Tough times for online media

Websites are not yet going the way of newspapers, but financial stringency has arrived for web-based media, including American Thinker.  The carnage extends from independent voices to the big, investor-backed sites. At the top end, the gold rush for staking claims to digital readership has gone bust, and the Big Money investors are licking their wounds after a number of changes have taken out much of money that flowed to digital publishers.

SFGate, the San Francisco Chronicle’s website, presents a good overview of the forces at work that are changing the way online media struggle to survive. The focus is on the Big Money crowd:

As legacy news companies suffered tremors over the past decade, money from venture capitalists poured into upstarts that promised to leverage a keener understanding online reading habits to create a giant-killing class of new media ventures. Today, the money is starting to dry up. Big ambitions have been downsized. And the tremors that continue to shake many newspapers are now moving through new-media companies.01:07

Among those facing headwinds are BuzzFeed, Vox and Vice. Another one, Mic, last week abruptly laid off most of its staff -- and the company that a year ago was valued at $100 million garnered a fire-sale offer of $5 million for its remnants.

But any impulse I might have toward schadenfreude over the problems facing lefties and their backers is tempered by the impact these changes are having on us. If you care about the future of media, I suggest that you read the whole thing. But here are some of the relevant details:

…many sites relied on Facebook and Google to build their audience. But just as many financiers were pressing to see more tangible financial results, Facebook changed its algorithm to favor posts from friends and family rather than news organizations.

Some new digital media firms saw audience declines. Others scrambled to alter their business models on the fly, making expensive bets on video that did not pan out.

One of the reasons AT has not (yet) started podcasts or video production is that unless the new media content is better than, or at least distinctively different from whatever else is out there on other platforms as well as online, there is no point to it.

Some investors have taken big haircuts:

The most recent example of industry troubles is Mic, a millennial friendly news site, which was recently sold to Bustle Digital Group, a publishing company focused on female readers. Last year, the site received $25 million from venture investors, giving it a valuation of more than $100 million, according to Pitchbook. A year later, it was sold to Bustle for a reported $5 million.

"Our business models are unsettled," Mic publisher Cory Haik wrote in a letter to staff, most of whom were laid off as part of the deal. "If anyone tells you they have it figured out, a special plan to save us all, or that it's all due to a singular fault, know that is categorically false."

Bustle hasn't announced its plans for Mic, one of the sites that tried to make the difficult pivot to video.

Tech change – the same factor that birthed digital media and created hell for newspapers and magazines – is now bedeviling websites:

All publishers, both new and traditional, have had to grapple with a shifting market from desktop computers to mobile phones and from display ads to video, which is depressing advertising rates, industry analysts say. New technology also has made it easier for advertisers to targets specific consumers, making it harder for publishers to charge premium prices for placement on their sites, they say.

These shifts are helping to depress some advertising rates, analysts say. "There is tremendous price pressure and too much inventory," said Douglas Arthur, an analyst for Huber Research Partners.

This trend is particularly hard on general interest websites like AT.  A website based on skiing, harmonicas, or hamsters can always generate good advertising rates from companies wanting to sell ski equipment, harmonicas and accessories, and hamster food or equipment to people. But we compete with every other website out there, and in addition, we suspect (but cannot prove) that blacklists exist telling advertisers which sites to avoid bidding on ad space in the digital auctions that channel ads to websites. Fewer bidders equals lower rates. As a result, the compensation we receive from ads (based on a price-per-thousand exposures) has plummeted by about half. Even as our readership grows and is the largest in our history, the money we receive from ads has plummeted.  

So, if you have wondered why AT is now selling ad-free subscriptions and asking for donations more often than in the past:

Some digital media companies are starting to turn to subscription models rather than finding their audience on social platforms created by tech giants such as Facebook. "It will be difficult for media companies to survive without a balanced revenue stream that includes reader payments, event and e-commerce referral fees," said Horan.

AT was never founded on the premise of enriching investors. For the first couple of years, it had no revenue and was run out-of-pocket. When our readership grew to the point of commercial significance (and therefore bandwidth became painfully expensive), we began accepting ads. We don’t have a billionaire patron writing checks the way The Weekly Standard did – until it didn’t, and then folded.  So, it is up to our readers to help us survive.

We’ll do what we can to earn – one way or another – our keep, whether by providing click-worthy, subscription-worthy, or donation-worthy content, or by continuing to grow our readership to balance the decline in ad rates.

Oh, and don’t rule out podcasts starting. But that is no path to riches, in my opinion, but rather a way to serve our audience better.

