Trending: What Went Wrong in Digital Media

By David Schonauer   Tuesday February 5, 2019

Digital media, and journalism, took a hit recently.

In total, more than 1,000 employees were laid off at BuzzFeed, AOL, Yahoo and HuffPost. Vice Media also began laying off workers.

“Coupled with recent layoffs at Gannett, the company behind USA Today and other dailies nationwide, the crisis in the digital sphere suggested that the journalism business was damned if it embraced innovation and damned if it didn’t,” noted The New York Times.

MSNBC host Chris Hayes commented on the news of the layouts in a tweet, asking, “What if there is literally no profitable model for digital news?”

For both creators and consumers of content, the story behind the downturn in the fortunes of online media companies provides insights into the shape of journalism in the future.

BuzzFeed is cutting about 15 percent of its workforce worldwide, around 220 jobs, noted the Nieman Lab. The company — a custom-built online media property designed to captured the attention of Millennials with algorithm-driven “listicals,” quizzes, celebrity news and hard-hitting journalism — reported $300 million in revenue for 2018, according to The Wall Street Journal. But its chief executive, Jonah Peretti, told staff that “revenue growth by itself isn’t enough to be successful in the long run” and that restructuring was needed to secure BuzzFeed’s future.

HuffPost, which is now owned by Verizon, also faced “economic headwinds” hitting newsrooms across the industry, “affecting once-bullish digital shops and longstanding newspapers alike,” noted CNN. Indeed, Verizon announced a 7-percent cut to staff in its entire media division, which also includes Yahoo and AOL.

“The cuts at BuzzFeed were the most alarming,” noted The Times’s Edmund Lee.. “Wasn’t this the company that was supposed to have it all figured out? Didn’t its team of wizards, led by the M.I.T.-trained chief executive, Jonah Peretti, know tricks of the digital trade that lay beyond the imagination of fusty old print publishers?”

Reflecting, perhaps, just the slightest case of schadenfreude, Lee added that fusty old print  publishers, like The Times, had faired better online than their digital-native brethren. “While leading digital publishers have resorted to harsh measures, legacy titles such as The Washington Post, The Atlantic, The New Yorker and The New York Times have seen growth as they accommodate the habits of their increasingly digitally oriented readers,” Lee wrote.

Lee also noted that Vox Media, a digital-native business, turned a profit last year, while a more recent digital news title, Axios, expects a profit in 2019.

While BuzzFeed may hit its financial marks this year, the news of its retrenchment had media analysts wondering where it went wrong. Part of the answer, suggests Lee, was its decision to rely on the 60,000-pound gorilla in the online zoo — Facebook — to distribute its articles. Other media properties, including legacy titles, also fell into that trap a few years ago, turning to Facebook’s social-media reach rather than driving audiences to their own sites.

“That was back when Facebook was considered a natural ally for media organizations seeking millions of online readers,” noted Lee. Today, Facebook, after facing charges of spreading “fake news,” has gone in another direction, altering is algorithm to favor posts from friends and family over those from media organizations. The change hit sites like BuzzFeed hard, noted Lee.

While BuzzFeed dove into the Facebook content whirlpool, distributing its articles for free, legacy sites like The Times set up “pay walls” to monetize their reporting and photography. A few years ago, that decision “struck media gurus as the last-ditch gambit of a slow-moving stalwart,” noted Lee. Today, more and more sites are putting content behind paywalls.

Just as the news about BuzzFeed was breaking, the Reuters Institute released a report exploring the future of journalism. Titled “More Important, But Less Robust? Five things everybody needs to know about the future of journalism,” the report highlights “risks posed by growing information inequality, struggling journalism business models, and the role of social media platforms,” noted the Institute.

Among the trends identified by the report: We have moved from a world where media organizations were gatekeepers to a world where media still create the news agenda, but platform companies control access to audiences.


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