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Right of reply: Dear King Content

Reply to “Death of the Content King” article published on 28 June 2002.

Dear King Content Rudy Nadler-Nir

Your article, WOZA and the death of the content king (The Big Change, 28 June) refers.

It is probably a truism that when you hanker after the past you miss key features about the present. That corner cafe where we used to get our groceries is a nostalgic memory to those of us old enough to remember, but the supermarket is an infinitely superior way of getting consumables to consumers.

You argue content is no longer king on the internet, but without having any facts on this at all I would guess that there is definitely considerably more content on the web now than there was when content site after content site started hitting the wall in the dotbomb collapse last year.

If you have any doubt about what I’m saying, go to news.google.com and check out the feast of news content, up to the minute, and from all corners of the globe.

There is probably also greater range, from specialist sites providing high-value information, to general sites providing a vast range of material. Google, I read, delivers 150 million requests a day. This is for content, so presumably content continues to have high value.

There is more content than ever, a greater range and it has never been as easy to access.

You will know, though, that the internet has changed the nature of content. People love to generate their own stuff, be it in e-mails, newsgroups, chat rooms or on blogs.

You seem to be concerned that white branding or labelling is taking place whereby some parties concentrate on the wholesale part of the distribution chain, others on retail. I can only think that this is a good thing and is one of many reasons why internet access is much cheaper in South Africa now than it used to be.

But I think your warm, fuzzy analysis about content has left you missing the central features of the present South African market. It has split in two, with incumbents at the high end offering access at the R120 to R135 level and a set of newer and smaller players charging R50 to R65 a month.

Most of the latter have no ambitions of providing a content operation to their user base. They probably have noticed, as you have, that content costs can be horrific. But it also suggests that they see no value in community.

I would continue to argue that the value of a user base is greater than the sum of its individual parts. Community, players like AOL have found, can also be a terrific, cost-effective marketing tool. Community forms around content.

Now, if you can somehow provide access and develop content and community with your user base, this I would say is a good business model for the overtraded and hyper-competitive SA internet access market.

Key here is that you can plan on annuity revenue to fund your content operations. You don’t seem to like this approach, but then I guess you’ve never run a content company online.

I would add that your romance about content as it used to be also leaves you to miss another interesting feature of the present market. The gurus with a capital G continue to tell us the market is overtraded yet almost every other day another ISP or VISP opens.

There is also no shortage of activity in the related telecommunication sector as about R20 billion in investment starts eyeing the second network operator.

The subscription-free model pioneered by Absa is coming back. Experience around the world with deregulating markets tells us this. The ISP market will change to call-sharing with telcos.

The most successful ISPs in this market will offer content as a way of keeping their users online longer. This may not look a lot like some of the stuff called content, the stuff which appears in newspapers, but to the user it will be content.

But the key prediction I’d make here is that with their top-heavy capital and cost structures, the present market leaders are not going to be competitive in this new space. They will watch while others move in and offer the new services at prices they can’t hope to match.

This is already happening. It is the key feature of the present market, but one which I’m afraid you will miss completely unless you understand that the nature of content and its pricing has changed forever.

Much of the above is not easy to see. The market is confused and confusing. Absa is charging some of its users R65 a month for its service which others still get for free.

Some suppliers think internet access should cost R120 or more, others say the sustainable price is half this. Yesterday there were no subscriptions, tomorrow they will also be gone.

But then, I guess its safe to say that you no longer get all your groceries from your corner store anymore, either.

Kevin Davie is the publisher of WOZA. He can be contacted on info@woza.co.za

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Rudy Nadler-Nir responds:

Mr. Davie wastes too much time on my romantic tendencies – I said in my article that Content King – as a factor that can generate revenue – is dead. Google makes money by selling search facilities, not from news, sport or whatever. The fact the Google keeps news up to date is irrelevant – nobody will pay for this.

As to the issue of the split in the ISP market – Mr Davie obviously reads only his own content – or content that has to do with his corner-kiosk. I have described the split months ago in my article “The compelling sum” (The Big Change, February 2002) and reached the same conclusion – users will pay for connectivity (and at R59 per month, Woza offers an attractive deal) but not a cent for content.

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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