Technology, Venture Capital, Private Equity

Perspectives from an Indian VC

Aggregators – New King Makers

Posted by Arun Uday on May 23, 2007

“Content is king” – is perhaps the most hackneyed phrase in the media world. However, some time back, a Bear Sterns analyst came up with this v.interesting report, which said that content aggregators are the new king makers. I have looked at and also helped prepare a few aggregator business plans in the past, and here is some of that learning.
First Learning – Content aggregation plays make most sense when there are many players on both supply and consumption side. The classic case is that of a user generated content aggregator like YouTube, where there are thousands of producers and millions of consumers. An aggregator is an indispensible part of the value chain in such cases. Quite often, we see aggregators hoping to pull it off by striking deals with a couple of content producers like large studios and getting started. We are especially seeing this in the case of the innumerable IPTV/VOD/movie download service providers in the US. And predictably, most are skating on thin ice and having to change their business model (Akimbo) or struggling to survive (Netflix downloads). As an investor, I’d be wary of backing such an aggregation play. You are always under the risk of the large content supplier(s) either pulling the plug or deciding to do it themselves. You obviously also can’t hope to earn extraordinary margins in such a business since the content provider, who has the maximum bargaining power would take a lions share of the revenues.
Second learning – Build a brand. It seems obvious, but somehow, especially having seen some of the mobile VAS content aggegators here in India, I feel that their focus has hardly been in building communities (proxy for brands). An active community / brand could be a major barrier to entry especially when operating amongst large players on either side.
Third learning – Don’t just loosely aggregate. Add value. Contrive novel ways by which you could ease content discovery or help users make new connections or engage users in discussions. This is again best illustrated by the example of how YouTube managed to hold its own against Google Video. It was all the various bells and whistles – Play Lists, Recommendations, Ratings etc that YouTube built which eased the discovery of content and fostered the building of a community, which made it the most popular video aggregator on the planet.
OK, here’s a question – Which is the largest aggregator on the internet, which is the best example of having accomplished all of the above? Clue – answer starts with a “G”.

4 Responses to “Aggregators – New King Makers”

  1. – Tilt-up Concrete Construction

    Useful, thank you!

  2. Vivek said

    Good Analysis – Agree with you about the Marginal Value Add for Studio Content. Check out Vudu – if you have’nt done so.

  3. […] by Arun Uday on September 8, 2008 Some time back, I had posted about the shift in power in the media industry from content generators to content aggergators. That […]

  4. My husband and I am always interested in informative posts about electro magnetic generators and free energy. This really opens my brain. Great post and I have entered you as a bookmark. thanks

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