The bad boy of digital media is now the king of the hill.<\/p>\n
Vice Media, the Brooklyn-based online news operation which has a strong following among 18- to 34-year-olds, has secured $500 million in funding at a valuation of $2.5 billion, according to reports in the New York Times and TechCrunch.<\/p>\n
The latest investment will allow Vice to invest in new technology and to beef up its coverage capabilities in news, including in video, around the world.<\/p>\n
At $2.5 billion, Vice’s value is greater than that of the “gray lady” of the industry, the New York Times, and many other established media organizations.<\/p>\n
The reports said the funds include $250 million each from Technology Crossover Ventures, a Silicon Valley investment firm, and the television network A&E, with each getting a 10 percent stake.<\/p>\n
While many in mainstream media know little about Vice, its unusual rise has not surprised analysts who follow digital sector.<\/p>\n
“Vice has done one of the hardest things to do in media today which is to reach the young demographic, the cord cutters, the non-newspaper readers,” says Rebecca Lieb, an analyst following digital media for Altimeter Group.<\/p>\n
Importantly, Lieb said, Vice has been able to gain a following among young men, who are noticeably absent on mainstream media.<\/p>\n
“Vice has made its mark by being subversive. They use sex, drugs rock ‘n’ roll and violence,” Lieb told AFP. “They are providing the content these consumers want.”<\/p>\n
Vice describes itself as “a global media brand producing and distributing premium digital media across platforms for 18-34 year olds.”<\/p>\n
It was founded in Canada as a print magazine by Suroosh Alvi, described in some reports as a recovering heroin addict, and Shane Smith, whose numerous tattoos give him the look of a biker gang member.<\/p>\n
It claims 220 million unique visitors and 500 million video views per month, and has 4,000 employees in 35 offices worldwide. It also has partnerships with YouTube, Facebook and Twitter.<\/p>\n
Vice gained notoriety for sending former NBA star Dennis Rodman to North Korea last year. It also won praise for a five-part documentary on the inner workings of IS, the militant Islamist group in the Middle East.<\/p>\n
Vice operates a popular YouTube channel and also produces news programming for Time Warner’s HBO.<\/p>\n
Ken Doctor, analyst with the media research firm Outsell, said Vice has take a page from the playbook of sports media group ESPN, focusing heavily on a particular demographic group.<\/p>\n
“Its attractiveness and increasing valuation are driven by its highly diversified business model, which is being proven out on ramping revenue.”<\/p>\n
Doctor added that Vice has been innovative in creating its own in-house digital advertising agency and by developing a modern studio for content sold to HBO and European television.<\/p>\n
Vice is believed to be moving to annual revenues of $500 million based on that, “its valuation seems justifiable,” Doctor said.<\/p>\n
Vice is perhaps the most prominent of the digital-only news outlets which have been emerging in recent years, along with groups like the Huffington Post, and BuzzFeed, which last month raised $50 million at a valuation of $850 million.<\/p>\n
According to a Pew Research Center study released in March, online news ventures have added nearly 5,000 US media jobs in the past few years, while most traditional news organizations have struggled.<\/p>\n
Amy Mitchell, director of journalism research for Pew, said operations like Vice and BuzzFeed have grown “by marrying technology expertise and journalistic expertise in a way that hasn’t happened before.”<\/p>\n
And she noted that the digital outlets “are thinking about news and information in an international way,” which broadens<\/p>\n
But Mitchell said digital-only news outlets are still a relatively small slice of the US media landscape, with the newspaper sector still employing some 38,000 people even after years of deep cuts.<\/p>\n
While the trajectory is moving in favor of digital, Mitchel said it’s yet clear if these operations can be profitable, since most of the money is coming from capital investments.<\/p>\n
“There’s no clear evidence at this point of a new kind of revenue model to support these news operations purely from the news they are producing,” she said.<\/p>\n
BuzzFeed is now $50 million richer<\/a><\/strong><\/p>\n BuzzFeed raises millions in capital<\/a><\/strong><\/p>\n New York Times is not for sale: publisher<\/a><\/strong><\/p>\n