Jul 15, 2016 ยท 3 minutes

Amid continued handwringing over Facebook’s algorithm changes, we saw two pieces of good news from the digital content world this week.

The first is that Quartz is said to be close to $30 million in annual revenues “with no clickbait or standard ad units,” as AdAge put it. The second is that Refinery29 has raised $50 million in capital in a deal valuing the company at some $300 million. According to ReCode that was $200 million less than the valuation the company hoped for, but it’s still north of nearly every exit in the digital content space since digital content began.

There’s a commonality to both pieces of news that signals an important new reality for digital content companies: They are living or dying based on investment from old media.

Turner lead Refinery29’s deal and Quartz is backed by an existing old media franchise, The Atlantic. Quartz has a staff of 175 people and eschews most ways media companies make money. What they’ve done is impressive, but it would have been extraordinarily hard as a stand alone company.

Digital content companies have tried as many different ways to get investment as they have revenue models. A lot of the early blogs bootstrapped, giving up control over their ad space to an ad network in exchange for immediate revenues. The knock on that was it constrained long term growth. Others raised capital, which lead to shuttering completely, premature sales or attempting to pivoting into more scalable businesses. (Pando has both lived life as a startup flush with venture cash, and a bootstrapped organization running off what we can bring in every month. The former is more fun. The latter is more rewarding.)

The hope that it can always be scaled is why publishers keep winding up betting on things like a Facebook algorithm even though they should know better.

Content businesses take a long time and it doesn’t scale like tech. It’s easy to get a seed round done, but beyond that… it’s tricky. But journalism is expensive. There is a reason most of our major newspapers franchises were built by wealthy families who subsidized losses for decades for the public good. (Personal wealth continues to be how some people finance new media outlets too.) It’s incredibly hard to have a sizable staff and produce in depth work based on ad sales a company can do in its first few years.

So the answer increasingly is… old media. The very thing that digital media should be disrupting.

Comcast has backed ReCode, Vox, and Buzzfeed.

Turner has backed Refinery29, Mashable, (Refinery29 competitor) Bustle, and others. Hearst and Scripps have also backed Refinery29. Vice-- which has raised nearly $1 billion at higher valuations than any of them-- is backed by Walt Disney Company, A&E and Fox.

Nearly every content company valued at a meaningful amount has an old media giant behind them.

I have no issue with the strategy, to be clear. Content is expensive and money has to come from somewhere. But there’s something uncomfortable about every single up and coming media company being funded by existing media companies-- and increasingly so. That’d be like Google, Amazon, and Facebook investing in every single tech company. Which, by the way, Google and Jeff Bezos do invest in quite a few, and in China Alibaba, Tencent and Baidu are major funders of the ecosystem.

But at least in the US Google Ventures is a separate entity, and Bezos invests with his own cash.

The state media has gotten into is more like big pharma: Small companies are more innovative, but can’t afford to take drugs all the way through clinical trials and market them. So it’s become common practice for them to license drugs to the big guys. It may have proven an efficient and cost effective way to get drugs into the market, but the result has been no new Amgens or Genentechs coming out of Silicon Valley.

Will see if new media suffers the same fate.