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Let’s jump into it…

Quick hits

Why go through all the trouble of building a following on TikTok or Instagram just so you can get brand deals when you can instead just upload your videos straight to Amazon and get a commission on every product sold? [WashPo]

A great deep dive into how a famous YouTuber is trying to diversify his business so he can one day step away from it. [Colin and Samir]

This new venture fund from the Financial Times will be interesting to watch. In addition to capital, the FT can share a lot of institutional knowledge that would help a media startup grow its audience and revenue. [Axios]

A lot of people assume streaming will never be as profitable as the cable bundle, but I actually think a lot more revenue will flow into the streaming ecosystem once the cable bundle finally collapses, an event that’ll probably happen relatively soon. [The Wrap]

Do shuttered media companies have a societal obligation to preserve their news archives for the public? Some journalists think so. [Slate]

Why HBO was a much bigger disruptor to the TV industry than Netflix. [Momentary Experts]

Is it worth it to spend over a dozen hours just to land one trick shot? It is if the video of that trick shot then generates millions of views. [NYT]

Could A24 lose its indie street cred as it tries to make mainstream entertainment? To me, it seems like its executives are failing to understand what differentiates A24 in an otherwise extremely crowded market. [Bloomberg]

I think Jezebel's membership program has a decent chance of working. Not only does it have a great brand, but it can benefit from the stirred-up anger and activism in the wake of the Dobbs decision. Women's health is likely to be one of the biggest issues in this election cycle. [Medialyte]

It wasn’t Vice’s business model that sank it

Back in 2008, Jeff Zucker, then the president of NBCUniversal, coined the phrase “trading analog dollars for digital pennies.” He was referring to the widespread belief at the time that audiences became vastly less valuable to advertisers as they migrated from print to online.

Today, that idea is even more pervasive, so much so that it’s widely believed that you can’t adequately fund news gathering with advertising revenue alone. The rapid collapse of high-profile media outlets like BuzzFeed News, Vice, and The Messenger has largely been interpreted as a failure of ad-supported media. Their very business models, in other words, doomed them from the start.

But while I do believe that it’s often a good idea for a media company to diversify revenue streams beyond just advertising, I also recognize that plenty of outlets have optimized the ad model so that it does a perfectly fine job at content monetization. Back in 2022, for instance, I wrote about how impressed I was with how Axios took its rather broad audience and segmented it down into niche verticals via its newsletters, thereby creating valuable channels for advertisers. There are also early reports that Semafor has already reached break-even status on the back of online ads and event sponsorships. In fact, I speak to successful media entrepreneurs pretty often who have built their businesses mainly on top of advertising and marketing products.

Over the last few weeks, I’ve read dozens of post-mortems about the collapse of BuzzFeed, Vice, and The Messenger, and the red flags that jumped out to me had very little to do with flaws in their respective business models. Instead, the recurring theme I kept coming back to over and over again was that these companies had established extremely high burn rates that were only made possible by huge influxes of VC cash, and that it was their failure to control their overhead that ultimately led to their implosions.

Take The Messenger as an example. Rather than hiring a small staff and slowly ramping up production, Jimmy Finkelstein onboarded hundreds of journalists pre-launch, agreeing to pay some of them exorbitant salaries to lure them away from their previous jobs. In fact, it acquired Grid News, an already-established media outlet, for the sole purpose of absorbing its staff. Not only did The Messenger engage in an expensive website build — rather than utilizing less expensive platforms like Wordpress — it also “rented the entire 26th floor of a skyscraper” in downtown Manhattan that sat mostly unused during the company’s entire existence. Over just eight months, The Messenger managed to spend $50 million in investment while generating only $3 million in revenue — an incredible burn rate that triggered instantaneous closure once that investment dried up...