Is VICE Media the ‘Members Only’ Jacket of the Media Industry?
History has shown that being the hottest company around does not guarantee a viable future.
Those of us of a certain age vividly remember Members Only. One day no one had heard of it, and the next day everyone — and I mean everyone — was wearing the jacket. However, Members Only did not actually come out of nowhere. The company (founded in 1975) was around for nearly a decade before an unpredictable chain of events caused it to become hot in the mid 80s. Then, just as quickly as it exploded, it died down. In no time, wearing Members Only was a sure way to tell the world you were out of touch and behind the times.
VICE Media runs the very real risk of following the exact same trajectory.
Like Members Only, VICE has been around for a while — since 1994 to be exact. For many years it languished in obscurity. An occasional article or series would give it a little visibility beyond the clubby world of the media industry. But in the last 2–3 years VICE has exploded. It seems like there is hardly a corner of the world or a sensational story that has not been touched by a VICE reporter. One would struggle to find a Twitter feed or a Facebook wall that is not littered with shared VICE articles and videos.
Most telling is how much VICE has become the main topic of discussion inside Old Media executive offices and boardrooms. As someone who works with print, TV, and online media executives, I hear the word VICE used on a daily basis. Common uses of the word VICE include:
“Why can’t our editors exhibit more of an edgy VICE-style voice?”
“I wish our Sales team could master native advertising the way VICE has.”
“If we opened an office in Williamsburg, Brooklyn would we be able to recruit fresh young VICE-like talent?”
“We can’t reach the VICE audience because nobody on our management team has the magnetism and charisma of Shane Smith.”
VICE is serious.
They are hungry, fierce, and on the attack.
However, the question nobody seems to be asking is whether VICE’s position is sustainable. Will they continue to grow and threaten struggling Big Media companies or will they implode and fade away like Members Only?
VICE has a few things working against it. First, its core demographic is getting older. Much of VICE’s rise is attributable to an uncanny ability to capture the attention of Millennials. There is probably no company on earth better than VICE at reaching this seemingly unreachable demographic. However, Millennials are getting older. Will they still want to munch on the Twinkie and Fritos diet of VICE content when they acquire a taste for Fois Gras? Millennials won’t wake up one day and simply decide they would rather read the commodities report in the Financial Times than watch a video of a rock band made up of heroin-addicted skateboard punks from Somalia. This transition will take place as they get jobs, get married and get on with their lives.
It is believed that Winston Churchill once said, “If you are not a liberal at 25, you have no heart. If you are not a conservative at 35, you have no brain.” VICE is a business that is all about nourishing the young heart. It is not equipped to satisfy a critical, well-informed, mature brain. Its content, however heartwarming, does not meet the needs of someone who wants to truly understand the implications and nuances of a serious news story.
Furthermore, the VICE business model is not very defensible. Sure, they have built a loyal and highly engaged audience. However, they do not possess a secret formula that cannot be replicated (or at the very least simulated). They are competing against media companies that have deep pockets, massive scale, huge infrastructure, and expansive reach and distribution. Most concerning is their reliance on advertising as a primary revenue source and social traffic as a primary audience source.
While these media companies are largely on their heels, VICE cannot expect them to stay quiet. Nor can VICE maintain the hubris that they are insulated from Old Media attacks. No matter how loudly Shane Smith calls the competition (any competition) “a bunch of bitches”, he must accept that these “bitches” fight hard.
Millennials are not an alien race understood only by the young Aquavit-sipping employees who occupy VICE’s funky Williamsburg offices. While it has taken a while, most companies in media (and other industries) have started to become very effective at reaching and connecting with this very fickle audience. VICE does not have a monopoly on talent, resources or even ideas. While VICE is much more than a one trick pony — the industry has figured out most of the tricks.
