You don't always hear the bubble burst. Often, it's more a gradual escaping of air, signaled by nothing more than the occasional queasy feeling you bat away: One house for sale on the block, oh well. Two, three—maybe just a robust market? Five, six, seven—and suddenly everyone's underwater and the sheriff is at your door.
That's kind of how it's feeling in the digital media business. For a few years now, investors have been pouring money into online news with the kind of fervor that once fueled the minimansion boom. But in the past year, the boarded-up windows have started showing up: The Guardian, which bet heavily on expanding its digital presence in the United States, announced it needed to cut costs by 20 percent. The tech news site Gigaom shut down suddenly, with its founder warning that "it is a very dangerous time" to be in digital media. Mobile-first Circa put itself on "indefinite hiatus." Al Jazeera America, once hailed as the hottest thing in bringing together cable news and digital publishing, shut down and laid off hundreds of journalists.
Pop.
And it's been getting worse. As the New York Times' John Herrman put it, "in recent weeks, what had been a simmering worry among publishers has turned into borderline panic." Mashable, which had made a big investment in news and current affairs, laid off dozens of journalists and pivoted to a new, video-heavy strategy. Investor darling BuzzFeed fought reports that it had slashed earnings projections by nearly 50 percent. Salon laid off a string of veteran staffers. Yahoo put its core business, including its news and search features, up for sale.
Pop. Pop.
Here's the thing: It was not hard to see this coming. For years now, smooth-talking guys (yes, mostly guys) with PowerPoint decks have offered up one magic formula after another to save the business of news. Citizen journalism—all the reporting done by users, for free, with newsrooms simply curating it all. "Brand You"—each journo out there on her own, drawing legions of followers to her personal output. (Even Andrew Sullivan couldn't make that work.) Viral headlines—every news shop Upworthy-ing its way into the Facebook swarm. Aggregation, curation, explainer journalism, explainer video, branded content, text bots, video, branded video, branded virtual reality video…each fueling the hope that here, at last, was the way to make news profitable again. A whole class of future-of-news pundits made a living pontificating about how "legacy media" were getting their lunch eaten by digital-native startups. (...)
What keeps them from making money now is that online advertising pays pennies. (Actually, a penny per reader is pretty good these days—CPM, or "cost per thousand" ads, is often far less than half that.) And there are a ton of people competing for those fractions of a penny—including Google and Facebook, which collectively pulled in a whopping 85 percent of new ad spending in the first quarter of this year. The only way to make ends meet in that environment is to turn up the fire hose of fast and cheap content or rent your pages out to native advertising (sorry, branded content).
Look at it this way: A reporter doing even modestly original work might produce five stories a week (and that's not allowing for anything more than a few phone calls and a couple of rounds of editing per piece). If each of those stories gets, on average, 50,000 readers, and each of those page views generates $0.01 (again, a very generous rate), you'll end up grossing $2,500 a week, or $130,000 a year, with which you'll have to pay the reporter and her editor, their benefits, web tech, sales and ops staff, taxes, insurance, electricity, rent, laptops, phones…
And this calculus assumes a brutal pace of hour-by-hour filing and publishing, with journalists constantly looking over their shoulder at the traffic numbers.... The math just doesn't work.
by Monika Bauerlein and Clara Jeffery, Mother Jones | Read more:
That's kind of how it's feeling in the digital media business. For a few years now, investors have been pouring money into online news with the kind of fervor that once fueled the minimansion boom. But in the past year, the boarded-up windows have started showing up: The Guardian, which bet heavily on expanding its digital presence in the United States, announced it needed to cut costs by 20 percent. The tech news site Gigaom shut down suddenly, with its founder warning that "it is a very dangerous time" to be in digital media. Mobile-first Circa put itself on "indefinite hiatus." Al Jazeera America, once hailed as the hottest thing in bringing together cable news and digital publishing, shut down and laid off hundreds of journalists.Pop.
And it's been getting worse. As the New York Times' John Herrman put it, "in recent weeks, what had been a simmering worry among publishers has turned into borderline panic." Mashable, which had made a big investment in news and current affairs, laid off dozens of journalists and pivoted to a new, video-heavy strategy. Investor darling BuzzFeed fought reports that it had slashed earnings projections by nearly 50 percent. Salon laid off a string of veteran staffers. Yahoo put its core business, including its news and search features, up for sale.
Pop. Pop.
Here's the thing: It was not hard to see this coming. For years now, smooth-talking guys (yes, mostly guys) with PowerPoint decks have offered up one magic formula after another to save the business of news. Citizen journalism—all the reporting done by users, for free, with newsrooms simply curating it all. "Brand You"—each journo out there on her own, drawing legions of followers to her personal output. (Even Andrew Sullivan couldn't make that work.) Viral headlines—every news shop Upworthy-ing its way into the Facebook swarm. Aggregation, curation, explainer journalism, explainer video, branded content, text bots, video, branded video, branded virtual reality video…each fueling the hope that here, at last, was the way to make news profitable again. A whole class of future-of-news pundits made a living pontificating about how "legacy media" were getting their lunch eaten by digital-native startups. (...)
What keeps them from making money now is that online advertising pays pennies. (Actually, a penny per reader is pretty good these days—CPM, or "cost per thousand" ads, is often far less than half that.) And there are a ton of people competing for those fractions of a penny—including Google and Facebook, which collectively pulled in a whopping 85 percent of new ad spending in the first quarter of this year. The only way to make ends meet in that environment is to turn up the fire hose of fast and cheap content or rent your pages out to native advertising (sorry, branded content).
Look at it this way: A reporter doing even modestly original work might produce five stories a week (and that's not allowing for anything more than a few phone calls and a couple of rounds of editing per piece). If each of those stories gets, on average, 50,000 readers, and each of those page views generates $0.01 (again, a very generous rate), you'll end up grossing $2,500 a week, or $130,000 a year, with which you'll have to pay the reporter and her editor, their benefits, web tech, sales and ops staff, taxes, insurance, electricity, rent, laptops, phones…
And this calculus assumes a brutal pace of hour-by-hour filing and publishing, with journalists constantly looking over their shoulder at the traffic numbers.... The math just doesn't work.
by Monika Bauerlein and Clara Jeffery, Mother Jones | Read more:
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