Jan 8, 2016 ยท 3 minutes

Yesterday, someone Tweeted this:

I quickly Tweeted back that I thought the same would be said of content in 12 months time. And then I spent the rest of the day trying to decide if I agreed with my own Tweet.

What does vertically integrated mean in terms of content? Basically that you create your own site, sell your own stuff, and are speaking to an affinity audience. The vertically integrated commerce companies mentioned are also niches, focused on selling one thing incredibly well. You could argue that’s as much of their success as controlling the inventory. (See also Honest.)

Don’t get me wrong: I think Buzzfeed and a few others will represent great exits. I’ll go further than that even. I think Buzzfeed may be the first stand alone $1 billion-plus media company of the digital age. But there’s basically no one else in that category. Maybe Vox. Maybe. But Vox itself is a collection of verticals, not one stand alone site.

But let’s look at the history of online news and content so far. Four companies have exited for north of $100 million…. ever. Two were solid niche players, one was a broad player and one was in the middle. Daily Candy, Bleacher Report, Huffington Post and Business Insider respectively. And even the Huffington Post started around politics, Business Insider started around New York’s tech scene.

Let’s look at the lone sad six companies worth north of $100 million in the content space as of next year:

Buzzfeed: Discussed already

BusinessInsider: Discussed already

Vox: Collections of verticals

Vice: Giant niche

Refinery29: Niche

Ozy: Niche, at least in terms of audience it’s appealing to

In terms of existing exits since the Internet began, the odds are better being niche, and relying more on your own destiny than, say, Facebook. Buzzfeed is the glaring exception that traps people into thinking otherwise. In other words, Huffington Post 2.0.

But let’s go further. Let’s look at all media exits of late, not just new ones built under Web rules.

The top ones are SNL Financial ($2.2 billion and very vertical), The Economist ($1.4 billion and business news), Financial Times ($1.3 billion and business news).

Building something for everyone isn’t easy or lucrative when it comes to content. Building something for a very specific group-- where ideally you control much of the interaction--  has way better odds of success.

And that will only get more pronounced in the next year. Last year some $800 million in content investments was seen as a crazy high watermark…. and some half of that was Vice. With the venture market officially tanking, content is gonna be the first thing to go. That means the short leash that investors already had for content companies (Hey, Circa!) has only gotten shorter.

Who is going to survive? The scrappy verticals who couldn’t ever raise Buzzfeed money, weren’t invited to be alongside the New York Times in publishing directly to Facebook, and have had to essentially get profitable to survive already.

Large examples may be Refinery29 and Bustle, but Pando is one too. Another is Skift. In a recent post on getting profitable, Rafat Ali wrote:

That word “scale.” I have since revised that word into a phrase, “scale for scale sake” because that is what it is really about, investor-driven frenzy to prove out a model that may ultimately eat itself. Ad blocking, platform dependence, clickbait, every trouble media is in today is a result of this quest of scale for scale sake. We fucked ourselves as an industry.


Lockhart Steele-- who built Curbed-- retweeted it saying that was their game plan too. At a recent PandoMonthly, the Refinery29 co-CEOs said whether they’d received more money or less early on, it still would have taken a decade to build their business. It took VICE a lot longer.

Being vertically integrated as a content company isn’t just about speaking to an affinity audience, controlling your own ad inventory and publishing your own content versus aggregating. It’s about not relying on the next funding round to subsidize an imaginary business model.