Tuesday, May 6, 2008

Digital Content Will Lead to the End of the Middleman: AP launches news service geared for iPhone

The information and entertainment business is changing rapidly as a result of digital distribution. The simplicity to transport content from creator to end user is leading to a wholesale change in the distribution chain. As evidence, watch as windows between dvd sales and VOD have been eliminated, TV shows are coming directly from NBC/Fox through their Hulu partnership to the viewer. Artists can talk directly to their consumer and provide a digital download. Yes today they still make a cd and sell through Amazon and Apple. But the path is leading to creating their own wholeowned distribution model and selling direct.

And AP, a longtime provider of news content to papers across the country, is offering content direct to consumer through the iPhone. Today, they are doing it in conjunction with their local newspaper partners, but in the future they may find that they can bypass this distribution channel and be a direct provider to the consumer, taking 100% of the profits. Yes, AP was created as a consortium of local papers, a not for profit entity to support its members; but the child is growing up and may one day have to leave the nest.

Barriers to entry have dropped significantly to allow old and new entrants a chance to speak directly to the consumer. Aggregators are still relevent to simplify the process of transport; but more companies may decide that they can be their own transport hub as they acquire brands across multiple platforms. Big fish will swallow little fish and will keep building and expanding their pipeline to speak directly to their consumer. Current distribution models are eroding and newer, more efficient models are adapting to this digital space.