A lot of people liked the thread! So if you want a short version, you can read that. But here is a fleshed-out article version, presenting a brief history of the past decade in (mostly digital) media. We'll break it into phases.
1. In the early 2010s, a ton of venture capital poured into digital media, especially companies like Vox Media, BuzzFeed, and Vice. The internet was relatively underserved space; lots of blogs were doing well and Gawker was the heavyweight as far as blogs, but it wasn't super formalized as far as original news and reporting. The idea was that these new companies should scale up to be as big as possible as fast as possible, surfing the rise of platforms like Facebook and Instagram to get huge audiences. Then they'd sell massive amounts of digital ads and sponsored content targeting those audiences.
2. These companies got the huge audiences and social-media followers and sold plenty of ads, but they were losing lots of that money to Facebook and Google, which were the middlemen between advertisers and publications: Advertisers could just buy in bulk through automated platforms instead of dealing with the publication directly. The scale was so big and VC money available enough to close the gap that the low rates didn't matter so much.
3. In the past few years VC, investor, and owner optimism has run out on huge-scale digital media and shallow advertising. The presumed profits of Vice and BuzzFeed didn't pan out. Publications freaked out about profitability or tried to sell their businesses (the likely goal of VC funding), which only very few succeeded at, like Business Insider or The Atlantic's Quartz. So publications started pushing for paywalls and subscriptions to get more revenue directly from readers. There's less money in that and it doesn't grow as fast but it's more dependable.
Sidenote: This is when the media catastrophe struck. Legacy titles like Time and Sports Illustrated have found themselves in freefall, sold as brands to marketing companies or tossed around like trophies. Gawker was destroyed by Peter Thiel's lawsuit and private-equity ownership ruined it and a number of other businesses.
4. Another model appeared over the past while: ecommerce and affiliate marketing: Websites that send traffic to Amazon or other big online retailers and get a small fee if someone buys something. The big winners of that model were The Wirecutter (acquired by the New York Times) and The Strategist, New York Magazine's ecommerce vertical, which helped it get acquired by Vox Media. (Lots of other media cos, from gadget sites to adult sites, were already exploring affiliate marketing.)
5. The big digital media companies reoriented around high-end content and prestige journalism. With paywalls and subscriptions, it made more sense to produce longform, which could also be sold as intellectual property to Hollywood or podcast companies. Business-to-business verticals, which cover particular industries or markets, also proved profitable (like Business Insider Pro). Live events became a big deal, especially for Recode, The Atlantic, and Pop-Up Magazine / California Sunday. (Pop-Up and California Sunday were both acquired or heavily invested in by Emerson Collective, Laurene Powell Jobs's media vehicle.) Digital and print advertising still provided lots of revenue, but it became vital to develop other sources.
6. In the midst of these changes, the pandemic totally wiped out advertising because advertisers have nothing to market and they started to demand that their ads not be placed next coronavirus content, which they were able to do because of the Google / Facebook middlemen and automated ad-buying platforms. Publications don't have much recourse because they don't have as many direct relationships with advertisers.
7. Live events are also non-existent in quarantine, of course. So companies that invested in conferences and meetups and performances suddenly see all that possible revenue gone. That's particularly a problem for The Atlantic. Pop-Up Magazine recently pivoted to doing video content instead of live events. All this lost revenue means that publications have to immediately cut their payroll — it's likely that they haven't even gotten paid for pre-quarantine advertising yet, given fiscal cycles. Ad payment isn't necessarily real-time, so future income is crumbling.
8. The companies not doing as many layoffs are those that invested most in high-end subscriptions, which often cost hundreds of dollars a year. That's New York Times (hits new records of digital subscribers every few months), Washington Post, and the Boston Globe (WaPo and Boston Globe also have billionaire owners who might be more willing to take losses). Newer media companies with more patient investors are pushing for big numbers of paid subscribers rather than a huge audience footprint (as in 2010), like The Information (tech news) and The Athletic (sports news). The Atlantic has grown its paid subscribers a ton during coronavirus, but not nearly as much as New York Times, and it's a lot cheaper than the Boston Globe, for example, thus it's really vulnerable to the advertising shortfall. Both Quartz and The Atlantic have done surprising rounds of layoffs. Conde Nast, which relies on high-end advertising as much as anyone, has cut many editorial employees.
9. Automated digital advertising (banner ads and all the stuff you see most often) is still monopolized by Facebook and Google and sliced into pieces by other tech companies. So it's totally fickle to news events and unreliable as a majority source of income for media businesses. Now, the other revenue streams are even more important: subscriptions, selling IP, providing "premium" content about industries, and affiliate marketing.
10. New media ventures in the coming years will be aimed at developing massive paid subscriber bases that drive the majority of revenue, and then selling those subscribers other products, like more expensive premium content, bundled subscriptions, or bonuses (podcasts, newsletters, etc). Slate's membership program is a good example of this. Legacy media companies need a variety of revenue streams to survive at their original scale. That ecosystem resembles the 20th century, when media companies were huge power players in the economy at large. Their value is based on a close relationship with paying readers, not a superficial, large-scale relationship with advertisers. This model takes a long time to develop and requires a lot of upfront investment, but it's much more durable.
11. Subscriptions aren't everything — The Financial Times and The Athletic have both cut freelance staff as they deal with advertising shortfalls. B2B publications like Skift, which focuses on travel, have also had to figure out new ways to engage with their industry when the market is frozen. Companies have to be both flexible and patient.
12. This is not all bad. Subscriptions are a more sustainable business model and will give publications more authority with readers and advertisers. Publications need stable relationships with readers and vice versa. (Such a model will also work against misinformation and improve media fluency.) There are three alternative models that have been gaining steam recently. Those are: Podcasts, newsletters, and nonprofits.
Podcasts: Podcast ads are still worth more money than digital ads because they're not automated (fewer middlemen) and they provide more intimacy with listeners — it's easier to sell stuff with a host-read ad than a banner on a random website. Spotify is still booming and it bought Gimlet and The Ringer, two of the biggest recent media exits.
Newsletters: Newsletter companies like Girls Night In, Morning Brew, or The Skimm are still doing well because they have a more direct relationship with advertisers and readers and they have much smaller staff numbers because the work is often more about aggregation than creating original content. This isn't a model for a major newspaper, but it is a bright spot.
Nonprofits: Nonprofit newsrooms are cropping up everywhere, supported by foundations as well as reader support (NPR is a giant precedent for a network of national nonprofit newsrooms). Texas Tribune is an interesting example. It's unclear as of yet how these digital-first nonprofits will survive longterm or how they handle changes in leadership.
Where Study Hall fits in: Study Hall is a small media company covering journalism and the media industry that is 99 percent funded by its more than 4,000 paying subscribers and members. We think this model is very sustainable in the longterm and already supports our staff of multiple employees. We have had slow, consistent growth, but we can always do more with more subscribers. Join us at patreon.com/studyhall or email any suggestions to [email protected]. Our homepage is studyhall.xyz.