It’s been an interesting period, to say the least, for online news sites with Vice reportedly facing bankruptcy and BuzzFeed closing down its news division. The demise of these digital titans is all the more shocking when looking at the decline in their once stratospheric valuations. BuzzFeed was once valued at $6 Billion but its share price has collapsed leaving the business now valued at less than $100 Million. Vice too was valued highly; $5.7 Billion based on a 2017 investment round led by TPG. More recently the company was thought to be worth less than $1 Billion, according to reports earlier this year when the company was searching for a potential buyer, but now it’s fighting for its very survival. This is despite receiving widespread acclaim for its unique style of storytelling, as well as past investments from blue chips like Disney and Fox.
BuzzFeed announced that it is shutting down what’s left of its award-winning news department, which signals the end of an era for a website that once promised to revolutionise the industry. Founder Jonah Peretti told staff that he could no longer continue to fund BuzzFeed News and that there would be substantial redundancies across the company. He blamed a whole slew of issues for the demise including the pandemic, a troubled stock market listing, a tough economy, a declining stock market, a slowdown in digital advertising, and changing audience habits. Interestingly he went on to suggest that there may not even be a sustainable business model for high-quality online news:
“I made the decision to over-invest in BuzzFeed News because I love their work and mission so much. This made me slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media.” Jonah Peretti.
Vice too has apparently been struggling financially for some time with recent reports that it needed $30M of emergency financing to pay off debts. Since then the company has announced it would cancel its flagship “Vice News Tonight” show and lay off dozens of employees as part of a larger corporate restructuring.
The issues at Buzzfeed and Vice are just the latest in a bruising period for online news media that has also seen cuts at Insider, NPR and Paper magazines. These online news sites, which boomed during the 2010s, have struggled as advertisers have naturally followed the audiences who have moved away from social media towards video services such as YouTube and TikTok. Advertising has been the main source of revenue for news sites but this was a risky strategy as, with the change of an algorithm, Facebook and Google slashed Vice and BuzzFeed’s massive audiences and hoovered up the bulk of digital advertising. With reduced traffic, advertisers have turned away and stopped spending millions for the brand advertising that was the lifeblood of Vice and BuzzFeed. Then their young, hip followers were not willing to pay subscriptions for their periodic scoops. News gathering turned out to be far more expensive than Peretti and Shane Smith, co-founder of Vice, bargained for.
Alongside this, traditional media channels that had been battered by these upstarts, have been resurgent. Take The Times for example, founded in 1785 it’s the quintessential old school newspaper. Despite initially struggling during the digital transition, The Times made the decisions to stick to its core strength - the news - even when the company was saddled with heavy debt and facing shareholder revolts. It fought against The City’s short-term demands to make cuts to its newsroom remaining faithful to its reporting. It has since expanded globally through a subscription model encompassing digital as well as print, but during the roughest patches of the digital transition and the financial crisis, the paper was under pressure as Jill Abramson, Managing Editor and Executive Editor of the Times explains:
“I led the merger of what had been separate and duplicative digital and print newsrooms, which the paper’s culture resisted. We were still running from behind in 2012 when I asked Arthur Gregg Sulzberger, then a talented reporter and editor, to form an Innovation Committee. The committee’s first mandate was to develop a suite of new products that would generate quick, new revenue. But after a few months, Sulzberger [now publisher of the Times and chairman of the New York Times Company] asked me to change the committee’s focus. “We need to grow from the core,” he told me, meaning our future would hinge on building from our core strength, the news report. We would secure the Times’ future by growing digital subscriptions and leveraging our strengths.” Jill Abramson.
In hindsight, all this may look like a no-brainer, but it was a brave policy that, by the way, needed deep pockets to fund. It’s not true to say that traditional media was always destined to win (most didn’t), or that digital newcomers failed just because they were new. Some digital news organisations, like Politico, are successes and are profitable, but the underlying reasons are common:
“Like The Times, Politico grew from a strong core. It covers politics and policy in a more granular way than anyone. Political junkies couldn’t live without it; companies with a vested interest in legislation would pay handsomely for its policy-focused Pro subscriptions. Paid conferences and other live events are logical and profitable extensions.” Jill Abramson.
The demise of Vice and Buzzfeed News is a reminder too that the digital landscape moves very quickly and companies that emerge and grow quickly to be valued in the Billions, can decline and disappear just as quickly - anyone remember Myspace? It also flags up the risks of platforms relying on digital advertising as a main revenue stream, because this can also rise and fall dramatically, plus there are factors outside your control as you’re at the whim of Google’s and Facebook’s algorithms which they modify whenever and however they see fit.
In this period of change, which may be re-calibration or it might be the end of an era, spare a thought for the journalists. Once upon a time if they got laid off, the good ones would be immediately recruited by another platform, but with fewer outlets there are inevitably fewer jobs and fewer places to pitch as a freelancer. Sonia Weiser, a writer who collects submissions calls in the newsletter Opportunities of the Week, announced on Twitter that there were no longer “enough freelance opportunities to warrant sending out the newsletter twice per week.” Some journalists will inevitably have to find other careers to pay the rent, but as Jill Abramsom summarises, whilst Prince Harry might be happy to see the media diminished, there are consequences:
“No one should be dancing on the graves of Vice or BuzzFeed News. Competition makes everyone, including The Times, better. Journalism, a bedrock of democracy, thrives when different voices and informed audiences make themselves heard. With abysmal public trust numbers, everyone working in news is on shaky ground. Seeing that landscape shrink even further is distressing for journalists—and the public they serve.” Jill Abramson.