The Dreaded 'Technology or Media' Question

When companies are asked to define themselves as either media or tech companies, it seems it's usually because they don't have a definitive answer. 

This article is from the archive of our partner .

When companies are asked to define themselves as either media or tech companies, often they don't have a definitive answer. Today, for example, The New York Times's Nick Bilton wondered "Is Twitter a Media or a Technology Company?" In light of recent moves, like today's announcement that the company would have an Olympics coverage destination, or that the company is working on an in-stream video service, it looks like Twitter has "media company" aspirations. But, then again, Twitter is, at its core, a platform that was built using technology. So, which is it: Media or tech? That's a question many companies before Twitter have faced. And often, the answers don't enlighten.

Here's what Twitter CEO Dick Costolo had to say to the curious question, for example. "I think of the company as a technology company that is in the media business," he told The Times. "Our business is an advertising business, we don’t sell technology." Translation: Both! But kind of one more than the other. Or more simply: one makes us money, the other doesn't.

Costolo deserves credit for the clear and plain-spoken assessment of the state of Twitter's business, but it doesn't instill a lot of confidence in the company's vision for where it is going. Take, Yahoo, for example, which has gotten itself in the same situation a few times The New York Times's David Carr posed this question for new CEO Marissa Mayer: "What is Yahoo?" He added, "That straightforward question has so far baffled the people who run the company." Yahoo, like Twitter, started as a kind of technological innovation, an HTML directory of other websites. Since then, though, it has gotten into the news business -- among other things.

So, again, which is it, media or tech? When Carr asked former CEO Carol Bartz her answer gave him a "taste of fuzziness." "After five minutes of listening to her I still had no idea. Seventeen years after the company was founded, you still have to wonder whether the frothy trademark Yahoo! should be replaced with Yahoo? to convey the uncertainty of purpose," he writes. That confusion revealed a broader identity crisis happening within. What was once a technology company had to deal with its media operation. A situation it had grown into it because it wanted to capitalize on its big homepage audience to build make more money. That didn't go so well, as former Yahoo News reporter and current Gawker writer John Cook told Carr: "They backed into an audience and had no idea what it would take to build a real news operation." The company fired Bartz due to a lagging stock and has gone through five CEOs in five years as it has failed to flourish. There's still no clear vision on the media-technology question.

It's not just tech companies ambling into media that sometimes get hung up on this distinction. Online media companies are prone to transform themselves into tech ones. Last year Gawker Media owner Nick Denton assembled his staff of mostly writers, editors and ad sales people for an all-hands meeting to tell them, as The Awl's Choire Sicha paraphrased, "Gawker Media is to be considered a tech company—but it should also be considered a tech company with editorial products… that should soon just happen to get more traffic than the New York Times website or the Huffington Post." More recently, BuzzFeed's founder Jonah Peretti has boasted that his company represents a perfect blend of technology and editorial. In a company memo he gave permission for BuzzFeed investor Chris Dixon to post on his blog, Peretti explains why online outlets hate the media label: as some surmised, tech companies are worth more. Peretti told about trying to raise money for his firm:

Venture capitalists don’t like funding companies that have reporters on staff.  In the early days of BuzzFeed, I had several VCs say they were interested in investing if we could figure out a way to fire all the editors and still run the site. I’m not joking. Tech investors prefer pure platform companies because you can just focus on the tech, have the users produce the content for free, and scale the business globally without having to hire many people.  Startups that promise this vision have an easier time attracting funding which is why there are so many startups trying to be the next Twitter or Facebook or the Instagram or Pinterest for X, Y, or Z.  Meanwhile, companies that employ reporters, editors, and creative people usually struggle to get funding which is why so few publishing companies or agencies are venture backed.

But a funny thing happens along the way from relatively small outfits like BuzzFeed and Gawker to tech behemoths like Yahoo, Twitter, and Facebook: once you win the tech battle, the reward is all in advertising, or rather back in media. Twitter's media moves are attempts to show it has a real business model, something it has not proven yet. The company predicted $1 billion in revenue by 2014 based on advertising. It does not yet have that revenue

Growing isn't the problem, of course. It is the "uncertainty of purpose" as Carr put it that gets the companies into Yahoo-like situations. Yahoo is a media company that still wants to think it's a tech company. The hope is that Mayer will recognize that, as GigaOm's Mathew Ingram suggested. Or, that she will bring her tech know-how and pull it back to its tech roots, and choose code, as Carr puts it. Either way, having a vision will help.

This article is from the archive of our partner The Wire.