Unlike prior rounds of layoffs, however, the bloodletting extended to digital publications, including BuzzFeed, HuffPost, Yahoo and AOL that have sought to use their origins as internet media outlets to displace legacy newspapers.
In at least one instance, the layoffs illustrate the power of Facebook, but more broadly, they illustrate the challenge of competing for eyeballs and attracting digital advertising revenues.
BuzzFeed fired about 215 people, or 15% of its staff while the HuffPost, Yahoo and AOL each slashed 7% of their editorial teams, representing 800 people. Legacy publisher Gannett, for its part, slashed 400 employees, according to a recent article from The Washington Post.
The news is surprising for a variety of reasons. First, at a time when advertising is moving from traditional media to online, many observers have opined that digital publishers have a bright future. Indeed, internet-only publications are not dependent on print, radio, or TV advertising that is associated with legacy publishers.
Secondly, the highly polarized nature on national politics and the unorthodox style of President Donald Trump has boosted interest in the news, which has resulted in increased subscriptions for various large publications, including The New York Times. As of the third quarter of 2018, the newspaper had 3.1 million paid subscribers, up from 800,000 in 2013.
Rather than generate income from subscriptions, digital publishers have sought to rely solely on advertising, which has put them in direct competition against Facebook, Amazon.com and Alphabet’s Google, which is a huge challenge, according to a recent article from the Atlantic.
In addition, other companies are pursuing advertising revenues. Apple is developing technology to skim a portion of advertising revenues from popular apps, such as Snapchat and Pinterest, and Microsoft is expected to rake in $4 billion in advertising from LinkedIn and Bing. Even Uber is reportedly evaluating how to generate advertising revenue.
Competition for advertising dollars, however, isn’t the only problem. Publications are at the mercy of search engine algorithms while at the same time making huge investments to meet the demands of fickle news consumers.
BuzzFeed’s relationship with Facebook is an example. The social media platform previously announced a “video first strategy,” which prompted BuzzFee to acquire $250 million in funding from NBCUniversal to make video programming, reports Vanity Fair.
BuzzFeed used the funding to create its own studio, which was comparable to a smaller scale Paramount Pictures. Unfortunately, Facebook changed its algorithm to place more of an emphasis on postings from users’ friends and families.
As Vanity Fair reports, the change resulted in a substantial decrease in Facebook searches showing BuzzFeed content. With fewer viewers, BuzzFeed and other publications generated less in advertising revenues.
The pivot to video also created other issues, says Jill Abramson, author of “Merchants of Truth,” which profiles The New York Times, The Washington Post, Vice, and BuzzFeed. In a Recode Media podcast, Abramson explains that the focus on video resulted in BuzzFeed emphasizing YouTube and Facebook video stars rather than concentrating on traditional news coverage. At the same time, publishers face additional competition, with Netflix and Apple both moving to provide news coverage.
Even though many publishers are struggling, there are a few bright spots. In addition to The New York Times enjoying strong subscriber growth, Bloomberg has recently announced growth in its advertising revenue, according to The Drum.
The company’s revenue grew 18% in 2018 and, overall, digital revenue grew 15%, according to a companywide memo from Justin B. Smith, chief executive of Bloomberg media. Last year, the company rolled out new formats such as ‘Pick Your Own Brexit’ Game and it won a Drum Online Media Award for its Twitter news network TicToc. It now plans to push TicToc onto additional platforms.
