February 16, 2021

Does Content Equal Media Company?

It has become common to assign the label of “media company” to any company that creates content.

This argument has popped up again in the past few weeks with the news that Andreesen Horowitz, a VC firm that is often referred to as a16z, would be creating a lot more content. In a blog post, Margit Wenmachers, an operating partner, wrote:

So we are doing just that: we are building a new and separate media property about the future that makes sense of technology, innovation, and where things are going — and now, we’re expanding and opening up our platform to do this on a much bigger scale. We want to be the go-to place for understanding and building the future, for anyone who is building, making, or curious about tech.

As you can imagine, some in the media were incredibly uncomfortable with this. In their minds, this was a16z bypassing the gatekeepers of the press and going direct to consumers.

I certainly understand why people feel this way, but I also find the argument to be underwhelming and also a little disappointing. But it helps to understand where it’s coming from to then understand why this reaction is happening.

For much of the history of digital media and the tech industry, there has been a relationship of access. The early tech blogs wrote articles on every single press release and product feature ever. I spoke with one editor who used to work at TechCrunch and he referred to themselves as “kingmakers.” Between the events and publication on the site, he was pretty confident he knew which companies would go on to raise boatloads of money.

But we have to consider why these major publications existed to begin with. There was no easy way for companies to go directly to their customer. Social networks were smaller. The way to find the right audience was to pitch stories to journalists. Is it any wonder that there are more PR professionals than there are journalists? Companies became so hungry for press because that could be the difference between raising a massive round or not.

In 2021, that’s not the case. For the average product launch, the company doesn’t have to rely exclusively on the media to get the message out. People are building massive Twitter followings and pushing information directly to their potential customers. There hasn’t been a democratization of media; there has simply been a democratization of communication. The same thing that happened to media from print to digital is now happening with communication from the few to the many.

The thing is… this isn’t an original thought. According to the Content Marketing Institute:

Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience — and, ultimately, to drive profitable customer action.

Doesn’t that sound familiar to you? When I read that a16z wants to be the “go-to place for understanding and building the future, for anyone who is building, making, or curious about tech,” I assume their goal is for people who want to build innovative tech to think of them first. It’s a competitive world we live in and being the first brand someone thinks about is powerful.

We shouldn’t expect this trend to slow down either. Everyone wants to control their message. That’s human nature (see: PR above). And to be clear, it’s not just VC. In a story about esports, Digiday reported:

“Gaming teams are very similar to digital media companies at the end of the day in the sense that the content generated by one of our professional gamers or influencers isn’t dissimilar to how Vice or Bustle work,” said Rohit Gupta, co-founder and chief product officer at esports organization Andbox. “We’re all content businesses. We’re looking at what those companies do to innovate when it comes to customer acquisition as well as retention.”

Faze Clan recently hired NFL executive Bill McCullough, as its executive vp of content to oversee a slate of original content, for example. A steady, consistent stream of carefully-crafted content greatly increases the odds of a breakout hit. And that in turn keeps people coming back to Faze Clan’s channels to watch more. That engagement drives pricing power for these organizations, from throttling acquisition costs to boosting average revenue per customer. In other words, the value isn’t just in the brand, it’s in frequency and quality of content too. 

I think about the same thing every day as well. How can I decrease my acquisition costs while increasing my ARPU? In the case of esports companies, the byproduct of their competitions is a ton of content. They could let someone else profit off that—such as an ESPN if it hadn’t recently shut down its esports product—or they can own the content distribution themselves.

Each company has its way of paying for the content. In the case of esports, it’ll be advertising and merchandising across other platforms. For a16z, it’ll be management fees. A couple of percentage points of a billion dollars is a lot of money and can pay for a ton of content. If deal flow increases for a16z because of content creation, it’ll be able to raise more money, which in turn generates more fees.

Sounds like the media flywheel, right? It will create content, build an audience (get deal flow), and then monetize that (earn fees) so it can then invest in creating more content.

Like I said… we’re all media companies at the end of the day.

What traditional media is going to have to accept is the simple fact that we are no longer gatekeepers. We are not the ones that get to decide who wins and loses. We’re not king or queenmakers. Those days of power are long gone.

But that’s fine. The world doesn’t need more PR. The world doesn’t need any more “this product just launched” articles without further reporting. It doesn’t help anyone and is honestly the same type of derivative content I refer to pretty regularly.

Here’s what the world actually needs. We need the context of why a product launch matters. We need dots connected as to why a specific story has significance for an industry. We need to hear from more sources than just the founder of a company. That takes time. We’re going to get scooped by the companies that go directly to the consumer.

None of that matters, though. If we are doing the work and going deeper for our audience, they will still show up and read the original reporting. There may be attempts at disintermediating the press, but I’m honestly not worried. The job just changes. We’ll adapt.