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January 31, 2012

What is a 'Media' Company?

By Gary Kim, Contributing Editor

It’s hard to tell what a “media” company is, these days. Twitter, for example, says it is in the media business, but not a media company. That’s basically a stance similar to Google (News - Alert) (which might say it is a technology company), as well. Both firms make their money from advertising, which is among the traditional revenue streams media companies routinely use.



But Twitter (News - Alert) and Google tend to argue they are distributors of content, not content creators.

Twitter is a platform for breaking news, entertainment and a variety of communications. But “we don’t create our own content, we’re a distributor of content and traffic,” said Twitter CEO Dick Costolo (News - Alert). “We’re one of the largest drivers of traffic to other media properties.”

Of course, a smart CEO would say that, if he or she believed that content companies are necessary partners. A “distributor,” perhaps even a distributor that earns advertising revenue as its main business, does not want to create unnecessary channel conflict by “competing with its customers.”

That isn’t to say the stance is illogical or incorrect. Twitter and Google have value because they drive traffic.

That isn’t to say that, one day, Twitter might not build important revenues in the analytics or e-commerce areas, for example.

But Google and Twitter, no less than Apple (News - Alert), have some characteristics that seem more akin to media than “technology.” You can argue about whether being a “content distributor” is the same thing as “media.” Some people might say Comcast (News - Alert) and Verizon are only distributors, not “media.”

Twitter and Google would argue that they only point to content and don’t create content. In Google’s case, that mostly is true, but Google also is funding the creation of original content as well.

Apple is a product company, not a media company as such. But iTunes and the App Store are distribution platforms for content. That is similar to the role played by a cable TV, satellite video or telco video operation.

For that matter, Netflix also distributes content, as does Hulu and Amazon. But is Netflix a “media company?” Is Hulu a media company? And Amazon is a potential “media distributor” only in its role as a distributor of music, video or e-content.

It is one thing to argue that every company is a media company, in a tactical sense, or in the sense of needing to use content as part of its marketing strategy. But the point is that the use of media tactics does not necessarily mean a firm is a media company in terms of its revenue stream.

But when a firm makes substantially all its money from advertising, it is hard not to see such a firm as a media firm, in some direct sense. The point is that media have changed and are changing.

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Gary Kim is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Rich Steeves
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