Online publishers hit a blip on the road to the digital dream
Published 24/04/2016 | 02:30
Last week BuzzFeed reportedly missed its internal revenue targets for 2015. The company - which distributes quizzes, listicles and viral stories -expected to make about $250m in revenues in 2015, but apparently only earned around $170m. Expectations for 2016, which were around the $500m mark, have now been reduced to $250m.
But BuzzFeed isn't alone in feeling the pinch. Other digital-media outlets are having a torrid time too.
Netflix's growth in new customers for the first quarter of 2016 is more than 50pc lower than had been forecast. Chief executive Reed Hastings warned that comparative growth would slow in the second quarter due to the strength of the company's performance in the same period in 2015, when Netflix launched in Australia and New Zealand. The response from the markets? Netflix shares fell 9.8pc.
Mashable dollied up its decision to lay off a host of news editors and reporters as a strategic shift to video and signalled that it would be dumping harder news in favour of entertaining content relating to digital culture.
In a memo to staff, new chief content officer Greg Gittrich wrote: "We'll continue to deliver well-reported, original stories, analysis, reviews, features and profiles in our core coverage areas of tech, entertainment, science, web culture, business, social media, lifestyle and real-time news.
"The notable change is that we've decided not to focus on general interest news and broad coverage of the world."
Digital video darling Vice Media was in hot water recently too. First, ComScore reported that it lost over 10 million unique visitors in the first two months of this year. Then it was found to be inflating its traffic using a technique called traffic assignment.
Visitor numbers from affiliated web properties' like ModernFarmer.com and ThePlaidZebra.com were being attributed to Vice Media to fatten up audience numbers. (Vice isn't the only site that's at this game, by the way; Conde Nast, Complex.com and Refinery29 all use traffic assignment).
This confluence of bad press for digital publishers has many commentators wondering if there's a fatal flaw at the heart of digital-media sites' business models.
One massive flaw, whether terminal or not, is the allure of scale. The desire to chase bigger audiences has pushed publishers to inflate their numbers through techniques like traffic attribution and an over-indulgence in a sweet but nutritionless diet of clickbait.
Reliance on clickbait has also proved to be a commercial game of lemmings. If everyone successfully generates the same type of frothy clicks and shares, traffic rises across the board - but the value of that traffic and its related ad inventory falls.
And there's an insidious subplot for publishers. The move to mobile has subtly undermined the desktop-based business model that many are still wedded to.
Interacting with the web through a browser is very different to an always-on relationship with the web via apps and social channels on a far smaller screen.
Waiting in the wings are distribution channels like Facebook, Apple, Amazon and Google, who have stayed on top of the mobile revolution. There's no indication that these channels will let up on colonising the space traditionally owned by media outlets.
For example, not only does Facebook now offer Instant Articles, which provides a better reading experience on mobile than any publisher can offer, the social network is also testing a new version of its newsfeed on mobile that highlights popular news verticals (niche sections) like World, Sports and Food.
So what are digital publishers to do?
Well, some probably don't need to do much at all. For all their troubles, both BuzzFeed and Netflix have money in the bank and reliable revenue streams, regardless of any wobbles which may see their overall value contract. But others need to stay relevant and build loyal, returning audiences.
This means following users onto the right new distribution channels and having a brand that resonates instantly with its target market.
Media outlets also need to protect and build their own base, maintaining an audience for native apps and web properties. They need business models based on stable and loyal audience numbers, not the promise of endless growth and a deluge of clickbait-y stories.
This isn't a technical challenge. It's an editorial one. And it won't be easy in an age of information overload, abundance and distraction.
Sunday Indo Business