What The Latest Layoffs Mean For Digital Journalism
AUDIE CORNISH, HOST:
The last 24 hours haven't been good for the journalism industry. Three large media companies have announced significant layoffs. They include the digital media upstart BuzzFeed, also the media division at Verizon, which includes The Huffington Post, Yahoo and AOL, and Gannett, which owns USA Today as well as local newspapers across the country. To talk more about digital journalism's latest struggles, we are joined by Edmund Lee. He covers the industry for The New York Times. Welcome to the program.
EDMUND LEE: Thanks for having me.
CORNISH: So tell us about the scope of this latest round of layoffs. How significant are they for these companies?
LEE: So the first company to really sort of get into here is BuzzFeed, I think. They announced laying off 15 percent of its workforce - a little over 200 people. That's pretty big for them. Verizon Media Group, which owns AOL and Huffington Post, they also announced a significant layoff - about 8 percent. But that's, like, 800 people. So that's a lot of people there. Gannett took a bunch of cuts as well, but they've been cutting for years now. So this is a little less - I don't want to say less significant, but it's more par for the course for them.
CORNISH: Are we looking at a situation where these companies are actually not profitable or just not profitable (laughter) to their shareholders?
LEE: The situation is that some of these companies are not profitable, and they need to become profitable - BuzzFeed, for example. Other companies like Gannett have decent profits at a lot of their papers, but they're shrinking. They're just getting smaller. And I think that's the hard thing to sustain. So in either case, the future of business is a little bit in doubt. And so cutting staff relieves some of the pressure as terrible as that is with people losing their jobs.
CORNISH: Focusing on digital media for a second - what are some of the specific challenges facing those companies?
LEE: For digital media companies, advertising is a huge problem. Right now, Google and Facebook take the lion's share of those dollars. And as big of an audience as these companies have, like BuzzFeed, they're just not getting enough dollar per viewer from advertisers as they would otherwise. And I think that's a huge existential problem going forward, at least for their business.
CORNISH: Can you talk more about the role of Google and Facebook?
LEE: The conceit around the Internet is it's sort of vast and endless and all kinds of places to go. In reality, it's really just Facebook and Google and sort of everyone else.
CORNISH: You mean where people are spending their time.
LEE: Exactly. And so as a result, advertising dollars largely go to these two platforms. The BuzzFeeds and the Vices and the Vox Medias of the world - their audiences pale in comparison. And it's just that much harder for a digital publisher, despite the good content that they create and the great journalism that they do, to attract those ad dollars or at least in a way that is sustainable for them going forward.
CORNISH: In the meantime, there is this ongoing discussion about the spread of fake news when it comes to social media on platforms like Facebook. What does all of this mean - this industry kind of shakeup - for journalism online?
LEE: So that's actually been the pitch that a BuzzFeed might make to Facebook, which is, hey, look, you're having a fake news problem; you're having problems with Russian trolls and misinformation; use our content; we have good, vetted content that people like; so pay us for that and make sure that, you know, it's good for your community, and you don't have to worry about fake news. At the same time, Facebook's whole identity is wrapped up in user-generated content. So it's a hard switch for them to make. I think they understand the argument, but it would be a fundamental change for them. So that's the tension right now between publishers and platforms.
CORNISH: Now that we've seen layoffs, what are the next steps ahead? What do you anticipate will be the move for companies that have pretty much focused on using an advertising model in order to pay for their journalism?
LEE: So I think the big digital media companies - BuzzFeed, Vice, Vox Media, Refinery - they're going through kind of an identity crisis, an existential crisis, whatever you want to call it where, in the next 12 to 18 months, some kind of big action is going to have to happen. One of those things could be big mergers. That - you could see BuzzFeed tie up with one of these other online publishers where they get even bigger. The reason for that is that by getting bigger, you have more scale. You can sort of lobby for more ad dollars. You can negotiate better with the Facebooks and the YouTubes of the world. And if they can't make something like that happen, they're going to have to go into some kind of, like, a pay model like The New York Times. And that's anathema to how a lot of these digital publishers started. They want it to be as widely available as possible. They like virality. Paywalls kind of hinder that.
CORNISH: Edmund Lee. He reports on media for The New York Times. Thank you for speaking with us.
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