Quantifying content’s business value is essential yet challenging. Value fluctuates based on context. A hit film soars when housed beside B-movies but blends into a strong library, for example. Yet, a business must explore how to assess content value amidst the noise. What signals reveal buried treasure? How do we separate diamonds from the rough?
We know the story of Midas—everything he touches turns to gold. That’s what you want. Although, if you read the actual Greek story, it didn’t work out so great for Midas, but when we say somebody has the Midas touch, we take that as a good sign. Then there’s Ozymandias, from a famous poem by Percy Bysshe Shelley, about a king who was once great but is now forgotten. All that remains is a broken-down statue in the middle of the desert. There is certainly quite a spectrum of thought about the power of content that falls in between both Midas and Ozymandias.
Bagalman says, “I’ve worked in the content business in a movie studio, streaming at Starz, the music business. It’s the same everywhere you go that you have your big hits that pay for pretty much everything and then you’ve got the long tail. In December, Netflix released a whole bunch of data. They had the exact same thing that you’d expect, that eighty/twenty rule. Twenty percent of your content will be 80% percent of the viewership or listenership or readership, whatever it may be. And in fact, in media, it’s often even more than eighty/twenty. You need to try to figure out, what’s driving that value? Where do you want to invest and where do you want to cut? You need to make those decisions carefully.”
One way to do that is possibly tagging each piece of content with some sort of value.
“Exactly,” says Bagalman. “You have a library of content somebody’s paying ten dollars a month to access your content. You have a million subscribers. You can get ten million dollars this month. And you’ve got, let’s say, a thousand pieces of content. They didn’t all contribute one thousand or ten thousand dollars each. How do you figure that out? For most companies, they are going to have data. They are going to have databases that show you how many people watched, read or listened to which piece of content for how many times, for how long, and you can try to do what we call—create the counterfactual. That is, what is the alternative universe where if we had these thousand pieces of content in this other universe, we only had nine hundred and ninety-nine. How much less money would we have made? Now I know what that piece of content was worth to me.”
You’re a data scientist, so you come from the data world. This might seem very straightforward for you but there’s a lot of work to it and one needs to have access to the right talent.
“What we were talking about today in the session was the concept. Here are the steps you need to take, or that you can access through a data scientist. And if your data scientist doesn’t know how to do that, get a new data scientist,” says Bagalman.
But once we do have that value understood, then what?
Bagalman observes, “Then you can make some decisions about your content. Am I paying too much for this? Should I get more of this? But the important thing is then to understand what’s driving that value. You want to keep working your way upstream. People watch this or are willing to pay more for this than that. Why? How do I make more of this than that? What is it about this specific content. Ultimately, this analysis is not just about shifting money from one pocket to another, from one person to one company. You’re trying to get to a place where you are making better content, so your customers are getting to watch, listen, read something that they enjoy more, and you get to be appropriately compensated for that. Everything is always about just driving one level deeper. One level deeper, but also one level up and a level up and a level up in terms of management.”
How can you take that information forward or higher into the business?
“Part of being a data scientist is working with your stakeholders,” he adds. “When you’re dealing with a finance team or you’re dealing with the content acquisition team, they want to know certain things. Maybe finance needs to figure out how they’re going to amortize costs. The programming acquisition team needs to know how much they should be paying if they should renew licenses. But as you move up, people’s goals become broader. The CEO is worried about driving revenue. And maybe the COO is worried about containing costs. It is up to you to speak your stakeholders’ language.”
Watch the complete video from the Media Insights & Engagement Conference as Seth Adler and Michael Bagalman discuss speaking stakeholders’ language when it comes to content, avoiding the mistakes of a flop, and gaining an advantage over your competitors.
