What I know about investing in content: Turi Munthe

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A little over two years ago, the MENA region witnessed the first big acquisition of a media company.

Diwanee, a Dubai-based digital media company, was acquired by Webedia, a Paris-based digital publishing company.

Since the rise of web 2.0 and social networks, the media industry was heavily disrupted. Media companies struggled to adapt. But things have been looking brighter over the past few years.

Founder and CEO of Demotix, Turi Munthe had his fair share of the content industry.

According to him, digital ad spend in the Middle East hovered around the $500 million level in 2015, with likely more than half going to Google (Youtube) and Facebook. Back of the envelope calculations say that is roughly 40 times less, per capita, than the UK.

Munthe built and led Demotix, a citizen-journalism website and photo agency launched in 2009, before exiting to Bill Gates’ Corbis three years later for an undisclosed amount.

Demotix was one of the companies that managed to hop on the web 2.0 bandwagon as an alternative media tool. It rose to success when it’s photojournalists were able to cover news that mainstream media couldn’t reach. Demotix’s best days were from the coverage of the 2008–2009 Israel–Gaza conflict, and the G20 protests in London.

Turi Munthe. (Image via Turi Munthe)

Today, he is Venture Partner at North Base Media, an investment firm focused on media, journalistic enterprise and digital driven opportunities in growth markets.

At Wamda's Mix N' Mentor in Cairo earlier this year we talked to him about investing in the middle east's media industry.

Content is attracting investors. There is no alternative to stratospheric growth in the media sector, and content is going to play a massive role in that growth. Investors should be all over this like a rash. And many - from the strategics like Choueiri and MBC to the pure-play VC sector - have already made big bets.

I think the hardest thing about today’s media ecosystem is working out how to tell complex stories and share difficult ideas when the format, distribution and attention economy is against you.

Europe and US markets are stagnating. North Base Media only invests in media companies in growth markets like the Middle East. We take a view that the media markets in Europe and the US are saturated, internet and mobile penetration is near complete, and that - because the cost of delivery is dropping - there may be a case that media revenue may even begin to drop. At best, it’s just moving from old media to new media, but it isn’t growing.

Growth markets are attracting investors. Growth markets, however, are seeing massive and systemic growth: growing populations, very large youth demographics, economic growth, and exploding internet and mobile penetration. A whole new generation of people are beginning to consume media in different formats and in different ways from their parents, and that market is ripe for reinvention. We believe the Middle East media market (like those in India, parts of SE Asia, Africa and Latin America) will see year over year double digit growth for some time.

Multi skilled journalists are a must. When I've taught at journalism schools, I’ve sometimes been surprised by how many young journalists still want to be Ernest Hemingway: first-person, I’m-the-hero, long-form text journalists. There is still real need for on-the-ground reporting, but yes, it’s multi-format, and it’s also dwindling. The best journalists today are not only tech smart, but they’re also often sitting thousands of miles from the action, parsing what the web is telling them.

Investors appreciate ‘business-y’ media entrepreneurs. Media entrepreneurs are often supreme examples of technicians-building-businesses: passionate, brilliant journalists who want to amplify their voice. We look for those same people who are passionate also about building the business side. Unlike tech businesses, where you build the app, optimise distribution, and sit back until Google buys you, media is a business in which you start every day naked in the wind: you constantly need new ideas, new stories, new angles. That makes the need for process, for pitch perfect operations, and for repeatable systems all the more important.

We love process, data, and revenue streams.

What should governments do to help build more regional funds interested in media. Apart from providing tax and other incentives to investors, maybe they could look at lightening up on the censorship.

Messaging is the next revolution. Pre-Google, publishers owned their audiences, before SEO shifted the balance. Then came Facebook and social determined audience. We think messaging is the next revolution - Snapchat is pointing some of the way, but the chatbot will have its day.

Video video video. As bandwidth gets cheaper, it’s where we’re all headed.


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