The Future Of News
I don’t know about you, but I thoroughly enjoyed the latest ROTW live on the future of news. It is a fascinating topic.
For those who couldn’t attend it, we were discussing about the future of news. How would the news and media industry change in the coming years? What would a company that builds the future of news looks like? And who is the natural owner of this space? Is it Netflix, Facebook, Google, or someone completely different? Would it be a media company that gets tech and distribution? Or a tech company that gets journalism?
One company has tried to build a new age news & media company, and we somehow missed talking about it. It’s Buzzfeed.
Buzzfeed is both a media company and a tech company. It’s a media company because it knows how to produce broad-based content interesting to the masses. It gained popularity with its online quizzes and listicles type articles but later expanded the site into long-form journalism and reporting.
It is also a tech company in the sense that is it built in the internet era. It has hundreds of engineers who are building analytics, advertising, and content management systems and algorithms to figure out the best way to drive engagement on the site.
Unlike typical media companies, who rarely see any interest from Venture Capitalists, Buzzfeed has raised close to $500M from tier-1 VCs like Andreessen Horowitz. This is what Chris Dixon wrote on his blog when Andreesen Horowitz invested $50M into the company back in 2015.
We see BuzzFeed as a prime example of what we call a "full-stack startup." BuzzFeed is a media company in the same sense that Tesla is a car company, Uber is a taxi company, or Netflix is a streaming movie company. We believe we're in the "deployment" phase of the internet. The foundation has been laid. Tech is now spreading through every industry and every part of the world. The most interesting tech companies aren't trying to sell software to other companies. They are trying to reshape industries from top to bottom.
BuzzFeed has technology at its core. Its 100+ person tech team has created world-class systems for advertising and content management. It now reaches over 150M people per month, is consistently profitable, and will generate triple-digit millions in revenues this year. I believe the future of BuzzFeed – and the media industry more generally – will only get brighter as the number of people with internet-connected smartphones grows and the internet solidifies its place as the central communication medium of our time.
But despite all the VC money and the tremendous revenue that Buzzfeed was able to generate, the company has been struggling lately. They tried to ride on the wave of Facebook Instant articles, only to realize that there was no credible monetization model. They realized that it’s hard to compete with Facebook and Google for advertising dollars, despite a pretty decent scale, especially when they depend on them to generate traffic too. Just last week, Buzzfeed and HuffPost announced a merger. Interesting move, and one that was long predicted.
What can be learned from Buzzfeed lessons is that it is abundantly clear that the only way to build a thriving business in a space dominated by aggregators like Facebook and Google is to go around them, not to work with them. The failure of the Buzzfeed model suggests that it’s probably impossible to create a broad-based media company with an advertisement led business model. That is now the realm of aggregators.
I am even more convinced now about my initial stand, which is that the future is niche. Narrowly focused publications, which have deep expertise, backed by a subscription model, has a better chance of succeeding than the broad-based general content publication houses.
Of course, the problem - and a rather good one - to solve is how do we make it easy for the customer to sign up for 20 different niche publications via subscription without going through the hassle of paying for each one of them individually. The likes of Substack and Medium are trying to solve precisely this problem, albeit in a different ways.
The world needs great journalism, and great journalism needs great companies backed by sustainable business models. I am confident someone will figure it out in the next few years.
Best,
Kaddy