Digital Media’s rise and currently being witnessed fall is akin to the old fable of the emperor with no clothes. Some weavers convinced big corporations and venture capitalists that the next major industry was going to be digital media. At the same time, corporations like Google and Facebook were convincing other corporations of the value of marketing with them. Creating an advertisement bubble that inflated the value of advertisement cost without delivering a significant return.
At a certain point, it was evident the emperor was naked or to put it literally: the market had no value. The first to realize this were the companies advertising with Google. For years without question, they’d spend whatever money their marketing team said Google or whatever advertiser quoted them for X results without questioning if they were getting supposed results. Until some actually demanded the hard figures on what their dollar was getting them from their marketing teams.
As it would turn out, it was next to nothing. This, in turn, resulted in the first adpocalypse, though corporations would ensure people had some drama to blame. Some scandal to believe, causing each subsequent adpocalypse, but in reality, they happened because the value of the advertisement wasn’t there.
In essence, advertisement rates were in a bubble, and it burst repeatedly. On the other end of the spectrum were the digital media giants who were funded by Venture Capital. Who, in turn, believed they had found the new media that would replace the legacy industry. Perhaps if these companies had managed their marketing offerings properly, they might have, but they didn’t. After the pop major companies realized just as the people in the fable did, the emperor was naked, and they began to divest from digital media.
One of the most significant examples is Verizon looking to sell off all their digital media holdings. As a result, the Huffington Post was hit with not one, but two rounds of layoffs in 2019. AOL and Yahoo, two companies acquired by Verizon, saw substantial layoffs of their workforce throughout 2019. After Verizon took a 4.6 Billion hit to their value after concluding their digital media holdings were worthless.
As a result of a particular time-traveling beer virus advertisement revenue continues to dry up. With it, so goes these companies’ continued ability to pay their staff outrageous sums of money. Buzzfeed, who recently shuttered both their UK and Australian news operations were paying reporters between $42,000 on the low end to $71,000 to $82,500 on average.
The Economist not only laid off 90 non-editorial staff members but have terminated the physical printing of their magazines. Claiming physical print is dead as their justification. Yet if their magazine was producing valuable information, its staff could have been transferred to a digital zine or website format.
Vice has now joined other digital media companies in downsizing its operations with the reduction of 155 staff members. Rather than professing some excuse, they were rather blunt with their reasoning. They don’t make them money.
“Currently, our digital organization accounts for around 50 percent of our headcount costs, but only brings in about 21 percent of our revenue.”
Quartz, who laid off roughly half of their staff, also offered the candid truth. Their paywall scheme simply wasn’t compensating for the loss of advertisement revenue.
I will talk about the process from here, but first, I want to explain the reasoning behind this decision. You all have the general picture of our business already: Membership is growing at a record pace, with 17,680 paid subscribers at the end of April, a great signal of our value to readers. Still, advertising accounts for the bulk of our revenue, and that business has been hit very hard by the effects of coronavirus. Even after the pandemic recedes, the likely recession to follow could hurt ad revenue for years to come. Prior assumptions about our business no longer apply.
So in thinking about how to respond to this moment, I had to consider not just the immediate impact of coronavirus but fundamental aspects of our strategy. What are Quartz’s strengths? What is working to grow membership? What is the most valuable part of our ad offering? And what do we need to thrive in the years to come? With these questions in mind, I worked with the rest of the executive team to hone our strategy, figure out what was necessary to pursue it, and devise a new budget that would still meet our commitment to become profitable by 2022.
At the end of the day, the reality is these companies are overpaying staff to produce products that don’t engage with the market. They’re not topical nor relevant to the average person. With Venture Capital pulling out, advertising drying up many of these sites will either fold or be reduced to a shell of their former glory.
Yet that isn’t what will drive the SJWs, centralists, and moderates up a wall. No, the fact their media fails to engage with the consumer is a fact that they will likely ignore blaming everything except their shoddy product. No, what will drive them up the wall is the simple fact One Angry Gamer has outlasted all of these outlets.