Job losses at digital media outlets Buzzfeed and HuffPost have left the industry reeling.
Buzzfeed announced last week it was reducing its workforce by around 15 percent, shedding 250 jobs. Verizon, which owns the news site HuffPost, Yahoo and AOL, is cutting 7 percent of its staff.
Verizon did not specify how the 800 job losses would be distributed, but at least 15 journalists at HuffPost received their marching orders five days ago. Among those being axed are a Pulitzer Prize-nominated reporter and HuffPost’s opinion and health sections.
It was assumed that the only way was up for digital media even as the fortunes of traditional media, such as newspapers, plummeted. Digital media was seen as being immune to layoffs and budget cuts.
But digital media, like any business, had to keep generating income to maintain investor confidence, according to Simon Gwynn from advertising and marketing trade magazine Campaign.
“I would disagree that everyone thought new media was immune,” Gwynn said. “Publishers like Buzzfeed have hugely grown their organizations as a result of venture capital funding, without the expectation they will be able to break even in the early stage. People who believed in their potential thought that, as they became established players, more and new forms of income would emerge but that hasn’t really happened.
“It has got to the stage where the funders of Buzzfeed et al have decided the models are no longer sustainable and staff cuts are necessary.”
Analysts point the finger at tech giants Facebook and Google to better understand why the business model for sites like Buzzfeed stuttered.
Both companies came under fire recently, accused of squeezing out smaller publishers by undercutting them on advertising rates.
“Digital media companies such as Buzzfeed and Verizon Media have struggled for years to keep pace with Facebook and Google,” Paul Verna, principal analyst at eMarketer, told Arab News.
Facebook and Google make up 52 percent of global digital ad revenue between them, he added.
“China’s biggest digital media companies — Alibaba, Baidu and Tencent — account for an additional 17 percent, meaning that more than two-thirds of worldwide digital advertising flows directly to these conglomerates. The combined share of these companies has grown by 10 percentage points in the last three years and is expected to continue climbing.
“These statistics give an indication of how challenging it has been for brands like Buzzfeed, HuffPost, Yahoo and AOL to compete against digital media giants that have more scale, deeper pockets and more diversified businesses.
“HuffPost’s editor-in-chief, Lydia Polgreen, said it clearly when she addressed her staff to discuss this month’s job cuts.”
In that meeting, held last Thursday, Polgreen said: “These giant platforms, they broke our industry. This is an existential challenge for every single publisher.”
While the switch to digital and then social and mobile media has been difficult for traditional media companies, it has hardly been easier for businesses that started out as digital because they lacked one important element — brand loyalty, said Verna.
“In some ways, the battles of the digital media brands are more intense because they had less brand equity than the likes of The New York Times, Wall Street Journal and Washington Post,” he said.
Verizon Media did not respond to questions regarding Middle East operations and said there was “no further comment at this time” to add to its earlier statement.
“Our goal is to create the best experiences for our consumers and the best platforms for our customers. today makes a strategic step toward better execution of our plans for growth and innovation into the future,” the company said previously.
This article has been adapted from its original source.
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