The economics of new media ventures like Vox

Key to the economical models of new media outlets is not journalism, but their technology. In this column, we are taking a closer look at the business model of Vox.

Just about every company with a reputation problem, for instance, should be jumping at the opportunity to be able to tell their story using Vox’s technology and platform.

In what is yet another masterful analysis of the news industry, Felix Salmon writes the quote above at the end of his article about Vox.com, Ezra Klein and The Washington Post.

The rest of the article is great, but this part is fantastic. At least to me. I don’t hide my fascination with new outlets like Buzzfeed or Vox, but I wasn’t quite sure whether the economics behind those venture will work. While the current inflow of VC money into news organizations is paying for the current unraveling, I am still not sure if long-form, investigative journalism and VC money can work together. That being said, VC’s obviously do not invest into journalism, they always invested in the tech. It’s the only part of companies like Buzzfeed at Vox that is scalable at a rate that is remotely interesting to venture capitalist. My hesitation was that: if those companies don’t earn money quickly enough, it is not the developers who will be fired first.

But with that one bit of information in Salmon’s blog post, I got a missing piece of the information needed to understand the economics of a venture like Vox.

If you are active in the publishing and / or media industry, you will have heard of buzzwords like brands as publishers or native advertising.

Native advertising is now a proliferated instrument in the ad business. Facebook does it. Tumblr does it (somebody on Twitter said that Tumblr is Yahoo’s native advertising format, which is both funny and can be correct). Vox.com does it.

Vox.com has build a piece of technology that, as Salmon mentions as well, allowed Ezra Klein to build a new news outlet in 15 weeks. 15 weeks! That’s nothing. That’s the time that the management of a German newspapers requires to decide whether or not to launch a new blog. If they are lucky and can bypass the print editorial team.

With flagship products like Vox.com, The Verge and Polygon, Vox ensures that they can shape the market according to their needs and build the technology to power it.

Enter brands as publishers. Simply put: why should a brand spend money on advertising, if they can spend that money on creating their own content for their own properties? That’s something that very few brands pulled off successfully and it took most of them a decade to become good at it. Like Red Bull.

But if a company like Vox.com can launch a whole news outlet in 15 weeks, I bet they can build – on top of their technology and distribution experience – a communication channel for a client that could generate them a mid-size six figure marketing budget. Something along the lines of what they just did for Intel. And here is the ultimate kicker. This is now burned money as it is with advertising. It doesn’t only take away the budget that Intel might have spent with a publisher like The Washington Post, it also ensures that they build something that will make Vox’s technology better and more competitive.

That’s why it scales.

What we read this week (10 May)

Bill Gates in an entertaining interview with Wired, insights from a news aggregator, how teenagers are more correct in their use of “social,” the gaps in language and literature when it comes to digital life, and reflections on augmenting reality.

Quote of the week

We’re reaching a cliff of AI, where the height of human knowledge falls off into a wasteland of poorly automated social grace.

Mark Wilson

Articles of the week

What we read this week (20 Apr)

Our articles of the week: why you might want to get some of your daily news from Fox, the twisted logic behind e-book publishing, an Ikea-made HD TV, democracies and internet freedom, and meme management as an emerging profession.

Quotes of the week

There are a great many bad people in the world, and if you are not offending them, you must be bad yourself.

Adrian Tan

More information does not make a more informed population.

danah boyd

Articles of the week

  • Cory Doctorow: A Whip to Beat Us With
    Author and digital rights activist Cory Doctorow sheds light on the twisted logic connecting publishers, e-books, DRM and certain platforms’ nasty habit of locking users in. For related material, see Charlie Stross’ related article on Amazon’s e-book strategy and its consequences.
  • Wired UK: Ikea’s “Uppleva” integrates TVs and sound systems into furniture
    Ikea is a great example of a company that knows how to extend their range of products. Their latest endeavor: making their own HD TVs. And it seems that they’ve done well on the product, too. This will be interesting to watch. On a grander scale, the company is also planning the construction of an entire neighborhood in East London.
  • The Boston Globe: How democracies clamped down on the Internet
    The openness of the Internet is threatened – unfortunately not only by nations and regimes that we expect to go against freedom, but also by democracies. This article is a good reminder that we can’t take the net for granted.
  • Mashable: Meme Management: Meet the man who reps internet stars
    In times when user-generated content can become more successful on the internet then professional productions, it probably shouldn’t be surprising that at some point they also get professionalized. Still, “meme manager” is a job title not many would have anticipated, and yet it is very much an expression of the zeitgeist.
  • danah boyd: Getting the News
    danah boyd, internet researcher, tells News.me how and where she gets her news fix every day. She discusses the importance of finding points of view as different as possible from one’s own, and what it means to be well informed.

Additionally, should you like to catch up on our series of articles on our social media strategy framework, the collection is now complete.