Is Vox Media's Curbed acquisition a death knock for portals?
Vox Media is about to acquire Curbed Network for about $25 million, and almost overnight it will go from owning three media properties to owning six. However, while appearances suggest Vox is using much of its recent $34 million Series D funding round to go wide, it is actually going deep.
The Curbed acquisition underscores Vox’s belief that giant all-encompassing portals are the old way of doing new media, and that the real power, and ad dollars, lies in big consumer verticals.
Now to its tech (The Verge), sports (SB Nation), and gaming (Polygon) verticals, Vox can add real estate (Curbed), food (Eater), and fashion (Racked). Rather than unite all the brands under one super banner, though, Vox will instead unite them under Chorus, its state-of-the-art content management system, and its design ethos. The message: This is not Yahoo; this is not AOL; this is not, even, BuzzFeed. It’s more like a digital-only Conde Nast.
The unifying factors in Vox’s vision are technology and design, not a URL or assigned zones within an uber-site where different families of content live. Vox’s audiences are built through community engagement – via its forums, its comments, social media, and its dedication to covering things that people are passionate about in great detail – not through browsing habits or homepages. The theory is that readers who care about, say, consumer technology are more likely to find satisfaction in The Verge than, say, Huffington Post Tech. Vox wants to own the leading category authorities in each vertical.
In Vox’s world, portals are out, and verticals are in.
According to that logic, an acquisitions-led approach to scaling might just work. As evidenced by the fact that Curbed CEO Lockhart Steele will join Vox and continue to look after his sites, this is not a situation in which the acquired entity must subsume its own brand to its new master. More important are shared values. (Important disclosure, by the way: Steele is on PandoDaily’s board of directors.)
“We’re not buying things for the sake of buying things, by any means,” Bankoff said in a phone interview this morning. “Curbed was unique in that we were very much – culturally, business, and all other aspects, team wise – very aligned in our approach, in our values, in our business models. That made this very easy. I don't think there's another company out there that we would be excited about it. This one is the best fit for us.”
Both Curbed and Vox are focused on big consumer categories, creating Web-native storytelling in a high-quality way, and building business models that address the needs of brand advertisers as oppose banners and direct response ads, Bankoff said. The company will invest in growing the reach of the Curbed verticals – the network draws only about 5 million unique monthly visitors a month, according to Fortune, while SB Nation has about 10 times that number just on its own – and adding video with high production values into the mix. Such video is key to attracting big-budget advertising dollars from major brands.
This union also demonstrates another important development in the world of new media: It shows that if you can build journalism brands around defined audiences, there is hope for a long-term lifespan that doesn’t involve a distasteful act such as selling yourself to AOL or Yahoo. Instead, you can join forces with like-minded tech-oriented media startups to not only resist being sucked into the portals but also reject their models. Business Insider and Gawker Media might well be the next to take the leap.
Still, this is not a wild success for Curbed. At a time when investors are starting to push tends of millions into media ventures – or, if you’re Pierre Omidyar, $250 million – this turns out to be middling exit in the $20 million to $30 million range, which is about where TechCrunch fell, too, when it sold to AOL. Under such a deal, the payouts tend to stretch not far beyond the founders and original investors, who in Curbed’s case include Gawker Media owner Nick Denton.
Vox, meanwhile still has a lot to prove, even with its Curbed-boosted media mix. It has now raised more than $57 million in venture capital, which is a lot of money to pay back. As much as it is fuel for expansion, that cash pile could also become a huge burden, especially when you look at its headcount – across the network, for instance, it has more than 400 paid writers. It is far from a lean operation. With on-site video production facilities and expensive-to-produce longform features to pay for, too, it’s easy to see how Vox could quickly burn through another big chunk of money. It also has to fight not just other media brands for ad dollars, but also platforms like Google, Facebook, and Twitter, which hog a disproportionate share of digital ad dollars.
The Curbed additions, too, will require no small investment. Moving them to Vox’s CMS and redesigning the sites means that the company is effective rebuilding the sites’ architecture from scratch. And those things alone will not necessarily grow Curbed’s traffic. Pushing its visitor numbers up from 5 million uniques a month to a number significant enough to capture the attention of major brands is going to take time and lots of money.
The anti-portal approach might turn out to be a winner for Vox. Indeed, by this time last year The Verge was already “very profitable,” according to the company. The question is whether the same economics apply to local real estate and dining as they do to a premium-friendly area such as high-tech gadgetry. For now, that’s a large and potentially very expensive question. How it is ultimately answered will reveal a lot about the future of online media.
[Image via Vox Media]