Vice, the media company once valued at $5.7 billion dollars, might be headed for bankruptcy, according to multiple reports. The company once vowed to be a disruptor to the media industry, but could not figure out a way to turn a profit.
Washington Post media reporter Elahe Izadi says digital media organizations made the following claims early on, "We are the future of media. We can attract millennials, younger audiences, newspapers are dying, print is dying, and this is really the future and they sold this promise, and as we can see, they couldn't grow fast enough to make up for those promises, especially when we're now in an economic environment where the advertising industry and the and the advertising revenue has dropped off."
Its potential downfall underscores the tough environment facing digital media companies as they struggle to cut spending during economic uncertainty.
"When we're talking digital media... during the pandemic and especially at the start, we actually saw audience spike, there was a lot of online interest, reader interest saw a lot of that happening, but that didn't necessarily mean an increase in revenues," Elahe Izadi said.
In an interview with Yahoo Finance's Rachelle Akuffo, Izadi also says that in the case of companies relying on other companies like those who rely on Google (GOOGL) and Meta Platforms (META), their businesses can also be susceptible to disruptions from something like a changed algorithm.
Vice's origins 00:00:14
Digital media's early promises 00:00:45
Digital media outlook 00:01:53
ELAHE IZADI: Vice Media raised billions of dollars. At one point in 2017, it was valued at $5.7 billion. It came out in an era-- you know, it started out as a magazine based in Montreal with a sort of punk sensibility. It grew into this multimedia company that attracted billions in investment.
At one point, Disney and Fox reportedly both explored buying the company. They invested hundreds of millions of dollars in there. And it grew into not just having its own TV network, its having its own film studio, but also producing Emmy award-winning documentaries and series. And it really ballooned into much more than just this magazine.
And it came out in this era in the 2010s, we could look at this time in digital media, one in which there were a lot of hot media companies that did raise lots of money. There was lots of interest. And they promised, essentially, that, look, we are the future. We are the future of media. We can attract millennials, younger audiences. Newspapers are dying. Print is dying. And this is really the future.
And they sold this promise. And as we can see, they couldn't grow fast enough to make up for those promises, especially when we're now in an economic environment where the advertising industry and the advertising revenue has dropped off. And also, these companies sort of banking on these other companies, like Google and Facebook, and an algorithm can change, and that can totally disrupt your business model.
RACHELLE AKUFFO: I mean, when you think of just how much media has changed even over the COVID years, the things that we didn't think were possible, I mean, you also have changing viewer behaviors with more streaming, and you mentioned reduced ad spend here, higher cost with inflation. Do you think, was there a particular inflection point when it comes to digital media, or was this sort of the bearish signals were already flashing?
ELAHE IZADI: You know, I think they were already flashing, but the pandemic certainly accelerated a lot of trends in media that were already there. I mean, the same thing happened with print and newspapers. But when we're talking digital media, you know, it was very fascinating to me because actually during the pandemic, and especially at the start, we actually saw audience spike.
There was a lot of online interest, reader interest. We saw a lot of that happening. But that didn't necessarily mean an increase in revenues. And then over time, audience dropped off. And so that was a dynamic that played out.
And in addition to the bigger economic issues at play, we saw rounds and rounds of buyouts and layoffs. Vice Media has gone through many layoffs, in addition to just recently closing and shuttering its news program, Viceland. And so even though Vice and other media organizations may have been producing award-winning journalism, hard-hitting journalism-- Vice was known for sort of going into conflict zones, covering human rights abuses, also kind of taking on a gonzo approach, journalism approach-- even if your product is really good, that doesn't necessarily mean that the business model is there.
And just stepping back, since 2005, that's the peak of print revenue, of ad revenue. And ever since then, media across the board, journalism industry, has been struggling to figure out a viable business model. Is it dependent on ad revenue? Is it dependent on subscribers? Is it a mix? Do you have sponsorships? And that's really what we're seeing playing out over the last few decades, but particularly the last couple of years.