Vice Media Group, the youth-focused digital publisher that was once valued at almost $6 billion, is now being sold for just $225 million.
It has filed for bankruptcy, but it will continue to operate during the process and is expected to emerge as a financially healthy and stronger company in two to three months.
Vice was launched in 1994 as a magazine called Voice of Montreal by Shane Smith, Gavin McInnes, and Suroosh Alvi.
It has since expanded to more than 30 countries and was once considered part of a vanguard of companies that would disrupt traditional media by offering edgy, youth-focused content across various platforms.
However, the company has struggled to turn a profit, and its revenue has been flat for several years.
Its plans to go public through a merger have also failed.
Vice’s investors include Fortress Investment Group, Monroe Capital, and Soros Fund Management.
So, what went wrong?
According to Joseph Teasdale, head of technology at Enders Analysis, Vice and similar websites never worked out a business model for free online journalism.
They came along during the first dotcom boom when there was a tendency to treat everything like software.
But it turns out that content doesn’t work like that. If you want people to keep coming back to your website or reach new people in new markets, you have to keep spending to make new content.
And Vice’s content was “pretty expensive journalism” involving global trips.
Some of its past credits include My Journey Inside the Islamic State and a documentary about Ukraine’s president, Volodymyr Zelensky, by actor Sean Penn.
Last month, Vice announced layoffs after its flagship TV program was shut down.
BuzzFeed, another online platform, also recently announced that it was shutting down its news division and laying off 15% of its workforce.
In short, the lesson here is that creating content that people will love and engage with is not enough.
To be successful, you need to have a solid business model that allows you to monetize that content and make a profit.
Otherwise, you might end up like Vice, selling for a fraction of what you were once worth.
But, on the bright side, at least you won’t have to worry about being valued at $5.7 billion and then selling for $225 million.
That’s a drop in value that even the crypto bros would be jealous of!
Source: BBC News
