Billion-dollar-plus Vice is the new patron saint of content companies

By Sarah Lacy , written on August 16, 2013

From The News Desk

Last spring we held a CEO Supper Club in LA where we featured several loud mouthed would-be media moguls. I always end these dinners by asking what company you'd like to run if you didn't run your own. Jason Hirschhorn gave an answer after any content CEO's heart: Vice.

Vice isn't a new company, but it's relatively newly sexy given a big push over the last five years to go beyond its magazine roots. When news just broke that it has sold a 5% stake to 21st Century Fox at a deal valuing the company at $1.4 billion, I didn't see the usual hating that you see when a media entrepreneur gets some cash -- at least not in my Twitter stream. I saw a lot of high fives all over the place. Because Vice is the company that's executing the playbook that so many diverse content companies also want to run. Even companies as diverse as Buzzfeed, NSFWCORP., and us. And since Vice started life as a magazine, it may well too become the patron saint for old media niche publications looking at the best way to embrace the Web.

Vice speaks to a demographic that doesn't read traditional news. Vice does smart projects to extend its very new media brand into very traditional channels like its HBO show. Most of all Vice invests heavily in editorial. And it doesn't chase stories everyone else is doing for SEO juice. It does stories that would normally go unreported. It makes us care about a story, rather than pandering to readers by giving them the easy story they think they want. And it makes the bulk of its money from video-- something that's brutally hard to produce and monetize for most Web media companies.

In short: Vice defines its own rules for content, makes existing distribution channels work with it, and leads its audience rather than chasing it. This isn't always pretty. Sometimes Vice is rightly accused of veering on gonzo-douche. Not everyone thought Dennis Rodman chilling in North Korea was great journalism or even in good taste. Vice has also been criticized for heavy product placement-- something a lot of news outlets will have to navigate in this native ad world. After a recent uproar of a photo spread of female literary icon suicides, they even had to apologize.

But these are all thorny areas that nearly everyone in new media is navigating as well. The fact that Vice is finding its way to a monster valuation amid them, if anything makes it more relatable.

It's the new media success story we've been waiting for. Other journalistically-minded organizations who don't want to take the easy way out or go for a mass audience can now point to a $1 billion+ valuation who didn't either.

This way the deal was struck is just as important to why we should all admire and root for Vice: As co-founder Shane Smith told the Financial Times, he knows he needs global distribution beyond just YouTube and the Web, but he found a way to get it without selling the company the way MTV and CNN did.

That's awesome. At some point Web media brands have to stop selling if we're going to have a next Fortune, MTV, or CNN.

I've long argued that new media has failed in large part because while the Web has brutally disrupted the economics of television and publishing, we haven't replaced any of those 100-year-old brands with new ones. A handful of media companies have crept into the value range of hundreds of millions of dollars-- just a few.

The Web has so far decimated more media value than its created, sort of like open source software in the early part of the 2000s. Many of the ones who had the best odds at it have already sold, because it's a long and incredibly difficult slog to do it well. Web-only, lowest common denominator, page view based models can only get so big. And that's one reason investment in the sector is comparatively low.

The Vice boost may be the watershed moment content companies need to prove you can still build a $1 billion company doing unexpected, expensive journalism-- and the permission investors need to fund those efforts.

I certainly don't love everything they do but, still: Go, Vice.