VICE CEO: 'Consolidation of media will get worse'
As concerns around the dominance of the Facebook and Google duopoly continue to swell, VICE's co-founder and CEO Shane Smith has said we should expect to see many companies disappear over the next couple of years as digital media businesses are forced to consolidate.
Speaking to WPP's CEO Sir Martin Sorrell at Dmexco on Wednesday, Smith said the consolidation that the industry is currently seeing - both in digital and traditional media - is "only going to get worse" as "massive power" falls into the hands of online giants.
"What I'm concerned about is that you already have two companies that control 75% of the market in video and mobile, then you have a further consolidation happening in television and mainstream media, and a lot of smaller companies are getting pushed to the wayside," Smith said.
"Whoever's last in mainstream media will partner with whoever's left in digital media - and I think a lot of people in the next 12 to 18 months are just going to go away."
Smith, who launched VICE magazine in 1994, said it is likely that the Internet will eventually be left with just three or four big sites - "and they're going to have their deals and everyone else can shut up."
"We used to talk about democratisation of information and content, but now, because of the strange agnostic current, you're coming to this thing where you're going to have massive power in the hands of very few companies and that is something to be worried about."
Smith also said ad-blocking, bots and a shift to programmatic are playing a big part in the upset as a growing number of businesses trade advertising at ever lower costs.
"Programmatic is a downward pressure because the actions are in reverse - you're getting the cheapest price, so that's what people [go for]," Smith said, at which point Sir Martin interjected and argued programmatic was "price effective".
"What we do is say we're a premium up here, and they'll say they'll just buy around you, so it's putting a downward pressure, and you end up losing any of that money to the scale plays.
"I remember when we were looking at buying a company and they said they had billions of video views a month...but if you have to get billions of anything to make money then you're in real trouble. And I think the scale plays are in real trouble going forward.
"Bots, ad-blocking, programmatic...the majority of the business is run by somebody else. And if they change that algorithm, like Facebook recently did, your business gets uphanded."
This is the main reason, Smith said, behind VICE's decision to expand to TV, online and mobile - and perhaps where more traditional forms of media are going wrong.
"What VICE realised two years ago was that we couldn't be hostage to Facebook and YouTube and the big players, so we realised we had to be platform agnostic."
Over the next 12 to 18 months, VICE is set to launch 58 24-hour TV networks in 15 different countries - including the arrival of Viceland in the UK this month.
Developed and produced in-house by Vice's creative team, Viceland will focus on a "distinct, immersive style" of original lifestyle and culture content for young viewers and will feature a slate of brand new VICE-produced UK programming.
However, Smith revealed that VICE hasn't always been a youth-orientated brand.
"VICE never had a plan and we definitely never went after a demographic," he said.
"When we were a magazine we were definitely a Gen X magazine. When we shifted to online video it became a Gen Y brand overnight, because that's who's consuming online video. We became a Gen Y brand because of online video."