Read on Twitter
Why Publications Are Doing Layoffs Right Now: A Thread
1. Over the past 10 years digital media was heavily funded by venture capital in the belief that scaling up to be as big as possible and selling as many ads / sponsored content as possible was the best way to make money.
2. These publications got huge audiences and online footprints and made revenue, but were still losing tons of money to Facebook and Google and digital ad middlemen: lots of layers between publications and advertisers.
3. In the past few years, the VC optimism ran out and people started freaking out about being profitable (or trying to sell their publications, which only a few did). Paywalls and subscriptions to the rescue! Smaller scale but more dependable.
(Sidenote: ecommerce and affiliate marketing revenue came in here to shore things up / provide another model. Congrats to Wirecutter (a NYT company))
4. The companies reoriented around high-end content (IP / longform), B2B products, subscriptions, live events, but still lots of digital (and maybe print) advertising and sponsored content.
5. The pandemic wiped out advertising because advertisers have nothing to market and start demanding not to have ads next to coronavirus content https://www.buzzfeednews.com/article/craigsilverman/news-sites-need-ads-to-survive-the-coronavirus-more-than-35
6. Live events are now nonexistent in quarantine. That’s something The Atlantic had invested heavily in. Its majority owner, Emerson Collective, also owns Pop-Up Magazine, which just started doing video instead of IRL.
(Sidenote: all that lost revenue -> immediate needs to do layoffs! AFAIK pubs don't even get that digital ad revenue immediately (print def doesn't), so they're facing the prospect of future income just crumbling)
7. The places not doing layoffs are those that invested most in expensive subscriptions: NYT, WaPo, Boston Globe — and those that are using VC to develop subscriptions: The Information, The Athletic. The Atlantic has tons of new subscribers, but not like NYT.
8. Subscriptions are growing but not fast enough to offset the mounting losses, which, who knows when ads will come back. Hence The Atlantic and its previous child-company Quartz doing big layoffs.
9. Basically: Digital advertising is still monopolized by Facebook and Google, thus totally fickle to news events and fundamentally unreliable as a majority source of income for media businesses. Need the other revenue streams: Subscribers, B2B products, IP...
10. New media ventures will be aimed at developing massive paid subscriber bases and selling them more products directly, just like........ print magazines and newspapers in the 20th century. Digital advertising is nice but not the only pillar of a legacy media co
(Sidenote: Newsletter companies seem to be doing alright because they have a closer relationship with readers and advertisers and much smaller staffs, since it's a lot of curation vs original content. Also already paid subs!)
This is media in 2020. Subscribe to Study Hall, a subscription-only media company that does not spend more money than our members provide us: http://studyhall.xyz
It's Funny to Me, Actually, that after all of the VC froth, the media companies that are doing best are the massive legacy operations with deep, longterm connections to readers.
As @felixsalmon points out, everyone is hurting. The FT, a giant of high-end subscriptions, is doing layoffs. @skift and other less 'sexy' industry titles are pivoting and trying to maintain their connection with readers, which seems hopeful
On podcasts: Ad rates on podcasts are still (maybe artificially) high because they're not as automated and don't have as many middlemen. Podcasts also have a much deeper connection with listeners than a random blog post, and so can sell more stuff via ads.
On Patreon and Substack: Small-scale subscriptions are great and reader loyalty is great but there's a big need for help making the leap from $200k in annual revenue to $2 mil that will sustain a slightly larger news / commentary organization.
On nonprofits: Great stuff is happening like Texas Tribune, but those really require an ironclad constitution and funding and by nature can't be flipped or sold or merged (?) Would love to see NONPROFIT NYT that networks every regional nonprofit
BTW: Study Hall is a weekly media-industry newsletter and a digital community for media workers. Our Patreon, with many original articles, is here: http://patreon.com/studyhall . Consider subscribing, or tip us: [email protected] on PayPal
Two more notes: the FT is possibly not going through any layoffs this year and The Information may not technically be 'VC-funded'. Has it had any funding whatsoever? Would be amazing if not.
Here are the FT freelance layoffs: https://pressgazette.co.uk/ft-spending-pay-cuts-despite-50000-new-sign-ups-covid-19-crisis/ The Athletic has also laid off freelancers https://britnidlc.substack.com/p/what-happened-to-the-athletics-wnba
And correx: The Information is entirely funded by founder Jessica Lessin! https://fortune.com/2016/08/05/jessica-lessin-the-information/ May we all be so lucky
Update: We just published an expanded, cleaned-up, corrected version of this thread on our Patreon unpaywalled https://www.patreon.com/posts/why-publications-37403792 (but please subscribe!)
