DANIEL VAUGHAN: Media winter enters Siberian conditions
Temperatures are warming up across the United States, but the media winter is only deepening. BuzzFeed News is the latest victim of the winter, with its parent company shuttering the entire news division. That move is part of an overall 15% reduction in BuzzFeed's staff. Industry observers see it as a longer-term trend where AI is taking news content creation jobs.
BuzzFeed News shuttering isn't the only action happening. Insider Inc., formerly known as Business Insider, is cutting 10% of its workforce. That came after announcements of layoffs at ABC News, Spotify, Salem Media Group, and NPR, among many others. Budget shortfalls are occurring across the media landscape as ad revenue dries up. Companies without subscription-based revenue, sometimes even if they do have it, are cutting costs everywhere.
If it's not layoffs, pay cuts are also on the horizon. ESPN announced both, with layoffs set to start next week and pay cuts requested from its on-air talent. In the news media, the Trump bump is long over. For everyone else, decreases in ad revenue are hitting everyone hard. The press was already cold, but now it's shifting into a frozen-over tundra with no end in sight.
BuzzFeed won't be the last shutdown.
BuzzFeed News isn't likely to be the last outlet to go under. The Wall Street Journal reports that Vice Media is on the chopping block: "Vice Media, which has been looking to sell itself for several months, is discussing shutting down Vice World News if a sale doesn't materialize in coming weeks, according to people familiar with the situation."
Entering 2023, the NYTimes reported that newspapers were averaging about two shutting down a week. The pandemic squeezed media outlets, and now an oncoming recession seeks to drop a hammer on the rest. The pressures facing media are true across all mediums: print, television, radio, and anything else. The media winter is settling in hard.
Social Media faces similar pressures.
There's a similar story on the social media front, which is getting hit from two sides. On the one hand, social media companies are one of the core tech sectors that are getting hammered by rising interest rates. BigTech got built on top of low-interest rates and easy money. With that critical money flow drying up, growth is rapidly disappearing across the tech sector.
Additionally, like media outlets, social media companies are dependent on ad revenue to arrive at a profit. Elon Musk got ahead of the curve by firing 80% of Twitter's staff and focusing on creating profit through new subscription models like Twitter Blue. He claims that Twitter is nearly profitable, which would be unique for the company. Whether it works or not is another matter, but he's not alone.
Following the model he always has, Mark Zuckerberg copied Musk's moves letter for letter. Facebook and Instagram are rolling out paid verification. Zuckerberg has already committed Meta to lay off approximately 25% of the workforce. Now, he's "told employees that he won't rule out future layoffs and said he doesn't expect the social-media company to hire as quickly as it did before the layoffs that began late last year."
Trump Bump vanishes.
For all the hate that Elon Musk has gotten for his moves, you can find virtually identical ones elsewhere. In fact, the only real difference between Musk and Zuckerberg is that Meta remains committed to censoring various forms of speech on its platforms, in contrast to Musk.
In the past, analysts have identified the absence of the "Trump Bump" as the reason media outlets have suffered drops in ratings and profit. That's why many outlets are pushing a Trump candidacy and coverage of him so hard - they want to return to the 2016 - 2020 era where media ratings were in a mini-boom.
But that's gone, as is any momentum from it. Media outlets must support themselves based on their value to the average consumer. And in an increasingly divided media culture, where everyone is divided into smaller and smaller niches, there's less room for anyone to make a dollar.
A Siberian winter is here.
As I wrote in December, "Winter has arrived. There's no avoiding it now. The hardest partisans in the media may claim a recession isn't here for the sake of the Biden administration. But it's abundantly clear that the business decisions of these networks tell another story. Recession has hit the press. They ignored all the evidence, but there's no getting around a pink slip."
While defending the Biden administration and this economy with one breath, the press is cutting costs, laying off people, and trying to get talent to take pay cuts. It's easy to lie with your mouth to defend a politician. Money talks, too, though. And it tells us what the press really believes about this economy and the media industry.
Winter isn't coming. It's here. The press is in Siberia.