Some members of Old Media may be going through some tough times, but those who say that Old Media doesn't "get it" and is dying should take note of what's happening. Old Media is buying New Media.
Last week came news of another acquisition; Guardian Media picked up ContentNext, owner of the popular technology and media business blog PaidContent.org, for around $30m, according to Reuters. According to a mediabistro.com source, ContentNext had revenues of "a few million" in 2007.
In his comments on the acquisition, ContentNext founder Rafat Ali, himself a former journalist, stated:
"We were planning another round of funding and were not out shopping the company but when Guardian approached us, all the pegs fit into the right holes: a company that will help us scale, add to our existing portfolio of products, and most importantly, help keep 'Our Essence of Being' intact.
"For our team, the biggest consideration was working with a media company known for its journalistic integrity, its long-term view of businesses — and its international outlook in editorial coverage as well as business."
Note the similarity to the statements of Ken Fisher, founder of Ars Technica:
"Once we realized that an acquisition would be the quickest way to accelerate the growth of Ars, the question turned to who the best possible partner could be. Respect for our community and our stewardship of the website was of utmost importance, and Condé Nast could offer both.
"Just as important, Condé Nast is privately owned, unquestionably strong, and has a very solid reputation for respecting and fostering talent. We wanted to be somewhere corporate leadership would 'get it,' somewhere the next fiscal quarter isn't more important than the long term, and somewhere with a proven track record of fostering smaller businesses."
In a post just over a year ago, I predicted:
"Just as I think that Silicon Valley and Hollywood will end up looking more like partners as opposed to foes, I think the world of the mainstream press will eventually come into contact with the world of citizen journalism.
"And of course, when this happens, a funny thing will take place: the best citizen journalists will become the professional journalists that so many of us take pleasure in marginalizing today."
While my post was geared more towards a discussion of individual journalists, the increasing number of acquisitions of upstarts like ContentNext and Ars Technica demonstrates that the dynamic I wrote of is indeed becoming a reality.
I would note the following:
- While some members of Old Media are struggling (particularly newspapers), the strongest members still have cash. And the eight figure amounts paid to acquire ContentNext and Ars Technica are still fairly small relatively speaking, even if the multiples being paid reflect a hefty premium to revenues.
- Upstarts like ContentNext and Ars Technica recognize that the resources entities like Guardian Media and Condé Nast bring to the table have significant value and can enable them to take their businesses to the "next level."
In his post about ContentNext's acquisition, TechCrunch's Michael Arrington commented:
"It’s getting kind of lonely out here as an independent blogging startup."
Interestingly, several months ago, Arrington outlined his vision for a roll-up of popular technology blogs that would create a "CNET-killer":
In conclusion, Arrington warned other A-list bloggers:
"Someone needs to pony up a big round of financing around an existing blog, or perhaps a new entity, and then start rolling them up into a big fat CNET crushing $200 million/year in revenue business.
"It can happen. In fact it’s almost certainly going to happen. But if you bloggers go out there and raise $3 -$5 million on say a $10 million valuation, you’ve just priced yourself out of the rollup. That option will be closed to you, and you’ll be stuck out in the cold, taking life support payments from Federated Media or another ad network, and having a generally awful time running your business.
"What I’d like to see, and even be a part of, is the blogger equivalent to the 1992 U.S. Mens Basketball Dream Team. That team could take CNET apart in a year, hire the best of the survivors there, and then move on to bigger prey."
"So think twice before taking that venture money, guys. You may be shutting more doors of opportunity than you realize."
Of course, Arrington's CNET-killer hasn't materialized, even though Silicon Alley Insider's Henry Blodget, for instance, essentially (jokingly?) told Arrington to "show me the money".
Since that time, Ars Technica and ContentNext have been snapped up by the Old Media Arrington hates, highlighting the fact that "money talks, BS walks."
Old Media ponied up the money and when given the ability to retain editorial control and tap into their acquirer's resources, the founders of Ars Technica and ContentNext found no reason to raise capital from investors or to merge with some hypothetical CNET-killer.
Clearly, Old Media "gets it" just a little more than some give it credit for and I expect that it will continue to find willing sellers in the world of New Media. In fact, I wouldn't be entirely surprised if TechCrunch's Arrington eventually earns his fortune through an Old Media acquisition.
At the end of the day, if there's a lesson for those in New Media who think they're in a life-and-death fight with Old Media, it is this: Even if you think your opponent is hurt, you can lose the fight when you get careless and your opponent still packs a bigger punch than you.