Business News, August 2014 Edition
Buzzfeed, which gets about 150 million of us to visit each month, just closed a $50 million round with Andreessen Horowitz, the prominent technology venture firm.
Chris Dixon, general partner at the VC firm, says Buzzfeed is a “full stack" startup, meaning that it’s not just an online publisher, but rather an online publisher with integrated end-to-end technologies.
In this case, a media stack on which listicles and in-depth reporting can co-exist side by side, driven by a modern content management system, integrated analytics and ad serving engines, and a 75 person team creating “native content” for advertisers. It’s repetitive to say Buzzfeed also gets the social thing. About 75% of Buzzfeed’s traffic comes from social media.
What, fundamentally, makes this an interesting investment to Dixon? A mastery of social, mobile, content and tech:
Many of today’s great media companies were built on top of emerging technologies. Examples include Time Inc. which was built on color printing, CBS which was built on radio, and Viacom which was built on cable TV. We’re presently in the midst of a major technological shift in which, increasingly, news and entertainment are being distributed on social networks and consumed on mobile devices. We believe BuzzFeed will emerge from this period as a preeminent media company.
Meantime, legacy media companies are dropping their print publications. “Divestiture" is the name of the 2014 game. Three companies built on print — Ganett, the Tribune Company, and EW Scripps — are focusing on television, radio and the Internet, and spinning off their print properties to survive as independent companies that sink or swim as the tides may turn.
Says The New York Times’ David Carr:
The persistent financial demands of Wall Street have trumped the informational needs of Main Street. For decades, investors wanted newspaper companies to become bigger and diversify, so they bought more newspapers and developed television divisions. Now print is too much of a drag on earnings, so media companies are dividing back up and print is being kicked to the curb.
The news behind the news, of course, is that already reeling smaller, regional papers will increasingly vanish without the financial buffer provided by being part of larger diversified companies. This, despite the fact that 72% of Americans follow local news via these same print publications. Then again, many outside the news media bubble don’t know about the financial disruption that’s churned the industry over the last decade.
Via last year’s Pew State of the Media Report:
[T]he majority of people surveyed early this year had heard little or nothing about the financial problems besetting news organizations. The largest group of respondents—36%—said they heard “nothing at all” about the issue and the second largest—24%—said they heard “a little.”
So where goes print?
As news of the $50 million Buzzfeed round pinged about the Internet, a quieter profile of Harper’s publisher John MacArthur hit the Web. In it, he doubles down on print:
The web is bad for writers, [MacArthur] said, who are too exhausted by the pace of an endless news cycle to write poised, reflective stories and who are paid peanuts if they do. It’s bad for publishers, who have lost advertising revenue to Google and Facebook and will never make enough from a free model to sustain great writing. And it’s bad for readers, who cannot absorb information well on devices that buzz, flash and generally distract.
He does not want to explore many of the new revenue streams favored by other publishers — like Monocle, which has stores and a radio station. He will not let advertisers sponsor a section of the magazine, let alone place native ads, for fear that it will look as if they own Harper’s. He does not want conferences or to make videos. “A magazine should be a magazine,” he said. “A newspaper should be a newspaper.”
Harper’s, like other general interest literary magazines, consistently loses money. Then again, as a nonprofit backed by the MacArthur foundation and its $5.7 billion endowment, it’s not going away anytime soon.
For the rest: the forecast reads rocky times ahead.
Image: Old Carissa shipwrecked off the coast of Oregon, via Erin MIsserion on Flickr. Select to embiggen.
What does this mean for UK publishers? I think the big question is why are we not seeing businesses like Buzzfeed and Huffington Post originating in the UK.