The co-founder of the digital publisher Ozy MediaCarlos Watson, was sentenced Monday to nearly a decade in prison over an explosive revelation that he and his business partner, Samir Rao, sought to defraud investors by lying about key financial information.
Watson, who has pleaded not guilty, disputed the charges, saying he had only engaged in the same type of business selling expected of any founder during last year’s digital media rush. decade.
“The level of dishonesty in this case is exceptional,” said U.S. District Judge Eric Komitee. said in handing down the sentence in federal court in Brooklyn, New York.
Although his plea didn’t convince the jury, Watson isn’t wrong: He’s not the only media executive to put his finger on a crucial scale.
In fact, for all its bluster about objectivity, the media industry is full of conflicting numbers, malleable metrics, and self-fulfilling truths.
Every relevant point of comparison in the market (traffic, subscribers, views, revenue) is calculated in the most flattering way for a given business. And when that data disagrees, hard facts become soft conversations.
Watson and Ozy Media, launched in 2013, were part of a broader wave of digital media companies that played a similar game, aiming to gain market share in a growing industry.
At the time, investors looked to publishers with the greatest chance of success, which encouraged founders to paint the rosiest possible picture of their company. And as long as the market continues to grow, a falsely inflated number today could well be true tomorrow.
The scale of the era reflects these motivations. Founders raised hundreds of millions of dollars, valuations soared into the billions, and companies spent lavishly on labor, real estate, equipment, and lunar plans.
But at the start of 2022, the delirium began to dissipate. Social media platforms began sending far fewer readers to publishers, capital became more expensive, and investors began seeking returns. Patience for growth was replaced by the demand for profit, and media companies, unable to meet their expectations, collapsed at an alarming rate.
Ozy Media farm only a few months before this correction began, but it is not difficult to imagine that she would have been one of the victims. Watson was, after all, looking to raise $40 million — on top of the $83 million he had raised so far — when he and Rao conspired to pose as a YouTube executive.
Industry deflation caused significant damage. Tens of thousands of journalists have lost their jobs and trust in the media has declined significantly. Phrases like clickbait and fake news – byproducts of an era that valued sensation over substance – have been slow to disappear, if they ever do.
But as in all bear markets, there are reasons to be optimistic.
The media industry, now chastised, has rightly begun to prioritize the needs of its audience over those of venture capitalists. Without the inflated scale offered by platforms, publishers now have fewer but deeper relationships with their paying audiences.
Once bitten, investors are also better able to spot the warning signs. The media startups of this decade are Lean companies that prioritize expertise and profitability. A healthy skepticism now reigns in space, and things too good to be true are treated as such.
This increased sense of surveillance does not come exclusively from the collapse of Ozy Media, but the publisher and its fall could well serve as a symbolic scapegoat. For that, the industry could actually thank Watson.
