London Daily

Focus on the big picture.

Turmoil At BuzzFeed, Vice Signals Crisis In The World Of Free Digital Media

Turmoil At BuzzFeed, Vice Signals Crisis In The World Of Free Digital Media

BuzzFeed, one of the OG new media disruptors, announced in late April that it would shutter its news division. Translation: 180 jobs lost.
With the closure of BuzzFeed News and bankruptcy looming at Vice, the once promising world of free digital media finds itself at a crossroads, seeing ad revenues dry up at the same time as disappointed investors begin walking away.

BuzzFeed, one of the OG new media disruptors, announced in late April that it would shutter its news division. Translation: 180 jobs lost.

As for Vice, the company -- once a darling that attracted major funding from Disney and Fox, among others -- has canceled its signature show Vice News Tonight, laid off 100 people, and is reportedly on the verge of declaring bankruptcy.

The two media groups have different profiles and goals, but one thing they have in common is a reliance on advertising dollars to fund their operations.

But in tough economic times, advertising is one of the first things to go, and tech giants now account for 70 percent of all digital ad revenues, with Google and Facebook leading the way.

"I think the free model -- trying to build high volume, and then sell ads on that basis -- hasn't worked out nearly as well as hoped," says Rick Edmonds, a media business analyst at the Poynter Institute, a non-profit journalism research organization.

Ben Smith, the onetime editor-in-chief of BuzzFeed News, is more unequivocal.

"It's the end of the marriage between social media and news," he told The New York Times.

At the start of the 2010s, Vice and BuzzFeed -- along with the Daily Beast and the Huffington Post -- were the standard bearers of a new generation of media outlets that were completely online and ready to battle the traditional purveyors of news.

The model quickly seduced investors.

"These outlets expanded way beyond their capacity, because they were attracting an enormous amount of venture capital," says Dan Kennedy, a professor of journalism at Northeastern University in Boston.

"Venture capitalists told themselves a fairy tale, which was if Vice and Buzzfeed News and all the rest are going to generate this much traffic, there must be a way to monetize all that traffic."

In 2017, Vice Media was valued at $5.7 billion -- more than the market capitalization of The New York Times at the time.

But when progress is slow in coming, investors "get impatient," Edmonds says.

'Hard sell'

As interest rates rose over the past year, tighter lending conditions have made venture capitalists more tight-fisted, and "everybody called in their chips," explains Aileen Gallagher, chair of digital journalism at Syracuse University's Newhouse School of Public Communications.

Vice and BuzzFeed had already struggled to attract new investments for several years and were forced to resort to taking on debt to stay afloat. Neither was turning a profit.

Fortress Investment Group, Vice's main creditor, could take the media company if it declares bankruptcy, according to The New York Times.

In 2021, BuzzFeed went public, but the move quickly proved disastrous -- the company, once valued at $1.5 billion, only raised $16 million.

In this tumultuous environment, free news websites attached to major groups like Vox (Vox Media), Mashable (Ziff Davis) and The Daily Beast (IAC) have fared better, helped in part by economies of scale and majority shareholders with long-term vision.

BuzzFeed was searching for such a set-up in 2020 when it bought The Huffington Post, which remains part of its group and is even profitable, although with a much smaller footprint than in its heyday, according to CEO Jonah Peretti.

Free media sites are the most exposed when the economy is tight, and many of them -- including NPR, The Washington Post and CNN -- have proceeded with layoffs.

Others, like The Daily Beast, have tried to transition to a paywall model, but for Edmonds, "that's a fairly hard sell to news consumers, particularly if it's a brand they've gotten used to having free."

"You have to really care about something to subscribe to it," Gallagher points out. "There's a lot of middle ground content in the digital world that doesn't have a lot of value. And I think that's the kind of stuff that's going to disappear."
Newsletter

Related Articles

London Daily
0:00
0:00
Close
UK's Infected Blood Scandal: Conclusion Nears After Seven Years
ICC Seeks Arrest Warrants for Israeli and Hamas Leaders
Julian Assange Granted Right to Challenge US Extradition
Congo Army Thwarts Attempted Coup Involving Americans and a British Citizen
Ireland's Homeless Gain Voting Rights
Blinken orders crackdown on Israel-Hamas leaks
Julian Assange Faces US Extradition: Key Facts
Jacob Zuma Takes Campaign to ANC Stronghold Soweto
Attempted Assassination of Slovakia PM Robert Fico: Investigation Ongoing
What Happens If an Iranian President Dies in Office?
Spain Recalls Ambassador After Argentina President's Remarks
Rishi Sunak Faces Cabinet Backlash Over Proposed Changes to Foreign Student Visas
Rwanda Denies Entry to Human Rights Researcher
Iranian President Ebrahim Raisi Reportedly Killed in Helicopter Crash
Blue Origin Resumes Space Tourism with 90-Year-Old Ed Dwight
Rishi Sunak and Wife Akshata Murty Wealthier Than King Charles
New Dutch Government Drives Wedge Through EU Liberals
Iranian President Raisi Missing After Helicopter Goes Down
Freemasons and ‘Global War Party’ Accused of Conspiring Against Georgia
Poland Supports Rolls-Royce's Nuclear Power Plant Initiative
European Ports Overflow with Unsold Electric Vehicles
Esprit Files for Bankruptcy in Europe, Putting Hundreds of Jobs at Risk
Chevron Halts North Sea Drilling Amid Rising Tax Burden
Jeremy Hunt Accused of Exaggerating Conservatives' Economic Record
Victoria Atkins Discusses Historical Gender Bias in the NHS
Dublin and Monaghan Bombings 50th Anniversary: Calls for Justice
Rishi Sunak and Akshata Murty’s Wealth Rises to £651 Million
New Caledonia Riots Escalate After French Voting Rights Change
Renters Face Fierce Competition as Listing Times Shrink
Surge in Fake Science: 19 journals shut down due to fraudulent papers from 'paper mills'
Global Birthrates Decline, Raising Economic and Social Concerns
Boeing Faces Possible Prosecution Over 737 MAX Settlement Violation
Prisoner Escapes in France as Two Officers Killed in Van Ambush
German Court Rules AfD Can Be Monitored for Extremism
Jacob Rees-Mogg Criticizes Bank of England’s Inflation Strategy
Prince Harry and Meghan Markle Promote Invictus Games in Nigeria
UK Arms Ban on Israel Would Aid Hamas, Says Cameron
US Regulators Probe Credit Card Reward Schemes
Labour Vows to End Rwanda Deportation Scheme/Scam
Exonerated Andrew Malkinson Faces Hardship Awaiting Compensation
India Poised to Surpass Japan as 4th Largest Economy
UN General Assembly Approves Palestinian Membership Bid
Biden to Impose Tariffs on Chinese Electric Vehicles
Cyberattack Disrupts Major US Healthcare Network
McDonald's Introduces $5 Meal Deal to Attract Customers
Protesters Attempt to Storm Tesla's German Factory
The United Kingdom reports it has emerged from recession
Teens Forming Friendships with AI Chatbots
WhatsApp Rolls Out Major Redesign
Neuralink's First Brain Implant Experiences Issue
×