Image credit: Pixabay

Websites are not yet going the way of newspapers, but financial stringency has arrived for web-based media, including American Thinker.  The carnage extends from independent voices to the big, investor-backed sites. At the top end, the gold rush for staking claims to digital readership has gone bust, and the Big Money investors are licking their wounds after a number of changes have taken out much of money that flowed to digital publishers.

SFGate, the San Francisco Chronicle’s website, presents a good overview of the forces at work that are changing the way online media struggle to survive. The focus is on the Big Money crowd:

As legacy news companies suffered tremors over the past decade, money from venture capitalists poured into upstarts that promised to leverage a keener understanding online reading habits to create a giant-killing class of new media ventures. Today, the money is starting to dry up. Big ambitions have been downsized. And the tremors that continue to shake many newspapers are now moving through new-media companies.01:07

Among those facing headwinds are BuzzFeed, Vox and Vice. Another one, Mic, last week abruptly laid off most of its staff -- and the company that a year ago was valued at $100 million garnered a fire-sale offer of $5 million for its remnants.

But any impulse I might have toward schadenfreude over the problems facing lefties and their backers is tempered by the impact these changes are having on us. If you care about the future of media, I suggest that you read the whole thing. But here are some of the relevant details:

…many sites relied on Facebook and Google to build their audience. But just as many financiers were pressing to see more tangible financial results, Facebook changed its algorithm to favor posts from friends and family rather than news organizations.

Some new digital media firms saw audience declines. Others scrambled to alter their business models on the fly, making expensive bets on video that did not pan out.

One of the reasons AT has not (yet) started podcasts or video production is that unless the new media content is better than, or at least distinctively different from whatever else is out there on other platforms as well as online, there is no point to it.

Some investors have taken big haircuts:

The most recent example of industry troubles is Mic, a millennial friendly news site, which was recently sold to Bustle Digital Group, a publishing company focused on female readers. Last year, the site received $25 million from venture investors, giving it a valuation of more than $100 million, according to Pitchbook. A year later, it was sold to Bustle for a reported $5 million.

"Our business models are unsettled," Mic publisher Cory Haik wrote in a letter to staff, most of whom were laid off as part of the deal. "If anyone tells you they have it figured out, a special plan to save us all, or that it's all due to a singular fault, know that is categorically false."

Bustle hasn't announced its plans for Mic, one of the sites that tried to make the difficult pivot to video.

Tech change – the same factor that birthed digital media and created hell for newspapers and magazines – is now bedeviling websites:

All publishers, both new and traditional, have had to grapple with a shifting market from desktop computers to mobile phones and from display ads to video, which is depressing advertising rates, industry analysts say. New technology also has made it easier for advertisers to targets specific consumers, making it harder for publishers to charge premium prices for placement on their sites, they say.

These shifts are helping to depress some advertising rates, analysts say. "There is tremendous price pressure and too much inventory," said Douglas Arthur, an analyst for Huber Research Partners.

This trend is particularly hard on general interest websites like AT.  A website based on skiing, harmonicas, or hamsters can always generate good advertising rates from companies wanting to sell ski equipment, harmonicas and accessories, and hamster food or equipment to people. But we compete with every other website out there, and in addition, we suspect (but cannot prove) that blacklists exist telling advertisers which sites to avoid bidding on ad space in the digital auctions that channel ads to websites. Fewer bidders equals lower rates. As a result, the compensation we receive from ads (based on a price-per-thousand exposures) has plummeted by about half. Even as our readership grows and is the largest in our history, the money we receive from ads has plummeted.  

So, if you have wondered why AT is now selling ad-free subscriptions and asking for donations more often than in the past:

Some digital media companies are starting to turn to subscription models rather than finding their audience on social platforms created by tech giants such as Facebook. "It will be difficult for media companies to survive without a balanced revenue stream that includes reader payments, event and e-commerce referral fees," said Horan.

AT was never founded on the premise of enriching investors. For the first couple of years, it had no revenue and was run out-of-pocket. When our readership grew to the point of commercial significance (and therefore bandwidth became painfully expensive), we began accepting ads. We don’t have a billionaire patron writing checks the way The Weekly Standard did – until it didn’t, and then folded.  So, it is up to our readers to help us survive.

We’ll do what we can to earn – one way or another – our keep, whether by providing click-worthy, subscription-worthy, or donation-worthy content, or by continuing to grow our readership to balance the decline in ad rates.

Oh, and don’t rule out podcasts starting. But that is no path to riches, in my opinion, but rather a way to serve our audience better.

Image credit: Pixabay