech giants like Baidu (BIDU), LinkedIn (LNKD) and Facebook (FB) putting on their own publishing hats, or blog site Medium cutting its writing staff to become a “social network,” or the struggles of seemingly successful tech blog Gigaom.
But if we zoom out on the content economy, one wonders whether monetizing (and thus investing in) video is a better bet. Is a picture — especially a moving one — really worth a thousand words?
Trey Henninger, who writes for DIYInvesting, thinks so. As he put it: “Videos have a much better ability to go viral because they can provide more information in less time than the written word. Therefore, they will have a much better chance at being a good investment.”
Henninger added, though, that the content landscape is definitely changing in video. “With the rise of YouTube and Netflix (NFLX), you’ll have video content be valuable, but this value will no longer be held by the traditional players,” he said.
But even Netflix and YouTube come with some concerns from an investment perspective. Netflix, in a move that in theory sounds good for monetization, has plans to begin testing ads. But two problems arise with this move. For one, it could isolate viewers considering the whole point of a paying subscription is to avoid annoying ads. Additionally, consider this recent damning article from The Economist, which points out the problem that ad-blockers pose for the already rocky industry. The synopsis:
“Consumers are increasingly using software that blocks advertising on the websites they visit. If current trends continue, the saying in the industry may well become that half the ads aimed at consumers never reach their screens. This puts at risk online publishing’s dominant business model, in which consumers get content and services free in return for granting advertisers access to their eyeballs.”
This is worrisome for Google’s (GOOG, GOOGL) YouTube as well, but with Google you’re hardly just investing in content. Then again, that’s the case for seemingly straight content plays too like Disney (DIS). In fact, Henninger is a fan of Disney for that very reason — and I tend to agree with his thesis. As he put it: “The key is that they don’t just provide content; they market it and make each of their stories into brands that sell themselves for generations.”
As a result, he says that “investing in Disney is one way to invest in the content economy and do quite well.”
I made a similar point recently in the wake of Tomorrowland’s flop, noting the company has an appealing sales mix and lots of strong franchises that bring in cash across various avenues (theme parks, merchandise, ticket sales, etc.).
The lesson, it seems, is that investing in content can have potential, but as is true with any investment strategy, it pays to be diversified. You don’t want to put all your eggs in an ad-backed basket when advertisers might soon realize those ads aren’t reaching many eyeballs after all.
As of this writing, Alyssa Oursler was long FB.
