Aug 11, 2014 · 7 minutes

Last night, Buzzfeed announced a $50 million round from Andreessen Horowitz at an $850 million valuation.

[Disclosure: Andressen Horowitz partners Marc Andreessen, Chris Dixon, and Jeff Jordan are personal investors in Pando] 

In the grand scheme of wild funding rounds at even wilder valuations, this one is comparatively sober. Buzzfeed is expected to turn a profit on $100 million in revenue this year, and the company just turned down an acquisition offer by Disney. (Fortune's Erin Griffith has a good rundown of what you need to know about the deal.)

Still, this is one of the wilder prices we've seen paid for a content company in recent years, and it's funded by an interesting source. When Andreessen personally invested in media companies like Business Insider, Talking Points Memo, and Pando, he was able to do so because his firm didn't invest in content so it wasn't considered a conflict. Apparently, that's changed.

That's good for the content business. Andreessen is a guy who can write huge checks and he not only wants to make money in return, he doesn't want to see journalism die. Also, his firm can greatly influence where other VCs invest. Last February, he wrote a blog post, adapted from one of his signature "tweetstorms," called "The Future of the News Business." In it, he was bullish about the news industry's chances of survival, putting forth a number of strategies and models he thinks are worth adopting for anyone looking to win in this space.

We'll get into how Buzzfeed actually helps his grand scheme to save journalism. But first, we can't write about this deal and the things the money is supposed to towards-- deeper video production and distribution, more elaborate professional agency services-- without comparing and contrasting the new media company with an even higher valuation: VICE.

Buzzfeed was always like a new version of Huffington Post, only one that used sharing instead of SEO, and one that monetized through native ads versus banners. Huffington Post and BuzzFeed co-founder Jonah Peretti was clear that a reliance on SEO and banners were the two ticking time bombs he saw at HuffPo that he wanted to correct for with his new venture. But much of the rest of the go-big, get-clicks, mass volume playbook was the same. Remember: Amid a lot of crappy free HuffPo content, it's also won a Pulitzer.

Meanwhile, VICE has always had the anti-Huffington Post playbook. It doesn't have a massive audience, but it speaks to a hard-to-reach audience very deeply. It charges way more to reach that audience because of it's elaborate in-house custom programs, and it's generated huge revenues reselling its quality video programming not only to HBO but emerging markets around the world.

VICE has seemed so far to break new media math: It doesn't come close to a billion page views a month, and yet it was valued at nearly 3x HuffPo's sale to AOL.

It turns out, The Huffington Post model is easier to get up and going but more difficult to scale. We've seen this with the proliferation of Buzzfeed imitators like Playbuzz and Viralnova.

In terms of ad revenue, there's also the law of diminishing returns at play. When you have a billion users coming and going, engaging only shallowly with the content, what's another 100 million more users?

On the other hand, VICE took more than a decade to build but is able to sell higher quality ad deals targeted at a fraction of the audience because its high quality content can be ported to television.

Just like its insistence that it can do both kitten videos and serious investigative journalism, BuzzFeed apparently now wants to do both the HuffPo and the VICE playbook. Money isn't gonna be the problem-- at least for a while. But focus and DNA might be.

Say what you will about VICE hunting down terrorists and doing cocaine with them -- Shane Smith is at least committed to his company's schtick. Is Buzzfeed really committed to such deep, expensive content?

While Buzzfeed regularly publishes meaningful investigative reporting and smart analysis (particularly related to pop culture), the bulk of Buzzfeed's traffic flocks toward content that could hardly be considered Pulitzer-worthy. A couple years ago, when I reached out to Buzzfeed and asked them to provide the site's thirteen most-read posts of all time, they were literally all listicles, many of which were repurposed from other sites like Reddit. (At Slate, Farhad Manjoo described how many of Buzzfeed's most popular articles are merely repackaged and "optimized" from only one or two sources).

While these share-bait listicles gobble up millions of pageviews, Buzzfeed's most important analysis and investigative reporting at the time (as identified to me by Buzzfeed's PR team) topped out at three quarters of a million pageviews, and many others hovered around the 10,000 mark. Buzzfeed no longer publishes pageview counts on individual articles, but judging by Facebook likes, this trend continues to bear out.

Andreessen alludes to this model in his post, calling it "subsidization by otherwise healthy news businesses." In short, Chlorox won't pay for the "Baghdad bureau," but it will pay for "25 Life-Hacks to Clean Your Kitchen Sponsored by Chlorox." In this way, the silly or sponsored content pays for the investigative department's continued survival. Andreessen writes, "As business models get re-engineered and this brave new world of news comes to pass, there is this fear that oceans of crap will drive out quality content. I don’t think that happens. In fact, I believe the opposite will occur."

Indeed, there are some reasons for optimism. There is more long form investigative reporting happening now than in the early wave of blogging, no matter what is subsidizing it. And at a high level, it's not too different from the history of newspapers. Horoscopes and comics and style sections and sports sections were hardly Watergate either. Fluff and serious have long gone hand-in-hand. The difference is you used to have to buy the whole paper so the disparity between eyeballs was far less codified.

But-- and this is an important but-- the sheer number of eyeballs reading any news anywhere is so much bigger and will be even bigger in the next ten to twenty years, Andreessen argues. Who cares what percentage of them are reading what, as long as more people are reading everything, right?

Maybe. This rosy-eyed view of the world may also be too good to be true. At some point these companies will stop raising huge troves of venture cash, growth will slow, and hard decisions will have to be made. Every media company falls on hard times. The newspapers of old-- or organizations like the Guardian, BBC and PBS-- had social missions backed up by public money or family money. Will a site called "Buzzfeed" support investigative journalism when its biggest advertisers balk or it's overall business tanks and hard decisions have to be made? That takes a lot of trust, and the consumer Internet isn't exactly high on the trust meter right now. Even Andreessen has noted, some of the most important journalism will likely be funded by philanthropy, not private dollars. These are investments first and foremost.

Likewise, as the more clickable BuzzFeed content spreads, the gulf between clickbait and serious journalism will likely widen even further. Facebook's News Feed is notorious for unearthing low-quality yet highly clickable content (like listicles and quizzes). And while it's technically true that "more people share news on Facebook than ever before," that's only if you consider viral beagle videos and quizzes as "news."

It's a virtuous (or vicious) cycle: More listicles drive more Facebook engagement, which drives more listicles and deepens these "news" organizations' reliance on Facebook, which in turn means optimizing even more for Facebook. That puts serious doubt in Andreessen's claims that "oceans of crap" won't drive out the good stuff, particularly considering he's on the board of Facebook the erstwhile crap purveyor. At some point is the gulf in pageviews just too great given Buzzfeed is a for profit company not predicated on a social, journalistic mission?

Andreessen himself wrote in that post, "The winners in these markets either offer the broadest breadth or the deepest depth."

In other words, pick one, Buzzfeed. Maybe now it has the money to do it all, but at some point, it has to pick a game plan even if it keeps insisting it doesn't have to pick between cat videos and Watergate.

[Illustration by Hallie Bateman for Pando]