VICE will learn that there are just two types of companies in the world — Attackers and Defenders. Attackers are the scrappy, hungry new entrants seeking to disrupt the industry, take market share, and battle the establishment. Twenty years ago, MTV was an attacker. Ten years ago, Google was an attacker. Today, they are defenders, fending off new entrants and small startups trying to nibble away at their business. The goal of nearly every attacker is to one day become the defender. Some companies thrive as defenders (Apple), while others struggle (Microsoft).
VICE has unquestionably been the attacker and has inflicted some serious damage onto established media companies. However, due to its scale, audience size and deep pockets, VICE is transitioning into becoming a defender. As that transition happens the new attack will not only come from young media startups but also from well-funded and extremely powerful established media conglomerates. Perhaps the biggest threat may simply be complacency and arrogance. Does VICE have the resources, skills and experience to thrive as a defender?
The war just started, and the outcome is not decided. However, VICE should prepare itself to take casualties.
It’s not yet clear how VICE will respond to the attacks and fight the war. The successful formula that got it to where it is today will need to be tweaked or possibly changed entirely. VICE’s investors have placed a lot of faith in its management team — a management team that curiously lacks anyone with any meaningful business experience. The team’s lack of experience and knowledge has served them well as attackers. It freed them of constraints and allowed them to make bold decisions. As VICE becomes a defender, it will need to expand its leadership team to include some experienced leaders who understand more than just the creative side of building a media company. Unfortunately, they will likely end up with media industry dinosaurs who will try to inject 1980’s media business models.
Ultimately, the future of VICE will likely rest less on the strength of its exceptional editorial content and more on its ability to expand into new business models. What are the ways VICE can convert this unique relationship with millennials into new businesses? Can Vice limit its exposure to a decaying advertising business model?
A positive sign was their launch of Carrot Creative — a digital ad agency focused on millennials. However, launching an agency is not a radical idea. In fact, Old Media has been in the agency business for years. An ad agency is merely table stakes… it’s not a defensible growth strategy.
What are other business models VICE may want to explore? Should VICE launch a travel business to target millennials who want to visit the exotic locations from which VICE reports? Should VICE launch a food delivery business to feed the kids who regularly enjoy the Munchies channel? Can VICE’s Motherboard create a tech event that puts Disrupt or SXSW to shame? There are countless ideas worth exploring, but doing so productively requires a blend of fresh creativity and business rigor. Most importantly, these explorations need to be done as part of a comprehensive and well-grounded strategy… not “flavor of the month” experiments.
To be clear — what Shane Smith has accomplished is very impressive. Beneath all the tattoos is a ruthless and brilliant leader who has done a masterful job of getting VICE to where it is today. Frankly, I would love to see Shane be the CEO of a few Old Media companies I know — he would certainly make an impact (hopefully a positive impact). However, the sustainability of VICE cannot rest on Shane’s shoulders alone. He needs to diversify his organization and its business models. For VICE to avoid becoming a one-trick pony, Shane has to get into the media equivalent of the racehorse breeding business.
Twenty years ago, the companies that we now call “Old Media” were in the same position as VICE.
They were flying high and could do no wrong. MTV was the voice of its generation, Fox was the fourth network in a three-network world, Wired was the future of the magazine industry, AOL was the forebearer of media convergence, and Sirius re-imagined the radio industry. While these companies all exist today (some reasonably successfully) they failed to maintain their meteoric trajectories. Most disappointing is that they failed to fully capitalize on the countless opportunities that were available to them. Ultimately, they did not evolve quickly enough, they stopped being sufficiently aggressive, and eventually became content with operating their businesses in “survival mode”.
Rather than ignoring or dismissing Old Media, VICE should learn from it. VICE should adapt, evolve, and continually transform… or one day it too will be referred to as Old Media (or possibly Dead Media).
The decline of Members Only was rapid and brutal. The company literally fell off the face of the earth. VICE is currently looking down from the very top of the mountain. It’s a long way down and the drop can be painful and possibly deadly. Rather than building a fort at the top of the mountain, VICE needs to aggressively look for new peaks to conquer.
