Tim Armstrong
Chairman & CEO
AOL

One of my favorite books is “A Thread Across the Ocean.” It tells the incredible story of how American entrepreneur Cyrus Field overcame seemingly insurmountable obstacles, multiple failures and 12 years of effort to get the first transatlantic cable laid from North America to England in 1866. The result was an unleashing of international business that made the original investors fabulously wealthy.

As impressive and fruitful as this heroic achievement was, what flowed through the pipe – content – would dwarf the success and economics of the pipe itself. Business and consumer communications and information that once took weeks could be carried out instantaneously, by telegraph, then telephone, then through other means.

In the years since, countless new pipes have emerged, either physical or wireless, opening up bigger and better content opportunities – from radio to network television to cable TV. As with the transatlantic cable, content is what made the difference for consumers and businesses.

We’re seeing a similar trend on the Internet.

The first Internet wave was the access wave – when the dial-up and then broadband pipes were put in place.

The second wave was about platforms – messaging, search, social networks, and the like, that let us find and share information. Many companies have invested years and tens of billions in pipes and platforms.

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But how much money has been spent designing content and content management systems that will fill these pipes and the platforms? Is the content you read, watch or listen to really built for you? Could the third and most promising wave of the Internet be the creation of scaled, quality content tailor made for every man, woman and child.

In my view, yes.

And, interestingly and painfully, the very economy we’ve been suffering through for more than a year is accelerating this third wave and is opening up the media business of the future.

Photo: Daniel Feldt

Consumers have been migrating to digital access and platforms for years.

Now the recession is turning what was a long slow migration of content and advertising into a methodical, forced march. The recession has already eliminated media outlets that didn’t follow the digital threads created by the Internet.

And it’s produced enough fear in many others that they’ve been forced beyond the “innovators dilemma.”

The dilemma is over.

There is a pipe, there are platforms, and now it’s time to create the larger and scaled content economy.

There are incredible new opportunities for start-ups and media companies nimble enough to ride the coming content wave.

Here’s why:

- It works. You can run a digital content business and be profitable with attractive margins.

- Hundreds of billions of ad dollars are poised to shift to digital media and services. Consumers spend far more time online than advertisers spend online. That gap has to close.

- Content will get much of that new ad money. The initial boom of the Internet ad sector was giant ad deals with access players; the second wave has been search. Search took half the market share in the first 15 years. Where will the next $50 billion dollars of ad revenues go? Content. And that content is running through your laptop, your phone and your TV – and maybe your Kindle or iPod.

- The recession has thinned out the herd of traditional media, a harsh but true reality. That’s left advertisers with limited inventory on traditional media (which might cause a spike in pricing in offline media, especially TV), pushing advertisers to migrate to digital opportunities.

- Advertisers are hungry for quality, branded content. As advertisers make this forced migration, they are finding many platforms and pipes, but limited opportunities that address their needs for a scaled audience and a scaled environment that is great for their brands.

The Content Economy is coming and it is riding a silver thread. The race is on to see who the winners will be.

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Tim Armstrong is Chairman & CEO, AOL. AOL operates some of the Internet's most popular products and destinations, runs one of the country's largest Internet access businesses and provides a full set of advertising solutions. Armstrong joined AOL in March 2009 from Google, where he served as President of The Americas Operations, overseeing Google’s North American and Latin American advertising sales, marketing and operations teams. Armstrong sits on the boards of the Interactive Advertising Bureau (IAB), the Advertising Council and the Advertising Research Foundation, and is a trustee at Connecticut College and Lawrence Academy. He is a graduate of Connecticut College, with a double major in economics and sociology.