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What the next crop of media startups will look like

To say that the last few years haven’t been good for BuzzFeed or Vice is an understatement. 

In BuzzFeed’s case, it launched a disastrous IPO — from which its stock price never recovered. It’s experienced round after round of layoffs and repeatedly posted disappointing earnings results. Its most recent earnings report revealed that time spent with its advertising products is falling precipitously. And as I was writing this piece, news broke of yet another batch of layoffs. 

Vice hasn’t fared any better; it abandoned its own SPAC IPO plans and then followed that up with layoffs and other cost-cutting measures. Recently, executives have shopped it around for an acquisition, with most potential buyers scoffing at its asking price. Its owners are even considering breaking up the company and selling it in pieces. 

I’m not sharing all this bad news to shit on these two companies, but rather to juxtapose their current position with how they were viewed a decade ago. 

Back in the early 2010s, BuzzFeed and Vice were widely regarded as the future of media, so much so that the entire industry tried to replicate their success. Fueled by free-flowing Facebook traffic and gargantuan amounts of VC cash, they scaled up rapidly, hiring hundreds of young staffers and launching dozens of new verticals — not just for their owned websites but also other platforms like Facebook and YouTube. There was this brief period when we all thought they had found the killer formula for monetizing online content. 

We all know what happened next: Facebook turned off its free traffic spigot, and it didn’t take long for the VCs to realize that those hockey stick growth charts didn’t actually represent consumer demand. With that money drying up, suddenly revenue actually mattered, and neither company was generating enough to offset its cash burn. By the late 2010s, nobody was looking at BuzzFeed or Vice anymore as the poster children for how to build a successful media company.

Which begs the question: what are the modern-day media startups charting a new path for the industry? Which outlets are reimagining the ways to deliver and monetize content?

There are several organizations I’ve been watching closely, but the one that’s stood out to me most in recent months is Puck. Founded in 2021 by Vanity Fair alum Jon Kelly, Puck is a newsletter-forward, magazine-like website that covers the power players who work in entertainment, tech, finance, media, and politics. While its masthead is small, it specializes in hiring star journalists who built their brands at other mainstream outlets.

In many ways, Puck is the anti-BuzzFeed, taking the exact opposite approach to hiring, distribution, monetization, and content production. I also think it’s one of the few media companies that understands how the rise of the Creator Economy is upending the relationships between journalists and the news outlets that employ them. Let’s dive deeper into why I believe it’s such an interesting company to watch: 

Better incentives for talent

For as long as the media industry has existed, its employment structure has been similar to what you’d find in just about every other industry: hierarchical, with most workers acting as interchangeable cogs in a machine. While some journalists managed to thrive within that hierarchy, they were still largely dependent on the parent company to handle the distribution and monetization, which thereby limited their bargaining power.

The rise of the Creator Economy changed all of that. Suddenly journalists started realizing that they could be revenue drivers in and of themselves, and that they no longer needed a media company to find and retain an audience. Over the past few years, more and more have quit their full-time jobs to launch their own newsletters, podcasts, and YouTube channels.

Puck designed its incentives with this new dynamic in mind. Here’s how The New Yorker described them:

Puck sought to capitalize on the same idea driving the newsletter company Substack—that certain writers, with dedicated followings, can be their own profit centers. Puck’s writers would be featured in their own newsletters (or “private e-mails,” as Kelly likes to say), but also enjoy the scaffolding of copy-editing and story meetings. Their compensation model was at the core of Puck’s strategy. At Puck, journalists weren’t simply salaried employees. They would get an equity stake in the company and receive bonuses based on their subscriber numbers. (For every thousand subscribers they bring in, writers get ten thousand dollars.) Puck journalists, some of whom earn between three hundred thousand and four hundred thousand dollars a year, refer to one another as “partners” and receive detailed briefings on the state of the business—an unusual arrangement in media, where writers typically have only a dim awareness of company balance sheets.

Puck is essentially approaching talent in a way similar to the book and music industries: by providing the infrastructure and support of a media company while giving the journalists a piece of the upside. 

Smaller VC raises

It’s probably hard to believe it now, but companies like Vice, BuzzFeed, and Vox Media used to announce huge investment rounds at absolutely insane valuations. For instance, Disney alone invested over $400 million in Vice at a $5 billion valuation!

The problem was that these massive cash infusions distorted the incentives of media companies, placing very little pressure on them to find a product-market fit. Jonah Peretti and Shane Smith didn’t have to stop and think on whether they were making smart business decisions because it literally didn’t matter if they were, as long as they could show a line was continuing to go up. In their case, that line was labeled “reach,” and at the time nobody knew that this line was pretty much meaningless.

