It’s been a big, weird year for the media industry. Gawker, the pioneering blog, declared bankruptcy and was sold off to Univision, whose millennial-focused digital endeavor Fusion has been having trouble finding an audience. The Awl, an heir to a certain version of Gawker, moved to Medium along with a number of other small websites. Medium’s own in-house editorial product, Matter, has turned itself into a … studio? Or something? BuzzFeed missed its early revenue goals by a wide margin, and has reorganized internally to emphasize video. (A better outcome for employees than at Mashable, where dozens were laid off in April, in preparation for a “strategic shift” toward video.) Vice launched a cable channel! Which no one is watching. Not that the executives at Disney, who seem likely to purchase the company, mind.
And then there’s Tronc. Tronc! Whatever it is.
What’s going on? At the root of these changes is a change in how digital publishers and advertisers do business. Selling display ads — banner ads and other advertisements you see alongside articles on websites in your browser — is no longer really lucrative enough to support a business. At the same time, sponsored ads — article-like pieces of content that are created at the behest, and with the input of, brands — haven’t been able to replace them. So what’s next? Video ads. And to sell video ads, you need video.
You can see this on Facebook, as much as anywhere else: The social network has shifted the formula by which it sorts your News Feed to prioritize video over outbound links. (Facebook, after all, has its own ads to sell.) It’s easy to talk about this in the abstract as a set of levers and incentives that digital publishers are forced to apprehend. But the change in priorities of advertisers and distribution channels like Facebook is more than just a minor new hurdle — it’s a requirement for those publishers to enter an entirely new business. We’re living through the effects of an ongoing shift away from text and pictures and toward video as the primary product of digital-media companies, a break that even the best-capitalized media brands are navigating only with difficulty. Smaller publishers are calling it quits or offloading their technical infrastructure to Medium. Larger ones are cozying up to telecom giants, partnering with the hydra-headed conglomerates like Disney and NBCUniversal, or subsidizing themselves with conferences.
The pain of the new regime is probably felt most keenly on small sites. There are a few ways to sell ads on websites: You can sell space and inventory more or less directly to advertisers (and make more money), or you can set up with an automated network like Google AdSense (and make less money serving up janky ads). Small websites — like the recently defunct and sorely missed the Toast — have trouble attracting an audience of the size necessary to get a foot in the door with big brands, and generally can’t make enough money off of programmatic advertising to pay the bills.
This is where Medium has stepped in. The platform-slash-publisher-turned-definitely-platform has struck deals with a number of beloved small websites — including the Awl, Pacific Standard, and the Ringer, the Bill Simmons site primarily funded by HBO — to publish on Medium. The main pitch is that Medium handles the technical implementation and upkeep of the sites (reducing overhead costs) and helps sell ads, taking a cut of the revenue. But whether or not that is a sustainable business model for either Medium or for those sites remains to be seen.
Still, staying independent is hard. Gawker Media is on track to bring in more than $50 million in revenue this year but was forced to declare bankruptcy, arguably because it didn’t have a well-funded corporate overlord to shield it from Peter Thiel’s bottomless pockets (or, depending on your preference, to rein in its worst excesses). But most tellingly, something like a third (and growing) of Gawker’s revenue isn’t coming from traditional display ads, but from affiliate marketing links to Amazon and other sites. Text can still be profitable, as long as it’s selling something.
Larger sites, at least, have the warm embrace of wealthy investors. For now. Vice, which began as an outlet encouraging Canadian bad boys to take a bunch of amphetamines and put their dicks in weird places, sold an 18 percent stake in the company to Disney, a company that until recently required its amusement-park employees to shave their beards. (Vice CEO Shane Smith said that he’d be cool with Disney acquiring the other 82 percent as well.) Last year, NBCUniversal gave both Vox and BuzzFeed $200 million each.
Vice almost doesn’t belong with these other businesses: Its website has always been a loss-leader whose traffic was never intended to be large enough to generate self-sustaining revenue from display ads. Vice’s real product isn’t its articles but the premium videos it creates in collaboration with advertisers. Seen from this point of view, Viceland, its new cable channel, makes sense. (Sort of: According to The Wall Street Journal, “The company has to host regular screenings with pizza and beer so that its largely 20-something staffers can actually see the shows they spend their days making”; millennials don’t have cable.) It also produces a nightly news show, premiering on HBO next month. Rather than going full-tilt into the social-media maelstrom, Vice is shutting itself inside the old-media bunker of television.
Like Vice, Vox Media is flirting with television — its tech(ish) site the Verge now hosts an online after-show following Mr. Robot. But it’s also expanding into live events. Tech site Recode hosts an annual conference that rich dork geniuses pay thousands of dollars to attend; the Verge helped throw the Panorama music festival in New York a few weeks ago; and explainatron Vox(.com) presents a clear opportunity to sell exorbitantly priced conference passes to the people who call the White House Correspondents’ Dinner “Nerd Prom.”
And why not? The truth is, just because advertisers are eager for video doesn’t mean it’s a smart or sustainable move. Tronc, the rebranded version of newspaper magnate Tribune Publishing, is also trying to do a lot of video. They’re hoping to use algorithms, and artificial intelligence, and video to optimize content and increase engagement and monetize and build their brand … ? I think. Unless the actual videos they create are more compelling than their pitch, they’re in trouble.
As always, the company most worth watching is BuzzFeed, which has been dominant for the past half-decade precisely because of its ability to quickly adapt to changes in the digital environment. And even though slower growth than hoped led to missed revenue goals and slashed projections earlier this year, BuzzFeed’s still pushing hard into video. This week’s reorganization has planted seeds of its Motion Pictures department all over the company, as both the news and entertainment sections feverishly produce more and more footage.
BuzzFeed will be fine — as will Vox and Vice. They have enough money to produce video. It’s the middle class of digital media — the kind that doesn’t have the cash or ability to build a large video operation — that’s nervous. Advertisers are willing to pay more for video, and if you’re not making it, you may not be able to get into client meetings that will land you big contracts. (One solution: Automate your video process!)
Earlier this week, Kelly Conaboy asked, at the Hairpin-on-Medium, what happened to blogging. There are cultural answers to the question, but ultimately, well, it’s gotten too hard to make money from it. It’s not that writing is dead, or that we’ve moved to a “post-text” world. In fact, the problem may be that there’s too much text. It’s the easiest content to produce and is in high supply. I’m doing it right now! But text is not a high-margin business. Writing isn’t what media orgs do to pay the bills anymore; it’s the bonus afterward.