In L2’s Media (R)evolution Clinic, the new media landscape was described as a place much like retail: thriving mass market and luxury brands – the Walmarts and the Guccis of media – while middle of the road content providers struggling to survive. Luxury Media brands – NPR, New York Times – are defined by a small, but engaged and valuable audience size. These iconic brands differentiate themselves with premium and exclusive content, and drive revenues by a mix of paid content and advertising. Mass media brands – Buzzfeed – have low cost-per-click, but are able to do well because of their sheer size. They have enormous reach, the ability to do sophisticated targeting and produce low cost content.

Screen Shot 2015-05-26 at 3.28.55 PMEven though they lack the astronomical user-base of mass media brands, luxury media brands have higher revenue per user. For example, a New York Times reader is worth close to 10x a Buzzfeed reader.

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Despite the divide, luxury and mass market brands have a lot in common. At the core of their business is content that incites enough passion for viewers to pay for or share. Take Netflix, for example, which produces television series and hosts movies people are passionate enough to pay for. And the New York Times derives 38% of its revenue from users willing to pay for content. On the other end of the spectrum, Buzzfeed and Huffington Post report more than 85 million and 122 million shares annually.

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The divide is not set in stone either. A study of media companies in the past few years shows a lot of crossover. New media wants to become like old media, and vice versa. Vice, for example, has undergone a successful transformation and lent itself to the luxury category. It landed a $250 million investment from A&E for continuing to broadcast on HBO, where it can reach the high-value users. Netflix has also transformed itself into a luxury brand, differentiating itself from other video hosting sites by winning five Emmy’s in August 2014.

So why do certain media companies remain stagnant, unable to cross over to luxury or mass media? Companies in the middle class – AOL, Yahoo – lack a strong identity. For example, AOL still produces weak content, and has become an ad distribution platform. Business Insider has strong content, but relies on research to supplement its ad-revenue model.

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