Moving forward, media startups won’t have the luxury of chasing meaningless metrics because they’ll have far less VC cash to burn. This will force them to approach scaling more responsibly and focus on finding viable business models early on. Puck, for instance, has only raised $7 million so far and launched with a hard subscription paywall right out of the gate.

That’s not to say that it won’t pursue further raises — in fact it’s reportedly seeking out a new $20 million round — but my guess it that its future valuations will be closely tied to revenue growth vs vanity metrics like reach.

A focus on quality vs quantity

Most of the VC-funded media startups of the early 2010s were heavily reliant on advertising business models that benefited from the massive waves of traffic sent by platforms like Facebook and Google. But because it was impossible to predict when a particular article would take off, every publication had to play the algorithmic lottery by pumping out huge volumes of content, much of it aggregated from other sources.

That’s how we ended up with what John Herrman coined as the “John Oliver Video Sweepstakes.” Every morsel of content that was even remotely viral-worthy was aggregated by an army of young 20-something bloggers, to the extent that outlets like HuffPost were pumping out hundreds of posts a day.

Puck, on the other hand, only publishes a few pieces a day, and most read like well-researched magazine features. While its business model does include advertising, it’s not selling programmatic ads at scale and is instead focused on bringing in brands that want to reach a deeply engaged readership. Its embrace of paid subscriptions also incentivizes original reporting over aggregation; no one wants to pay for an aggregated John Oliver clip they can find for free on YouTube.

A stronger emphasis on owning the audience

One of the biggest throughlines of the BuzzFeed era was the overreliance on huge tech platforms for traffic. I remember reading end-of-year memos from Jonah Peretti openly bragging that he didn’t care whether a piece of BuzzFeed content was consumed on BuzzFeed’s website.

Boy, that approach didn’t age well, for now-obvious reasons. And it should surprise no one that media startups launching today place heavy emphasis on moving their audiences onto email. While Puck’s editorial output is similar in format to magazine features, it still sends these longform pieces in their entirety to the inbox. While platform traffic still plays a role — in fact, I’ve seen quite a few Puck ads on Facebook and Instagram — it’s definitely secondary in importance.

Building niche editorial products

Back in August, I wrote a piece about the “4 things Axios did right.” What most impressed me about the company was how it simultaneously managed to be a general interest news site while also funneling its audience into niche verticals, making it much easier for it to deliver highly targeted advertising and industry-specific subscription products.

Puck took a similar route; while its topic coverage is broad — it includes tech, Hollywood, politics, media, and finance — it’s able to go much deeper into those topics than a general-interest publication like The New York Times. It does this by positioning itself as an “insidery” outlet that prioritizes palace intrigue coverage of its powerful subjects. You don’t subscribe because you want to be informed on the top headlines of the day, but rather to learn how the sausage is made within the world’s most influential industries.

***

I’d be remiss if I didn't acknowledge that Puck isn’t the only outlet experimenting with these new modes of distribution and content monetization; organizations like Workweek and Defector have also developed similar models and reward structures. 

Let’s face it: the genie is out of the bottle, and journalists now have a much better understanding of the value they bring to their employers. As the Creator Economy matures, the media industry will need to adapt to the new economics of content creation, and that will involve relinquishing at least some control and ownership to the talent they’re trying to retain. It’s the age of the micro celebrity, and as Puck founder Jon Kelly put it, journalists are the “original influencers.”

What do you think?

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Quick hits

Netflix keeps breaking new viewership records while at the same time its subscriber growth is stalling out. Puck writes about the diminishing returns of streaming hits. [Puck]

The Wall Street Journal reports on why Jeff Bezos is considering spinning off Arc, the content management platform developed at the Washington Post, into its own company. [WSJ]

“You’d be hard-pressed to describe what differentiates a Vox article from an Atlantic article or a Slate article or an article on any other quality website … There has been an incredible flattening of the content landscape, and Vox has become part of that flattening rather than an alternative to it.” [Slow Boring]

Passionfruit wrote about the processes that some influencers undertake to vet brands before agreeing to work with them. [Passionfruit]

For years, Ken Doctor was a go-to resource on the economics of news, and he was well-known for his deep dives into the balance sheets of major media companies. Then in 2020, he decided to put his money where his mouth is and launch a local news venture in Santa Cruz. He’s now resurfaced to give an update on how that venture is going. [Nieman Lab]

ICYMI: Why The Information launched a Creator Economy newsletter

Kaya Yurieff explains how she shapes her daily coverage of creators and the startups that service them.

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