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The counterculture club
By Tim Bradshaw
Published: November 18 2009 22:35 | Last updated: November 18 2009 22:35
It’s Halloween, and Vice Magazine, a streetwise glossy monthly given away for free in the world’s hippest stores, is throwing a party. Vice throws parties all the time. While media companies around the world limp through another quarter of plummeting advertising revenues and staff cuts, the fact that Vice is blowing $250,000 on a Brooklyn bash for 2,000 readers to celebrate 15 years in print is unusual.
If this seems like a deliberate act of provocation to the rest of the industry, the move would be entirely in character. Yet judged by its output and its income, this former punk newsprint is making a better fist of the transition to international multimedia group than many media organisations. Vice expects to increase revenues across the whole business from $45m in 2008 to $64m in 2009, with earnings before interest, taxation, depreciation and amortisation up from $11.4m to $16.7m.
Every business unit is growing, and this year, profits from VBS, its online video service, and Virtue, its in-house advertising agency, will outstrip those of its magazine, the most mature part of its business, which is expected to increase revenues by a healthy 25 per cent this year by itself.
The Vice empire also includes a record label, book publisher, film studio and even a London pub. It says its magazine distribution network extends to 1.2m people in more than 30 countries. And it has branched out beyond simply creating editorial content into creating advertising material for clients. VBS, for example, is selling its online video productions for advertisers such as Dell, the computer maker, and Vodafone, the mobile telephony group, to mainstream television networks such as Viacom, Time Warner and Sky.
With so many media organisations struggling to cope with the twin challenges of the global downturn and the internet’s role as a disintermediator, it is an impressive record for a magazine that was started in 1994 as a free “zine” in Montreal by three friends who had no publishing experience.
“We didn’t have a business plan or any idea of what we were doing,” says Shane Smith, who co-founded the magazine with Suroosh Alvi and Gavin McInnes. “We just loved magazines and loved making the magazine. And we didn’t have anything else to do, so we kept doing it.”
Vice covers music, fashion and current affairs with a unique, countercultural style and deadpan, sarcastic tone that offends at least as many people as it attracts. The company has always been marked by an anti-establishment approach that has infused its editorial and business approach. Only now, for example, is the company starting to create hierarchies and line managers.
This approach has also meant that they have been confident enough to challenge conventional wisdom and business models. “Anytime we got advice from big publishing people, it was always bad,” says Mr Smith. “We realised these massive companies were just losing money hand over fist.”
But advertisers have been drawn to Vice precisely because of this countercultural attitude combined with its street-style identity, access to the latest trends and influential readership. Indeed, even in the recession, Vice has continued to maintain its premium rates across its range of advertising formats.
“At some point, [we realised] that the kid in Williamsburg listens to the same music as the kid in Shoreditch, Sydney and Stockholm,” says Hosi Simon, general manager of Virtue Worldwide, Vice’s communications and marketing agency.
The company has been careful to nurture this audience by never moving to the newsstand and continues to hand-pick each store that carries copies of its magazine to make sure it reaches the right kind of readers. These are students, hipsters and early adopters, Vice says, with money and influence not just on fashion and culture but broader social issues like the environment and politics.
The company has also been inventive in how it has extended its global reach. When Vice opened offices in Brazil and Mexico, for example, it announced them to the world with nationally themed issues, with the same content translated for every local edition – a cheap source of editorial and great public relations.
But while Vice’s reach is global, it remains targeted at a large niche and advertisers are required to fit with this brand image. For example, it has rejected advertisers, such as footwear giant Sketchers, when they have not fit with its image.
By contrast, one of its biggest long-term clients has been American Apparel, the trendy Los Angeles-based clothing retailer, which buys the back cover on most of its editions. “We’ve been called American Apparel’s Vanity Fair,” says Mr Smith. “There’s a changing of the guard in fashion and a changing of the guard in media. We rode our expansion together.”
Vice believes these relationships distinguish it from, for instance, the ill-fated London freesheets that worked purely on undifferentiated scale.
But Vice is not without its critics. For some media owners, Vice works too closely with advertisers and blurs the lines between the editorial and commercial parts of the business.
“Since day one, we have worked with brands and for brands,” explains an unapologetic Mr Simon. “We are completely transparent in what we do. Never in any of our communications will we find a cheeky way to get one over on our audience. The audience is incredibly sophisticated.”
Having a wide range of options to throw at potential advertisers has also helped it buck the recession.
With Virtue, the business has become a one-stop shop for youth branding. So, at the same time as charging premiums for advertising in its own pages, the company produces video content, photoshoots and other work for less than more established advertising agencies thanks to its network of 4,000 freelance creatives from around the world.
In practice, this means the company is able to leverage almost any opportunity. Don’t want to buy as many pages in the magazine this month? Try sponsoring a special supplement, or take over the homepage at Viceland, the group’s website, instead. And don’t forget about that party at a music festival next month that could use an extra sponsor, which Vice will cover extensively in its next issue. Have you thought about bypassing the advertising slots altogether to make an online film for VBS that shows off your brand? Although most media companies attempt to offer a similar smorgasbord of opportunities, Vice’s willingness to integrate brands directly into its content in a way other media owners would not marks it out.
“Diversification of our media and pushing quality content through it on a global level has played massively for us,” says Mr Alvi. “It’s created a deep engagement with our audience and made a compelling story for brand partners as well, who are signing up platform-wide and doing international buy-ins. It’s a bit better than publishing a magazine in a single territory.”
A key example is Dell, which is working with Virtue to create Motherboard, a new gadget show and channel to be aired on VBS. The show will focus on Dell’s core technology sector, even though it is not in Vice’s core editorial remit. But because the company is able to offer and create “branded content” shows that appeal to its readers, advertisers are willing to pay premium rates.
“There are lots of amazingly creative [ad] agencies out there ... but what they don’t have is a global youth media brand behind them as part of their DNA,” says Mr Simon.
However, not everyone fits seamlessly into this new countercultural order. Mr McInnes left the company last year citing “creative differences”, and recruits to the Vice team have been known to find its working culture impenetrable and not inclusive.
“It’s a totally insane working environment,” admits an unrepentant Mr Smith. “It’s like an incestuous family. It’s a weird culture and we love [it]. Keeping that culture is one of our big challenges going forward, while we are growing so rapidly.”
Next year, for example, Vice will launch new branded content “verticals” or channels in non-core sectors solely at the behest of advertisers, including sports, music and news.
“We can produce better content than is on TV for pennies in the dollar and put it on phones and TV,” says Mr Smith. “Eventually when we get to 25m unique [users] and have all the biggest brands in the world underwriting it, we go to Google and say, ‘If you turn on the jets we’ll be the biggest network in the world and overtake MTV’.”
― just sayin, Friday, 20 November 2009 21:09 (fourteen years ago) link
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