The publishing industry had a very surreal moment last week with a drove of surprising layoffs. Verizon (which owns HuffPost, Yahoo, and AOL) announced it would be laying off seven percent of its staff, Gannett Co. which owns more than 1,000 daily and weekly newspapers across the country had cut approximately 400 jobs, and most surprising of all BuzzFeed cut 15% of its staff.
This is BuzzFeed we’re talking about, who’s largely been a “media darling” for years as one of the digital-first publications to really get it right. However, the simple fact is that ad revenues are declining for publishing companies and are therefore forced to rethink their revenue models
In the pre-Internet era publishers had it easy: on one hand, they employed journalists whose goal it was to reach as many readers as possible. On the other, they were largely paid by advertisers, whose goal was to reach as many potential customers as possible. The alignment — reach as many X as possible — was obvious, and profitable for the publishers in particular.Ben Thompson, Stratechery
The shift from paper to digital meant publications could now reach every person on earth (not just their geographic area), and starting a new publication was vastly easier and cheaper than before… The increase in competition destroyed the monopoly, but it was the divorce of “readers” from “potential customers” that prevented even the largest publishers from profiting much from the massive amounts of new traffic they were receiving.
After all, advertisers donʼt really care about readers; they care about identifying, reaching, and converting potential customers. And, by extension, this meant that differentiating ad inventory depended less on volume and much more on the degree to which a particular ad offered superior targeting, a superior format, or superior tracking.
It remains clear and obvious that the superior targeting tools are Facebook and Google. That’s why the two of them receive nearly 60% of the entire digital ad spend in the United States.
Ultimately, it’s a zero-sum game for all publishers today. Banking fully on making ad revenue is not what’s going to carry them through the rest of the 21st century.
New Media Models
We’ve seen many of the legacy publishers adopt digital subscriptions from the jump. Other publishers have adopted confusing paywalls where I get a few free articles a month, but once I pass the limit I can still open the article in an incognito window and get it for free.
Then there are the hundreds of other publishers, from The Hollywood Reporter to Engadget to the Huffington Post, that
The simple answer is subscriptions or paywalled content, as we’ve already mentioned. However, not every publisher is in the position to do that. Especially if their brand voice is highly-sought after or their audience isn’t as consistent as, say, a New York Times.
The Ringer is one media brand that has successfully found new forms to create revenue. Podcasting is a niche they’ve killed, bringing in nearly $15 million in annual ad revenue from this burgeoning industry. With around 100 employees, that is a pretty good ratio on just one stream of revenue. They’re also turning to HBO to produce movies and documentaries. Granted, Bill Simmons was a majorly successful part of ESPN (creating the 30 for 30 series) before starting The Ringer. But, he’s setting a great example for other publications, nonetheless.
The Future is Live
I think the most compelling revenue stream of all that media brands can be looking to do are positioning and branding themselves around Live Events.
First of all, the signs are all pointing in the direction of Live streaming. Every social network has gone heavy into promoting live streaming features in the last couple of years: YouTube Live, Facebook Live, Snapchat Live, Instagram Live, Twitch.
If they’re all saying that the Future is Live, but no one has quite cracked that code yet, then there’s clearly a huge opportunity for publishers to turn to this outlet. I don’t even think that BuzzFeed would need to use one of those social media platforms to carry out their live event. There are plenty of tools you could use such as Wirecast or Vimeo Premium. Not to mention, then you could charge for a virtual seat to this Live Event.
Barstool Sports is one of the media companies that’s currently tapped into this trend. A couple of years ago, they purchased an amateur boxing league called Rough N’ Rowdy and has since turned it into a quarterly fight night that features anyone from amateur boxers to average joes that want to settle a grudge. It’s a really interesting and raw take on traditional boxing. One of the first events they had they sold around 13,000 pay-per-view seats at $16 a head, which isn’t that bad for a small media company. That’s a Live Event that they own and they can grow however they please. And they seem to have big plans for it.
What could BuzzFeed learn from Barstool?
BuzzFeed’s Tasty food network, which launched in 2015 is a global media brand that evolved by breaking all the rules: focusing on building a viral brand first, and then figuring out distribution and channel second. They’ve already built a strong enough following where it would be interesting to see them monetize through cooking events that viewers can pay to join and cook along with some of the Tasty chefs, engage in some nice dialogue with the creators, and just have a good time. Especially with devices like the Amazon Echo Show and Facebook Portal, which are interactive screens designed to be in the kitchen, Tasty could be one of the first shows (paid entry perhaps) to really kill it on these new platforms.
Nonetheless, the point I’m driving at here is that the traditional publishing model is dying. There will be a select few that can survive solely on revenue. But the large majority must find new ways to adapt or else the future of journalism is not a story worth sharing.