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Jan. 24, 2019, 11:18 a.m.
Business Models

In the latest sign things really are dire, BuzzFeed is laying off 15 percent of its staff

“The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again.”

BuzzFeed is cutting about 15 percent of its workforce worldwide, around 220 jobs, The Wall Street Journal first reported and CEO Jonah Peretti said in a memo to staff Wednesday evening.

BuzzFeed “basically hit” $300 million in revenue for 2018, the Journal reported, but Peretti told staff that “revenue growth by itself isn’t enough to be successful in the long run. The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again.” (Unspoken there is that raising another round (a) would be difficult in an environment where investors have lost most hope of a large-multiple exit and (b) would certainly require a significant drop in valuation from the $1.7 billion it fetched in 2016.)

BuzzFeed also laid off 100 employees in late 2017. Late last year, the company launched a membership program for its news content — which some saw as an unusual mixture of public-radio-style fundraising and VC-funded company.

BuzzFeed is certainly not alone in struggling in this digital advertising environment. Digital-native media companies Vox Media, Vice, Mashable, and Refinery 29 have all laid off significant numbers of staffers over the past year or so, while Mic laid off its entire editorial staff before a firesale to Bustle Digital Group (also now the owner of the suddenly staff-less Gawker 2.0).

And BuzzFeed’s layoffs weren’t even the only ones announced on Wednesday: Verizon Media Group, the owner of Yahoo, AOL, HuffPost, and other brands, is laying off about 800 people. (Oh, and don’t forget the old media layoffs: Wednesday, Gannett; previously, The Dallas Morning News and lots of other small cuts that don’t even make industry news anymore.) These events are depressing on their own but, combined, feel disastrous — especially since, as The New York Times’ Mike Isaac wrote in his 2019 prediction for Nieman Lab:

The biggest albatross is that big media companies like Disney (focused on fighting Netflix) and NBCUniversal (not sure what they’re focused on!) aren’t buying. Four years ago, if you were a BuzzFeed or a Vox, you’d just eye NBC as your exit path. Now that story isn’t as attractive.

Even worse is that if the most promising startups are getting passed on, what happens to the small fries? Mic, Refinery29, Mashable — that ilk— will all have to make some hard decisions (and some already have, as we’ve seen).

(Let’s also not forget that this is happening at a time of 3.9 percent unemployment, rising corporate profits, and healthy overall economic growth. The next recession might be mild for the country overall, but it won’t be for the news business.)

BuzzFeed’s specific job cuts are still not clear; Peretti said in his memo that the staff would have specifics by Monday. One Media Twitter fear is that BuzzFeed News, the company’s investigative and reporting unit, will be particularly hard-hit, having been less affected in previous cutbacks. Another possibility is international retrenchment: BuzzFeed U.K. editor-in-chief Janine Gibson announced last week that she is leaving the company, and the U.K. staff was disproportionately affected by the 2017 layoffs. BuzzFeed confirmed there would be layoffs in News and International but wouldn’t share how they’d be divvied up. (BuzzFeed News has been a finalist for the Pulitzer Prize in International Reporting the past two years.)

Hiring at both BuzzFeed and BuzzFeed News had already slowed down substantially before Wednesday’s announcement, according to numbers compiled by ThinkNum: “In April 2017, BuzzFeed was hiring for as many as 185 positions. As of last week, it listed just 48. Hiring at Buzzfeed News has all but stopped: In August 2017, the division was hiring for 21 openings. By October 2018, BuzzFeed News listed only one open position.”

The scariest thing this time around is that it’s not easy to pinpoint what exactly BuzzFeed did wrong. Yes, it seems to have hit a limit for how far a strategy reliant on native advertising and social distribution can go — but it’s also adjusted, trying to build revenue streams out of programmatic advertising, merchandising, and yes, that membership play. You can comfort yourself with the notion that Mic and Mashable were ridiculous anyway — but when the BuzzFeeds and the Vox Medias get hit repeatedly, it’s harder not to see the revenue problems for ad-driven news online are systemic.

Two months ago, Peretti floated the idea of a sort of digital publishing Justice League, “a series of mergers with five or six top internet publishers,” conglomerating into a BuzzVoxViceNine29Corp. He framed it as a way to better compete with Facebook and Google for ad dollars (and more favorable terms). But the real bottom-line impact of any such deal would come from cost-cutting, not any newfound market power. BuzzFeed appears to be getting a headstart on that.

POSTED     Jan. 24, 2019, 11:18 a.m.
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