BuzzFeed has been given a lot of money over the years — $496.3 million, to be exact, over seven rounds of funding. But even with half-a-billion dollars at its disposal, the company hasn’t managed to consistently turn a profit, as its founder Jonah Peretti admitted earlier this year. (In fairness, profit is tough when the vast majority of online ad dollars flow to Facebook or Google.) Last year, the company fell short of revenue goals, bringing in $260 million instead of the planned $350 million.
Still, the company is trying. It’s still churning out native content; it features the banner ads it once scorned; it has video programming on Facebook, Twitter, and Netflix, subsidized by those platforms, of course; and it gets commissions from e-commerce affiliate link programs. It has also laid off dozens of people in the past year, including its entire podcast division.
Today, BuzzFeed announced a new revenue stream: you. Earlier this year, BuzzFeed put out a digital tip jar at the end of some of its articles; the membership announcement today is the next step. You can pay $5 a month for BuzzFeed’s articles, or you can pay $100 a year and get a tote bag. It’s like subscribing to NPR. Except that it’s not radio and … not public.
Asking for readers to pay for access to a publication is not a bad idea (just ask us, lol), but it’s a somewhat different proposition for a website backed by venture capitalists hoping to turn a profit in a liquidity event like a sale or public offering. It’s one thing to toss money to a publication whose work you admire and want to support, and quite another to toss money to a publication whose work you admire and want to support that’s already received quite a bit of money from investors like Andreessen Horowitz and Comcast. It’s hard not to feel like you’re being asked, in part, to make some very rich people and companies whole. BuzzFeed has been lauded for innovation and experimentation in building a new type of large-scale digital-revenue model, only to now fall back on something so traditional. Where did that half-a-billion dollars go? Into R&D for a Wi-Fi hot plate?
But, well, media needs to figure out some new model. The root cause of all of this experimentation and upheaval and uncertainty is, as previously mentioned, the fact that Facebook and Google dominate digital advertising. BuzzFeed CEO Jonah Peretti has a solution for this too: forming a gigantic megapublisher to negotiate with those two companies and get some of their billions. “Consolidation in digital media is something that is going to happen,” he told the New York Times. He did not elaborate on who BuzzFeed might merge with.
Ironically, the merger idea preaches the virtues of collective action against an entrenched power, while Peretti has spent the last few years discouraging BuzzFeed’s many varied departments and global outposts from unionizing. Like most VC-backed start-up founders, Peretti has gotten very good at giving old ideas a new label and reselling them to the public.