In last week’s newsletter, we explored the relationship between digital media and venture capital using Big Cabal Media as our anchor.
An interesting conversation followed, and a comment from Jaco Maritz, the Publisher of How We Made It In Africa, a pan-African business publication, stood out. He said, “Personally, I’m not crazy about business models that require media companies to get involved in other things to fund journalism. Makes it very complicated… There is obviously a limit to the size a subscription-only publication can reach. But as long as it is profitable, I think it is okay.”
So, for today’s discussion, we’d like to hear your thoughts. Do you think digital media companies, especially those in the news business, should be raising venture capital?
Well, firstly, I think the media business, like every aspect of the work economy, has evolved in more ways than one. Almost every kind of business (involving technology) is raising venture capital these days. So why shouldn't the news industry?
Secondly, the very essence of venture capital is to provide financing for emerging companies with high growth potential. This means that media companies can and should raise venture capital as well.
In fact, the nature of the media business makes income generation very difficult, especially at the start-up phase. If any growth is to be made, funding from venture capitalists is perhaps the surest way.
So, yes, digital media companies should raise venture capital.
Most media companies, particularly news media, CAN’T raise venture capital. They can’t demonstrate the kind of returns VCs need to get excited and struggle to attract the talent to pull of their projections. But if as a media company you’re ready to “grow or die”, then why not.
But if it was me I'd rather not take any VC money. I have consumed a lot of media related stuff last years. like A LOT. I am an avid reader of yours along with Simon Owens's, A Media Operator, Medialyte and the Rebooting among many others.
I read almost every single issue they sent to me.
So my proposal for African media based on +1500 articles on media business is this recipe:
1. The ads are not pure evil. In fact, you can do them with subscription and sponsorship in many ways. I know well the evil side of ads, because I am also an avid reader of the Ad tech roaster Bob -the ad industry is a scam- Hoffman. So I know the cons of ads but still. You can do good advertising as a media business.
2. Diversify your income streams and keep each one below 20% of your total revenue. The 20% to minimize the risk of depending on one revenue stream.
3. Make your revenue streams more than three. The more you have the better. Why? Because «Full-time creators have an average of 2.7 income streams, which is more than part-timers or hobbyists»*
3. Make room for experimenting, try eCommerce, improvise, make partnerships, break them, try prints, make microSaaSs, abandon them, try the idea of Mark Stenberg that called MAP**
4. Read The 7 Deadly Sins of Digital Media part I and II*** (Yes, I am subscriber there too) and avoid them.
I think that we are the African (I am from Algeria) can launch successful media businesses in Africa. Without VC dough.
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* according the state of the creator economy 2022 p. 52, by ConvertKit.
Yes it a report about creators not media business but both media and creator are in the creator economy.
Firstly I really thought you had dropped another newsletter 😓. But to answer you question I think yes media businesses should be raising venture capital but my issue is from who. I think media affects all of us and who they are raising funds from can easily sway public as we see with Bezos and the NY times being the owner.
I know it doesn’t equate but raising venture capital comes with its own politics that I don’t believe should be there.
I think companies should raise venture capital but they need to perform due diligence in make sure who ever gives the money understand the media stance and ideals.
Money is needed for growth but growth needs to happen in the right direction.
Well, firstly, I think the media business, like every aspect of the work economy, has evolved in more ways than one. Almost every kind of business (involving technology) is raising venture capital these days. So why shouldn't the news industry?
Secondly, the very essence of venture capital is to provide financing for emerging companies with high growth potential. This means that media companies can and should raise venture capital as well.
In fact, the nature of the media business makes income generation very difficult, especially at the start-up phase. If any growth is to be made, funding from venture capitalists is perhaps the surest way.
So, yes, digital media companies should raise venture capital.
Most media companies, particularly news media, CAN’T raise venture capital. They can’t demonstrate the kind of returns VCs need to get excited and struggle to attract the talent to pull of their projections. But if as a media company you’re ready to “grow or die”, then why not.
IMO it's not a yes or no question.
But if it was me I'd rather not take any VC money. I have consumed a lot of media related stuff last years. like A LOT. I am an avid reader of yours along with Simon Owens's, A Media Operator, Medialyte and the Rebooting among many others.
I read almost every single issue they sent to me.
So my proposal for African media based on +1500 articles on media business is this recipe:
1. The ads are not pure evil. In fact, you can do them with subscription and sponsorship in many ways. I know well the evil side of ads, because I am also an avid reader of the Ad tech roaster Bob -the ad industry is a scam- Hoffman. So I know the cons of ads but still. You can do good advertising as a media business.
2. Diversify your income streams and keep each one below 20% of your total revenue. The 20% to minimize the risk of depending on one revenue stream.
3. Make your revenue streams more than three. The more you have the better. Why? Because «Full-time creators have an average of 2.7 income streams, which is more than part-timers or hobbyists»*
3. Make room for experimenting, try eCommerce, improvise, make partnerships, break them, try prints, make microSaaSs, abandon them, try the idea of Mark Stenberg that called MAP**
4. Read The 7 Deadly Sins of Digital Media part I and II*** (Yes, I am subscriber there too) and avoid them.
I think that we are the African (I am from Algeria) can launch successful media businesses in Africa. Without VC dough.
------
* according the state of the creator economy 2022 p. 52, by ConvertKit.
Yes it a report about creators not media business but both media and creator are in the creator economy.
**https://medialyte.xyz/map-monthly-access-payment/
***http://createsend.com/t/y-01275C955FC390262540EF23F30FEDED
Firstly I really thought you had dropped another newsletter 😓. But to answer you question I think yes media businesses should be raising venture capital but my issue is from who. I think media affects all of us and who they are raising funds from can easily sway public as we see with Bezos and the NY times being the owner.
I know it doesn’t equate but raising venture capital comes with its own politics that I don’t believe should be there.
I think companies should raise venture capital but they need to perform due diligence in make sure who ever gives the money understand the media stance and ideals.
Money is needed for growth but growth needs to happen in the right direction.
Sorry about the long take