Whoa, this makes sense now that I've read it:

Look at the major venture-backed content websites of the last decade. How many of them have truly “failed” after receiving meaningful venture investment?

There are the three that have sold for nine-figure exits — DailyCandy, Bleacher Report, and Huffington Post. Then there are the many that are almost certain to sell for nine-figures one day — BuzzFeed, PopSugar, Vox Media, Refinery29, Curbed, Mashable, Gawker, BusinessInsider, Thrillist, etc.

And what else do you notice about the dozen companies that I just mentioned above? They are all experiencing record traffic and revenue. Every single one. Not one of those sites has ever seen better days.

That’s the amazing thing about content companies. They don’t really disappear. In fact, even when they have a “bad year,” they still usually grow.

And even the ones that don’t achieve big nine-figure exits can still have great returns on relatively small capital investments. My cousin’s company, College Humor, experienced a terrific eight-figure exit after raising exactly zero dollars in venture capital. Same with TechCrunch.

While it’s true that many VCs hesitate to invest in unlaunched or very small content websites, the ones that have any modicum of critical mass have performed really well. It is unlikely to yield at 100-times return, but a 10-15-times return is very real.

And, let’s face it, if you asked ten VC’s to choose between a high-probability 15x return or a long-shot 100x return, they will all tell you that they prefer the latter — but everyone knows that they are lying. Including them.

Bryan Goldberg says the business model is simple. Content companies can make money via e-commerce and advertising alone without having to reinvent the wheel.

Bryan Goldberg adds that Content plays have less systemic risks:

Did you hear about the Evernote hacking, that has caused massive damage to the company’s relationship with users? Does Dropbox need to employ innumerable security whizzes in order to prevent more bad press about account breaches?

How often do you hear about credit card numbers being stolen?

It’s a good thing that content websites don’t have to worry about that crap. Most of us just tell you to log in via Facebook, and we don’t even know how to collect your credit card information.

And you don’t even need a team of 20 engineers to run a content company, even one worth hundreds of millions. I plan to launch my next startup with two engineers, and it may stay that way for quite some time.

The only real risk that I can think of is some sort of lawsuit or libel accusation, but the good news is that the United States Government has seen fit to, well, basically ignore that libel exists.

It really makes me wonder why there aren't more Content businesses.

Again, it makes sense that the Content space has room for many victors:

There could be only one great social network for you and your friends — and so Facebook ate MySpace, Friendster, High5, etc.

The world only needs one micro-blogging platform, so don’t even try to encroach on Twitter’s turf.

But there is plenty of room for multiple victors in the content space. Even within the same content verticals. Heck, look how Bleacher Report and SBNation co-existed for years. I never cheer for my competitors, but they will probably have a nice lucrative exit one of these days, and we co-existed the whole time.

That’s the thing about content companies… there is so much pie to eat.

And with the decline of the publishing world, and the implosion of companies like Conde Nast and every newspaper company known to man, we’re all taking share.

Users like going to multiple websites. That’s why Gawker and Jezebel both thrive within the same ownership portfolio. And even a slightly different editorial voice can make a site viable amongst its competitors. Think about how Refinery29 has carved a large following even amongst Vogue, InStyle, etc.

This is actually making me very enthusiastic about Content, the more I think about it!

This article reminds me of Michael Arrington's thought piece of 4 years ago:

http://techcrunch.com/2009/07/30/what-if-the-new-new-york-times/

He discusses the implications if New York Times were to go completely online.

Three reasons why VCs don't like content businesses:

http://techcrunch.com/2012/10/21/vcs-dont-like-content-here-are-three-reasons-why/

100% agree.  The critical question is not whether a VC likes the business.  It's whether a content business is a savvy investment of founder time and effort.  Many businesses can become great attractors of customers and ultimately great exits for founders, without checking the boxes that VCs would care about.  The argument here, that content companies can be relatively lower risk, lower capital requirement, with a straightforward path to monetization, is one I find compelling.  A great outcome potentially for founders who execute.  As an investor, I'd have a hard time touching a pure content company with a 10' pole!  :)  

Well said, Jay.

This part of the TechCrunch article really resonated with me:

The venture business is about scale and speed. Pinterest reached 11.7 million monthly uniques in nine months. This sort of growth has changed the game (Chris Dixon does a great job explaining how).

For content businesses, your core asset is your content and the experience you build around it. Content is expensive to produce (unlike Reddit, your users aren’t doing it for free!) and requires a lot of infrastructure at scale (WordPress can only take you so far). YouTube recently began investing $100 million into original, exclusive content. Netflix, Hulu, and others are doing the same.

The content companies that have scaled the most quickly are hits-driven (Angry Birds). But hits are tough to predict and expensive to manufacture – just look at the increasingly formulaic but mediocre movies that Hollywood’s been putting out.