Is The Media Business Just One Big Arbitrage?

A year ago, I wrote a piece asking, “are the most successful media companies just good at arbitrage?” And in it, I argued that the non-content creation side of media is just one big math problem. If you can acquire a user for $1 and earn more from that user than it costs, then it makes sense to invest the $1.

Why wouldn’t you? It’s the closest thing to making money appear out of nowhere. But as I argued in the piece, there was a wrong and right way to do it: