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LAST December Uruguay became the first country to legalise cannabis fully. Soon afterwards Vice.com, an American website, became the first news organisation to send a journalist to smoke weed with José Mujica, Uruguay’s president. It is this sort of plucky, playful reportage that has caught the attention of millions of young media consumers—and, more recently, investors. This week A&E Networks, a television company jointly owned by Disney and Hearst, was negotiating to buy a 10% stake in Vice’s parent company.

The deal would value Vice Media at $2.5 billion, nearly double what it was worth about a year ago when Rupert Murdoch’s 21st Century Fox bought a 5% stake, and ten times what Amazon’s founder, Jeff Bezos, paid for the venerable Washington Post last year. Vice has come a long way from its origins as a punk magazine in Montreal.

Vice is one of dozens of digital denizens launched in recent years, offering a populist mix of news and entertainment to readers via websites and mobile apps. It is valued more highly than many of its peers because it has a wider range of businesses: besides a news website and a magazine it has an advertising agency and a deal to make television shows for HBO.

There are plenty of opportunities to claim young audiences who are not tied to any particular news brand and may not have touched a print newspaper for years, says Chris Altchek, who helped found Mic, a news site, in 2011. Mic now says it has around 19m unique visitors a month, and in April it secured $10m in financing. Until recently venture capitalists had little interest in the news business, but earlier this year Marc Andreessen, a doyen of Silicon Valley, predicted a “golden age” for journalism. Last month his firm, Andreessen Horowitz, put $50m into BuzzFeed, another popular news site. Investors hope to strike it rich by identifying the “heir apparent” to today’s media conglomerates, says James McQuivey of Forrester, a research firm.

Since digital firms have none of the printing and transport costs of paper publications, “news is starting to look a lot like software,” says Jessica Lessin, who recently launched The Information, a digital newspaper about technology. “The marginal cost of distribution is zero.” That lets digital firms spend more of their revenue on hiring writers. Earlier this year Jim Bankoff, the boss of Vox Media (which started out in sports blogs), hired Ezra Klein, a star blogger from the Washington Post, to launch Vox.com, a news site. Some outfits, including Vox and BuzzFeed, have proprietary technology that gives them an edge. As a result, Ken Lerer, a founder of the online Huffington Post and now an investor in digital news firms, says he values them somewhere between a traditional media company and a technology firm.

Investors see potential for digital news firms to go global. BuzzFeed still produces a lot of fluffy content (including, this week, “27 Google Searches All Cat Owners Can Relate To”) but it is hiring foreign correspondents to provide more serious coverage. The Huffington Post, a pioneer of digital news, is seeking readers in places like France and Brazil. Few newspapers have established a truly global business, says Ken Doctor, a media analyst, but a handful of digital news firms could pull it off, and reap the rewards.

However, those rewards may be more meagre than venture capitalists are accustomed to earning on tech firms. With so many competitors, digital news outfits will find it hard to charge much for advertising, and their readers are highly averse to paying for subscriptions. That is why some, like Vice Media, are plugging the potential of their proprietary technology and for extending their brand into new areas, such as conferences, research and writing advertising copy. Even so, these firms may struggle to earn the high returns Silicon Valley investors expect.