The U.S. media industry is facing another cold winter and a wave of layoffs.
For years, the media industry has been forced to compete with technology online platforms for advertising revenue and consumers. Now, in addition to these pressures not being removed, the competition for eyeballs among publishers is only getting more intense as the economy recovers.
Last March, media bosses introduced unpaid furloughs, layoffs and other cost-cutting measures to deal with the economic fallout from the New Crown (a Chinese Communist virus) pandemic. In March of this year, as the world entered the next phase of the New Crown Epidemic, four prominent media brands made important announcements that underscored an even more precarious outlook for the industry as a whole.
First was HuffPost, a 15-year-old publication that underwent significant layoffs shortly after its high-profile merger with BuzzFeed. Second, Medium, a publishing platform known for its business strategy of highlighting the odd man out, made another move, offering a buyout contract to all of its editorial staff. Next, a little-known but popular lifestyle digital media outlet for men, MEL Magazine, was shut down by its parent company, Unilever Affordable Shave Club (Dollar Shave Club). Finally, Vice Media cut some high-end positions in late March, claiming it was a corporate restructuring rather than a cost-cutting exercise.
About 130 million people in the U.S. and nearly 500 million worldwide are now vaccinated against the new coronavirus, which means some kind of normalization is coming. At the same Time, however, the Biden administration is not constantly making news, as the previous president did, which represents less time for consumers to spend on their screens. Some digital media companies have also been preparing to go public, offering long-term investors a good opportunity to exit, but that could also be the reason for more layoffs.
“I think these media companies care a lot about actual financial resources, but they don’t exist,” said Professor Joel Kaplan, associate dean of Syracuse University’s Institute for the Study of Magazines, Newspapers and Digital Journalism. “It will probably be another six months before they see the situation worsen. Once people are fully vaccinated and then go back to their old patterns, the media boom will fall off a cliff again.”
“The point of no return”
HuffPost is losing more money than BuzzFeed co-founder and current new owner Jonah Peretti can afford.
He announced on March 9 that the U.S. HuffPost laid off 47 employees and closed the Canadian and Quebec editions of HuffPost, and revealed that HuffPost had lost more than $20 million last year and estimated that it would lose an equal amount this year if no action was taken.
Peretti said, “The most responsible thing we can do is manage costs and make sure that BuzzFeed and HuffPost are sustainable for a long time.” “That’s why we’re making these tough decisions to restructure HuffPost so it can become profitable faster. Our goal is for HuffPost to break even this year.”
Morning Brew co-founder Austin Rief said layoffs are common in acquisition activity. The media company he leads, which also covers other products in addition to daily business news, was recently acquired by Insider, formerly Business Insider, but did not suffer layoffs. That was an incentive for us,” Reeve said. But that’s rare.
“The layoffs are indeed unfortunate, but not shocking,” he says. “One of the purposes of mergers and acquisitions is to try to have a win-win effect. Often, companies are acquired because they are not in such good shape and have some key businesses that the buyer wants. But the buyer doesn’t want to buy everything.”
HuffPost’s March layoffs aren’t the publication’s first downsizing. While still under its former parent company, Verizon Media Group, HuffPost fired 20 employees in January 2019.
The decision at the time was brutal for digital media as a whole. Emily Bell, founder of the Tow Center at Columbia University’s School of Journalism, wrote in The Guardian in February 2019 that about 2,100 media people had lost their jobs. At the time, BuzzFeed laid off more than 200 employees.
Technology platforms, primarily Facebook and Google, are adversely affecting publishers’, whose advertising business is growing.
In the Guardian article, Bell noted, “The amount of data that large platforms collect and control allows them to deliver more effective advertising than any publisher, and the practice of making online content a profit-making tool runs counter to news editors who want to take on limited resources alongside senior media professionals.”
Laura Bassett, one of HuffPost’s 2019 layoffs, co-founded the Save Journalism Project shortly afterward to raise awareness of the “monopoly” power of big tech companies. “to raise awareness about the power of Big Tech’s “monopoly.
“It’s getting to the point of no return,” Bassett said of the recent wave of layoffs. “Holding Google and Facebook accountable and figuring out that journalism is a necessary public service will require a larger, higher-profile conversation and more public support.”
No advertising business
The media used to survive mostly on advertising revenue. But in 2017, Medium CEO Ev Williams transformed the company into a digital subscription. It was one of many changes at the company and resulted in a third of its employees losing their jobs.
MEL, which coincidentally also published on Medium at the time, also stopped operating without advertising revenue; the publication later set up its own website. Michael Dubin, the founder and former CEO of Dollar Shave Club who resigned earlier this year, told Fast Company in 2018 that he viewed MEL as “a company that is not a part of its customers or of us. as “a representative of creating a deeper connection with our clients or our customer base.”
But in March, MEL launched three paid newsletters to attract subscribers.
“Given the advertising monopolies of Google and Facebook, the search for a new and sustainable business model is understandable,” Bassett said. “Journalism is an industry that is facing a huge financial crisis.”
But the owners of Medium and MEL don’t see a financially secure future for either brand, at least not for MEL, because Dollar Shave Club doesn’t want to lose any more money.
A Dollar Shave Club spokesperson issued a statement saying, “Unfortunately, we had to make the difficult decision to cut them before moving on so we could focus more on our consumer business.” “We wish them all the best and are doing everything we can to support them during this transition. We are hopeful for the next step in publishing.”
MEL made the announcement via its official Twitter account, prompting an online wail. Unlike other men’s magazines, MEL offers an authentic, down-to-earth masculinity, often using strange and funny headlines like “Why Vape Bros Love Vaping While Pooping” or “Why Vape Bros Love Vaping While Pooping. Pooping), or “Survivalist TV Is Now Our Pandemic ASMR” (Survivalist TV).
New York Times technology reporter Taylor Lorenz tweeted that she was “sad for the people who produce groundbreaking, amazing digital Culture coverage. Max Tani, media reporter for The Daily Beast, tweeted, “At a time when people still seem to love reading posts, Mel punches us back to the days of traditional blogs.”
Medium has made a name for itself with its native reporting and investigation, as well as occasional viral distribution by celebrities like Barack Obama and Jeff Bezos. Newton (Casey Newton) reported that since Medium switched to subscription viewing, the platform has attracted more than 70 paid subscribers, bringing in more than $35 million in revenue.
He wrote, “But that’s a drop in the bucket for Williams, who previously sold Blogger to Google and co-founded Twitter, resulting in a market cap of more than $50 billion since the IPO.”
As Williams said, Medium is “reshuffling its editorial resources” to focus on supporting independent writers rather than non-regular staff. “They are intentionally transforming into a platform rather than an original news outlet,” says Reeve. “There’s too much user-generated content.”
Competing with user-generated content is a primary concern for Reeve and his team at Morning Brew.
“Basically, it’s competing with every person on the planet,” he says. “Everyone can publish content. Publishers have to figure out is what sets them apart. Why would people want to click on a Morning Brew ad letter instead of just watching it on Instagram or Twitter?”
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