Not long after launching in the UK, BuzzFeed co-founder Jonah Peretti wrote of his dream for the website, built on viral cat videos, to become the Time magazine for a “new golden age of media”. Comparing BuzzFeed’s trajectory with the iconic magazine of the 20th century, he wrote: “In our case, it only took a few years to go from summarizing web trends in our little Chinatown office to reporting from Syria and the Ukraine.”
Yet this week, BuzzFeed pulled the plug on its UK and Australian news operations, effectively ending its global expansion plan.
The first thing to say about this closure – leaving a few reporters to cover “news that hits big in the US” – is that it is not a failure of BuzzFeed’s journalism. In both places, tiny teams (cut to just four in Australia and 10 in the UK) punched well above their weight in covering underreported issues such as LGBT rights and publishing scoops.
The failure is one of a marketplace in which digital advertising has not been able to match the combination of cover price and print ads which supported Time magazine, as well as other newspapers, from the early years of the 20th century to the early years of this one.
Without the baggage of printing presses and grey-haired readers, the retreat of BuzzFeed and other digital natives such as Quartz, which on Thursday cut half its workforce, shows the extent of an industry car crash already piled high with newspaper closures and job losses. Even before Covid-19, it felt far from a new golden age for the media.
BuzzFeed blamed “economic and strategic reasons” for its decision, and it is hard to predict which news organisations will survive what the company called this “difficult period”. But it’s not too early to think about what lessons could be learned from it.
To start with the obvious, news does not make money. At the start of this year, in an exhortation to “get after 2020,” Peretti wrote about how news remained the only unprofitable BuzzFeed division. Yet in an interview in 2015, that all seemed part of the plan: Peretti told me that news was the best way to move beyond clickbait. It drove readers to the site, but it cost more to produce and was shared less than any other content. What counted, he said, was “impact, not traffic”. Getting laws changed and righting wrongs, in other words, rather than making money.
Second, global as well as local news is under threat. The collapse of local newspapers in both the UK and US is well documented, but BuzzFeed’s decision to focus on serving its home market is a sign that, when the wolves are howling at the door, only those close to home get pulled inside. Foreign news outfits are particularly costly to run, no matter how attractive the size of the market. Losses in BuzzFeed’s non-US business quadrupled from £1.9m to £8.9m in 2018, the last date available.
The company, which relied until 18 months ago on advertising alone, was nothing if not innovative – yet its struggles suggest that innovation counts for little in a market sewn up by two groups. Like many journalists, Peretti mistook the reach of his company’s content rather than its financial firepower as a marker of its scale. In his grandiose 2014 memo to staff, Peretti wrote: “BuzzFeed reaches … more people globally than the print circulation of all the biggest newspapers or magazines, and as we continue to expand internationally, the benefits of this scale will become even more dramatic. The golden age of media never saw numbers this big.”
Yet BuzzFeed never made a global profit despite this enormous audience. Even at its peak, with annual revenues of some $300m (£245m), it could never compete with the two companies which dominate the digital advertising market. Google and Facebook together accounted for $205bn of revenues in 2019. Buzzfeed tried many things to beat the so-called “attribution problem” in which Google and other platforms hoover up revenues from content they didn’t create. But neither pivoting to video with shows for Facebook et al, nor selling kitchenware in Walmart earned enough.
I called Martin Sorrell, the veteran advertising executive who was once a huge fan of BuzzFeed, to ask what went wrong. “BuzzFeed never got the scale [of Google or Facebook],” he said. “The strong will just get stronger.”
When it comes to finances, BuzzFeed – and indeed so much of the current carnage in the US media – proves that venture capitalists, or anyone out for a quick profit, make bad media owners.
Buzzfeed raised hundreds of millions from sexy venture capital firms with names like a16z – and there was even talk of a listing on the US stock market in 2018. But such investors like charts that shoot up at 45 degree angles. Once growth slows, so does their interest. Investment into digital media stuttered as early as 2014, according to Pitchbook data. BuzzFeed started asking for voluntary contributions from readers in November 2018.
Finally, and perhaps most worryingly, appealing to young people is not enough for news organisations. Not so long ago, a newspaper industry that worried about an average reader close to claiming free bus fares looked on in envy at sites like BuzzFeed, which trumpeted an audience largely made up of 18- to 34-year-olds. At one point, Google Analytics research suggested that half of that age group in the US visited Buzzfeed.com every month, catnip to those all-important digital advertisers.
Yet once they realised these young readers pay less than their parents’ annual subscriptions to the New York Times, advertising attention moved on, to sites like Snapchat and now TikTok.
Few journalists will feel happy at the demise of digital news sites. But there is still hope that news and professionally curated information can survive. After all, when Time co-founder Henry Luce first teamed up with Briton Hadden to produce a weekly news magazine, they first called it Facts. Almost 100 years later, there is still a lot of time for those at least.
• Jane Martinson is a Guardian columnist
