Content is not king 2
Content is Not King
Although social uses are important to the the telephone industry, a glance at Table 1 shows that most of the revenues come from businesses. Household spending on phone service brings in only about a third of the total revenues. (The figures for total revenues, $256 billion in 1997, and consumer spending, $85 billion, come from different sources. It is possible that consumers spend somewhat more, especially for cell phones, than is reported in the $85 billion figure. However, even if one makes the most likely adjustments, it still appears that business spending on telephony is far larger than that of households.) That has been the historical trend, and many communication services, including the phone, were initially devoted almost totally to business uses. Traditionally, commercial users have subsidized residential ones. Sometimes this was done involuntarily, as in higher rates dictated by carriers or by government regulators, and sometimes voluntarily, as in paying for toll-free 800 numbers. It appears probable that similar subsidies will also play a large role on the Internet. (That is also why toll-free numbers for wireless calls may be very important.) We may very well end up with a system in which the largest monetary contribution will come from commercial users, the second largest for households paying for point-to-point communication, and the smallest by the transport component of charges for content.
On the other hand, if point-to-point communications were to dominate, and if Metcalfe's Law were to hold, there would be strong economic incentives to a unified network without barriers. This is considered more fully in Section 4 of [Odlyzko3]. The general conclusion there is that even though Metcalfe's Law is not fully valid, the incentives to maintain an open network are likely to be very strong. This will be largely because content is not king, and effective point-to-point communication will demand easy interconnection.
An extreme form of the "content is king" position, but one that is shared by many people, and not just in the content industry, was expressed recently by the head of a major music producer and distributor:
What would the Internet be without "content?" It would be a valueless collection of silent machines with gray screens. It would be the electronic equivalent of a marine desert - lovely elements, nice colors, no life. It would be nothing. [Bronfman]
The author of this claim is facing the possible collapse of his business model. Therefore it is natural for him to believe this claim, and to demand (in the rest of the speech [Bronfman]) that the Internet be designed to allow content producers to continue their current mode of operation. However, while one can admire the poetic language of this claim, all the evidence of this paper shows the claim itself is wrong. Content has never been king, it is not king now, and is unlikely to ever be king. The Internet has done quite well without content, and can continue to flourish without it. Content will have a place on the Internet, possibly a substantial place. However, its place will likely be subordinate to that of business and personal communication.End of article
About the Author
Andrew Odlyzko is Head of the Mathematics and Cryptography Research Departments at AT&T Labs. His professional interests include computational complexity, cryptography, number theory, combinatorics, coding theory, analysis, and probability theory, as well as data networks, electronic publishing, and electronic commerce.
E-mail: amo@research.att.com
Web: http://www.research.att.com/~amo
Note
For more detailed arguments, data, and references, see the longer manuscript [Odlyzko3].
Acknowledgements
I thank Frances Cairncross, Bob Frankston, Alan Kotok, Monica Marics, Mike Noll, Hal Varian, and Mark Wolfe for comments and useful information.
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Editorial history
Paper received 8 January 2001; accepted 29 January 2001.
Contents Index
Copyright ©2001, First Monday
Content is Not King by Andrew Odlyzko
First Monday, volume 6, number 2 (February 2001),
URL: http://firstmonday.org/issues/issue6_2/odlyzko/index.html
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