Everyone has a conjoined twin in today’s times—their smartphone. And with more and more people preferring to have the entire world in the palm of their hand, the demand for digital news platforms has surged.
There are more than 1.5 billion websites spread across the World Wide Web, and a sizable chunk of these are news portals. These digital newsrooms provide their readers more diverse content as compared to newspapers, which is why the latter’s ad revenue has taken a hit.
This shift has allowed publishers from all over the world to reach a larger audience. In the last decade, there has been a veritable shift to subscriptions and memberships, causing change in the business models of organisations.
It is ironical then that big and popular names in this industry have been feeling the need to cut down on manpower, and gone ahead and done that.
Layoffs: A sustainable business strategy?
So far in 2019, there have been over 2,400 mass media layoffs—Buzzfeed and HuffPost announcing theirs early in January 2019 had sent alarm bells ringing all over.
On January 23, Buzzfeed announced it would lay off 15% of its workforce. Verizon, which owns HuffPost, AOL, Yahoo, and other media services, announced it would cut 7% jobs.
Soon after, on February 1, the Hollywood Reporter reported that Vice Media had decided to cut 10% of its workforce. According to the Hollywood Reporter, “The cuts, which will impact around 250 people, are a part of Vice Media CEO Nancy Dubuc’s strategic plan to tighten spending and achieve profitability.”
In March, the New York Media announced that it was cutting 32 jobs.
The announcements came in an atmosphere of turmoil surrounding the media industry; last year, it was reported that Buzzfeed missed its revenue targets and has been having to make do with curtailed revenues due to companies like Google and Facebook.
The 2008-2017 period reportedly witnessed a substantial decrease in the number of “U.S. newsroom employees”.
Fall of ad revenue and rise of AI
According to sources, BuzzFeed makes money from sponsored advertisements shown at the start of its short videos. But it’s Facebook and Google that extract the maximum share of advertising revenue, accounting for “84% of digital ad investments” and making it a struggle for digital news platforms.
In 2017, Buzzfeed reportedly fell short of its revenue goal of $350 million. The way out for digital media platforms, in such cases, remains tying up with big companies or other online publishers to make up for revenue losses.
“I remain enthusiastic about Facebook as a platform. It’s a great place to reach a huge audience and build a brand. The question is how do you build a business? It seems to me that it would be in Facebook’s interest to share revenue and have more control over their platform. Part of my critique for Facebook is why they wouldn’t want to ensure the quality of content on their platform by sharing revenue, and that makes it harder for them to get rid of fake news and clickbait in the newsfeed,” said Peretti.
Then there’s also the rise and rise of Artificial Intelligence (AI), which has made inroads in news writing as well, resulting in what’s called as “robot journalism”.
Bloomberg News became one of the first digital platforms to use this technology. According to reports, roughly one-third of the content produced by Bloomberg is generated through Cyborg, the automated news writing system.
Newsroom employees wouldn’t be paranoid to feel threatened by this spread of AI in journalism. However, according to a report by the Press Association, “The automated news writing technology will only be able to publish the most basic of stories and will not replace journalists in the near future.”
The aftermath of the layoffs
Employees of Buzzfeed News reportedly formed a union to share their grievances about “unfair pay disparities, mismanaged pivots and layoffs, weak benefits, skyrocketing health insurance costs, and more”.
Following the layoffs, Buzzfeed’s Entertainment Editor Krystie Lee Yandoli had shared a link, announcing recruitments for “editorial fellows” under its “fellowship program”.
US President Donald Trump, in the meanwhile, had attributed all the digital media layoffs to “bad journalism” and “fake news”.
This then throws up the question: Can start-ups in the digital journalism industry thrive in the future? They all benefit from the rapid growth of Internet but face different challenges. How readers spend their time online and where advertisers spend their money largely determines the overall business model and growth of an organisation.
Where’s India on the map?
The expansion of the digital advertising industry has also given rise to start-ups across the Sub-continent.
The Wire, Quint, InShorts, and Scroll are just some of the “results of many interesting experiments in the Indian digital journalism industry”.
“Digital journalism is doing public service in India. It’s made people fundamentally more accountable, whether it is the press or politicians or businesses. I think people have found a voice,” said Raghunath, Firstpost co-founder.
“I don’t know if there are single players who are going to change the game, but taken collectively, it has been very, very powerful.”
However, the newly developed digital journalism platforms in India face the risk of being depreciated by media companies who have been a part of this industry since long. Moreover, India generates lesser revenue per user in terms of digital advertising as compared to other countries.
The hope for an increase in revenue in the near future, considering the gradual rise in the number of people getting online, is ever-present.
“Today, you have between 400 million and 500 million people online because Jio has dropped data prices significantly. With increase in consumption and reach, the rates will also rise commensurately,” said Ashish Bhasin, CEO (South Asia) at Dentsu Aegis Network.
So while Indian digital media industry’s start-ups may have a plethora of opportunities, the turbulent market in which they operate remains challenging.
Anika Manchanda is a Writing Analyst at Qrius.