Content Matters

Scott Karp has penned a thought-provoking post on his Publishing 2.0 blog, entitled "Content Businesses Don't Scale Anymore".  The basic premise of the post is that all of the recent content businesses which have scaled dramatically in recent years are content platforms (YouTube, MySpace, Google) and not creators of original content.  Karp further notes that even the long tail of revenue tends to reward the aggregators in the head, with more modest benefits trickling down to the tail.
Factually, I think Scott's points are accurate.  My question, however, is whether scale matters in the content industry.

The content business has long been a market of small companies focused on niches.  Interestingly, many niche content providers are profitable, particularly in the b2b space.  Many industries require scale to become profitable.  For example, in the enterprise software space, a company really isn't considered viable without revenues of $80-100M.  I can think of dozens of content businesses with revenues of $10-25M and 20% margins.

On the b2b side, most of the dominant "traditional" publishers, such as McGraw-Hill, Thomson, Primedia and Reed Elsevier, were built through the acquisition of small, niche players.  With the possible exception of the newspaper industry, there are few content companies that scaled well, even in the old days.

Scale may matter in the consumer space, where you need millions of page views in order to compete for the mainstream advertising dollar.  However, in the b2b space, I believe that growth and profitability are the key metrics for content companies.  A lot depends on the reason that you are building your business.  Is your goal is to get page views high enough to be acquired or is it to build a profitable business with sustainable growth?  If it's the latter, then scale shouldn't be your key measure of success.