How else could 2017 end but with a leading digital media exec saying media is in crisis? Also this week: Lucia Moses on Facebook possibly turning against news and Sahil Patel on Hulu’s big year.
The state of BuzzFeed
BuzzFeed CEO Jonah Peretti dropped an end-of-the-year memo today that is a fitting coda for the year. “Media is in crisis,” Peretti writes, detailing the known headwinds facing media companies at a time when duopoly power is sapping the ad market.
None of Peretti’s solutions will come as a shock. In fact, they are more of a return to basic media principles. Build meaningful brands. Develop multiple revenue streams. Don’t depend on ads alone. Peretti correctly notes that there is no one-size-fits-all model for media. Video won’t be the answer; subscriptions won’t be, either. And no matter the model, execution trumps all.
In BuzzFeed’s case, the crisis it faces is in many ways of its own doing. Revenue forecasts, especially when presenting to venture capitalists who desperately want to see hockey sticks, are often more art than science. Circumstances change, so it’s hard to project growth rates in a fickle market like digital media. BuzzFeed missed revenue targets this year — not for the first time, either — but that shouldn’t obscure that it has a powerful business that will bring in $280 million in revenue this year.
The same can be said of Vice, which might be overvalued at $5.7 billion, but that’s not to say it hasn’t built a business that is in many ways the model of a modern media company. The multiple revenue streams Peretti noted — ads, content, licensing, merchandise — are not foreign to Vice. Of particular note as publishers scramble into video, Vice has mastered the art of licensing content abroad and through several platforms.
Peretti presents BuzzFeed’s “pivot to multiple revenue streams” as a sign of maturation, not desperation. There is truth in this. BuzzFeed spent years preaching the gospel of native advertising as a panacea and inveighing against the evils of display ads. We journalists like to bring that up because we love whiffs of hypocrisy. But what BuzzFeed was doing was marketing. It was standing out in a crowded market. Expect many of those who say they’re only about subscriptions to suddenly start running ads, doing events and finding other revenue streams. Multiple revenue streams is the inevitable end state for any sustainable business model.
That’s in part why we’re doing Digiday+. Digiday has long had a diverse business model that generates revenue from ads, events, our content agency Custom, job listings, awards and even exclusive dining experiences. Memberships are a critical next piece. We are ending the year at 76 employees, all built without a dime in venture funding. We want to keep hiring reporters and creating new products, here and abroad, and figuring out this piece is important. Thanks for being part of it. One of the most interesting parts of my job is, in our own way, we’re figuring out the same challenges as the market we cover.
On that note, give the gift of Digiday+ to a colleague. Members can gift Digiday+ memberships for 2018 at a discounted rate of $199. — Brian Morrissey
Facebook-publisher relations might get worse
The conventional wisdom (or wishful thinking) among publishers is that Facebook needs high-quality publisher content to keep users on the app, and that bodes well for publishers that to date have poured time and resources into the platform but seen little advertising return. Facebook’s horrible year in the public spotlight has led to some concern that the near term will get worse for publishers because the platform will revert to its core and favor peer-to-peer content over news in the news feed, what with fake news blowing up in Facebook’s face and the solution being elusive so far. “They had a shitty year,” reasoned one publisher. “In the short term, Facebook will be a worse partner before they’re a better partner.” — Lucia Moses
A splashy night caps off Hulu’s big year
If holiday parties can reflect who had a good year in media, then Hulu’s event made clear that it was a breakout year for the streaming video company. Hulu rented out an entire floor at Spring Place in Tribeca, a year after hosting its holiday party at a cozy Italian restaurant in Greenwich Village.
This is because, thanks to “The Handmaid’s Tale,” Hulu did something that both Netflix and Amazon have yet to do: win a prime-time Emmy for best drama. Hulu made sure that was known by hiring several performers to dress up as the titular handmaids and stay in character throughout the evening. Several celebrities, including Hugh Dancy, who stars in Hulu’s “The Path,” also attended. (Of course, the canapes were good, too. A standout: spinach and cheese raviolis, topped with black truffle, cooked on the spot by a chef. Let’s just say this reporter found those to be delightful.) — Sahil Patel
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