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Organized Labor Moves Into Digital Media as Investors Circle

Earlier this month, when writers at Vice Media were emailing about the potential benefits of unionizing, one employee brought up company co-founder Shane Smith’s purchase of a $ 23 million mansion in Santa Monica, Calif., a house featured in “Beverly Hills Cop” and the HBO show “Entourage.”

“For next time [management] says they can’t afford to give us raises,” the employee wrote, posting a link to an article about the real-estate deal.

Two days later, on Aug. 7, the writers voted to join the Writers Guild of America, East.

The move at Vice is part of a broader unionization push in the digital media world. This summer, the WGA and another union, News Guild-CWA, have also signed up writers at Gawker Media and Salon.com, and say they’re actively trying to make inroads elsewhere.

As online media outlets grow in heft—generating significant revenue and earning eye-popping valuations in investment rounds—their workers are beginning to argue they deserve better compensation and employment protections. Vice, whose edgy brand of online content and TV has caught on with young audiences, is a new-media powerhouse that was valued at $ 2.5 billion in its last investment round.

It raises questions about the extent to which a union contract might encumber a company from being able to make rapid decisions.

—Iliya Rybchin, of Highnote Foundry

But the labor organizing movement is happening at what is arguably the most inopportune moment for the industry, just as it is attracting attention from strategic investors who can inject a huge amount of capital into their fledgling businesses. Big media companies are scouting the space aggressively as they chase young audiences, and while unions won’t necessarily be a hang-up in deals, they won’t be a selling point.

Skeptics say collective bargaining may not make sense for these companies, and could counter some of the advantages they have over traditional newsrooms, such as nimble decision-making, flexible work roles, and, in some cases, a lower wage scale.

“It raises questions about the extent to which a union contract might encumber a company from being able to make rapid decisions,” said Iliya Rybchin, the director of the media and entertainment practice at venture capital firm Highnote Foundry, which isn’t an investor in any of the unionized companies. “With unions you also often have strong delineations about roles, and in young companies you usually want a lot of fluidity.”

Management at all of the new-media companies that have voted to unionize have recognized and accepted the decisions of their workers.

One investor who has been on the board of several digital media companies—none that have unionized—said the collective bargaining movement is a bad idea. “For a fast-changing, dynamic, tech-led industry the last thing you want are barriers to growth,” he said, adding that unions have “been a weight” on traditional newsrooms.

At Vice, the union recruits included the writing staff of roughly 80 people, which makes up about 10% of the overall U.S. staff. Globally, Vice employees more than 1,500 people. The decision wasn’t unanimous, with support mostly coming from younger staffers, people involved in the process said.

“All I want is for my beautiful Vice family to be happy,” Mr. Smith said in a statement at the time. But some executives say they aren’t yet clear what the employees are demanding. They said the company has an ample benefit package, which includes stock options, retirement programs and a soon-to-be-instituted tuition reimbursement program.

Much of the debate among Vice employees leading up to the unionization vote focused on pay. The union representatives, WGA Executive Director Lowell Peterson and News Guild of New York President Bill O’Meara, said compensation will be a key issue across the industry. That could mean establishing a floor on benefits and pay or instituting across-the-board increases, though demands will vary from company to company.

“Sometimes there are inequalities in pay structures that need to be addressed,” Mr. Peterson said.

BuzzFeed, which has more than 1,000 employees world-wide and this week announced a $ 200 million investment from Comcast Corp. CMCSA 0.39 % ’s NBCUniversal, would be another big prize for the unions.

Last week, BuzzFeed founder and Chief Executive Jonah Peretti, in response to a question at a staff meeting, said that unions wouldn’t be right for his company. He said BuzzFeed operates more like a technology firm in Silicon Valley—where collective bargaining is rare—and less like a traditional news organization, where labor unions have existed for decades.

Mr. Peterson of WGA said Mr. Peretti “doesn’t seem to understand how collective bargaining actually works.”

“While the management may see these companies as being like Facebook or Google, the staff is starting to see themselves as no different than the New York Times or any other newsroom,” said Tom Juravich, a professor of labor studies at the University of Massachusetts-Amherst. Reporters at the Times have been unionized since 1940, and at The Wall Street Journal since 1937.

In the email exchange leading up to the Vice union vote, one employee lamented, “Our pay is demonstrably below market rates. We’re lacking a few major institutional necessities—say, a standardized framework for raises, transparency, diversity guidelines.” The staffer was optimistic that the issues could be “addressed amicably.”

In an application for a tax credit for building its new headquarters in Brooklyn, N.Y., Vice stated that it paid editorial writers an average wage of $ 45,000 in 2012. Video production and postproduction employees received an average wage of $ 60,000. Creative and design employees were paid $ 70,000 on average. A person familiar with the matter says that salaries have since gone up to an average of just under $ 70,000 for nonmanagement employees.

According to the Bureau of Labor Statistics, the average mean wage for media and communication workers in New York state as of May 2014 was $ 61,510. It was $ 84,050 for editors.

For the unions, expanding into digital media reflects overall trends in the news industry as jobs have shifted away from print. The News Guild, which has long been present in traditional newsrooms, now represents 22,000 people, down from a peak of 32,000 in 1986. The writer’s guild has typically represented writers in Hollywood and on television, but also has a presence on the digital sides of television newsrooms.

So far, the unions have picked up about 260 recruits from digital media newsrooms.

“There will be more of this,” said Mr. O’Meara, of the News Guild. “Some of the recent organizing drives were easy ones, but they are not all going to be easy.”

Write to Lukas I. Alpert at lukas.alpert@wsj.com

WSJ.com: US Business

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