The future-of-news crowd was taken aback on Tuesday after the Financial Times reported that BuzzFeed — a heralded pioneer in digital media — missed its 2015 revenue target by about $80 million.
The report, which was quickly disputed by BuzzFeed Chairman Ken Lerer in an interview with Re/code, quickly sent journalists to their keyboards to fire off gloomy tweets about the future of digital news. Within hours of the report, Vanity Fair wondered whether the news portended the “beginning of the end” for venture-backed news startups.
But is it really as bad as all that? It’s not a doomsday scenario, but it could signal a shift that the sun is beginning to set on the speculative heyday for digital startups, Ken Doctor, a media analyst and contributor to POLITICO Media and Nieman Lab, said in an email.
“Is this a cratering of the newest news media?” Doctor asked. “No, but it’s a significant re-calibration. If anyone expected these new companies to have figured out how to navigate the new world and replace the legacy news companies, they’ve got to think again. There is no secret sauce in news publishing, though the emerging ingredients within it tantalize.”
In essence, the reported revenue shortfall is a sign that digital news organizations may be starting to feel some of the pangs that have afflicted some of their legacy competitors over the last several years, he said. But he indicated that the potential decline doesn’t yet seem precipitous.
“What we have gained: A wealth of new national news and analysis, often spirited, occasionally ground-breaking and instructive to a news craft that needs shaking up,” Doctor said. “Most of that remains in place, and we can hope it will continue to.”
BuzzFeed has reportedly been profitable for several years, and internal documents published by Gawker in 2015 showed the company is reinvesting in its editorial operation — hardly a sign of retreat.
BuzzFeed was in some ways a victim of its own success, said Vivian Schiller, a former executive at NPR, The New York Times and Twitter who now advises media companies and brands. BuzzFeed does great work, and a $250 million annual revenue target is an ambitious one for a young media company, she said. But the hype around BuzzFeed swelled so large that it was bound to be punctured in some fashion.
Part of the story, she said, is the idea that audiences are shifting their attention away from publishers to distribution platforms, like Facebook, Twitter and Tumblr. Those news organizations eager to remain vital must experiment with reaching readers, listeners and viewers on those platforms directly. BuzzFeed, to its credit, is among the news organizations at the forefront of experimenting with so-called “distributed content,” media created specifically for social networks and other channels.
She added that the note of glee struck by many journalists upon learning the news didn’t speak well for the news industry writ large.
“What was must disturbing about yesterday was the schadenfreude,” Schiller said in an email. “If a publisher stumbles, that’s not good for any of us in media. We have a lot of work to do as an industry and sadly there are no shortcuts. The long-term winners will figure out where you add value to users; how to get in front of them and how to get paid — even if it’s not on your own platform.”
Ultimately, media analysts need more information before declaring digital news has entered a period of reckoning, said Alan Mutter, a newspaper consultant and media analyst. If other digital media companies encounter similar revenue shortfalls, business-side executives, investors and journalists can begin to make broader conclusions.
“If Buzzfeed falters where others succeed, then the issues would seem to be the nature of their particular product and/or the ability of its management to execute on the business plan,” Mutter said in an email. “We need more data points from other digital publishers before we can make generalizations from the Buzzfeed experience. Meantime, to be sure, the revenue shortfall is alarming.”
