Are You a Product Company or a Content Company?

  01 Mar 2015

I think a question that more companies should be asking themselves these days is, "Are we a product company or a content company?"

The quintessential product company is Apple: it designs products like computers and smartphones. An example of a content company is Universal Records: they have a large catalog of music that they're trying to sell. Their goal is to maximize the value of their collection.

I think a lot of websites and apps these days confuse the distinction between product and content companies, to the detriment of the consumer. Let's take The Weather Channel. Are they selling weather forecasts? Or apps to make weather forecasts easy to understand and interpret? I think they're doing a poor job at both. Their iPad app is a confused mess of information. Their iPhone app seems to be getting clunkier with each release.

The Wall Street Journal is another example. Its iPhone app is a nightmare -- it freezes, stalls, and inexplicably reloads pages at random intervals.

In both these cases, I think the companies are trying to be both product and content companies, and failing at (at least) one of them. They're vertically integrating a market without realizing it by packaging a content viewing mechanism with the content itself. It's like NBC trying to sell TVs. Combining the product with the content prevents the free market from improving on specific layers of the experience to improve each separately.

What's a better way? Choose a single direction and go all-in. If you're The Weather Channel, either give up on weather predictions and make the best weather app on the market, or sell your weather predictions to a variety of apps and let the best one win. If you're The Wall Street Journal, put all your effort into journalism and let other people create an interface.

From a technology perspective, this maps into two distinct areas: APIs and user interfaces. Content companies should create APIs for their content, and charge people to use them. Product companies should consume other people's APIs to present their content in the most compelling and intuitive way.

Horizontal markets work better than vertical silos, and ultimately deliver more value to the consumer.

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