“Content is where I expect much of the real money will be made on the Internet,” Bill Gates said in 1996, “just as it was in broadcasting.”

Versions of this pithy claim remain popular. But the distinction between what we consume and how we consume simply does not exist any more. Distribution influences how much content is worth, and vice versa. Ask any newspaper executive.

In video, as Citi points out, subscribers to US cable watch 10 or 20 channels but pay for 200 – a nice deal for producers and distributors alike. Still, Netflix, offering on demand instead, now accounts for a third of internet traffic in the US and had subscription revenue equal to HBO’s last quarter. But it may not capture much of the earnings of the cable companies. By distributing more shows than anyone wanted, the legacy distributors may have over-earned. Sometimes on the internet profits simply evaporate.

BuzzFeed’s $850m valuation – implied by a $50m investment by Andreessen Horowitz – is a bet that distributors of internet news will capture big profits, as surely as there are “24 Sassy Villain Comebacks Every Disney Fan Still Uses”. The price, at 8 times revenues, may not look high, relatively. AOL paid more than 10 times sales for Huffington Post in 2011, and BuzzFeed is likely to report triple-digit sales growth in 2014. The incumbents are not catching up. Newspaper homepages are becoming graveyards, passed over by link-followers jumping straight to the articles themselves.

More value to BuzzFeed’s aggregation platforms, then? Well, $850m remains less than half of the New York Times Company’s enterprise value. Distributors will come to need more varied, and thus more expensive, content (BuzzFeed plans a movie studio, just as Netflix is making its own shows). There is real money here. There may just be less of it to go around.

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