How relying on the whims of powerful tech companies led to the collapse of Buzzfeed News' business model and the lessons to be learned.
Once a dominant force in the digital publishing world, Buzzfeed News has seen its business model crumble, leaving many to wonder how such a seemingly successful company could fall so far.
The answer lies in Buzzfeed News' dependence on the whims of tech giants and the platforms they operate, which ultimately led to the digital-first news site's undoing.
The implications of this dependency are far-reaching, not only for Buzzfeed News but for the entire media landscape including operators like Business Insider and a few others.
The Power of Tech Giants and Platform Dependency
Buzzfeed News, like many other digital publishers, relied heavily on social media platforms like Facebook, Google, and Twitter to drive traffic and ad revenue. These tech giants have the power to make or break publishers by adjusting their algorithms to prioritize certain content, often without warning or clear guidelines.
In 2018, Facebook changed its algorithm to prioritize content from friends and family over publishers and businesses. This severely impacted the reach of publishers like Buzzfeed News, resulting in significant revenue losses.
According to a study by the Tow Center for Digital Journalism, these algorithm changes led to a 20% decrease in traffic from Facebook to news websites in 2018 alone.
The Impact of Advertising Revenue Losses
As publishers like Buzzfeed News saw their social media reach shrink, so too did their advertising revenue. According to eMarketer, global digital ad spending accounted for 53.6% of total media ad spending in 2021. With the lion's share of this revenue being concentrated among tech giants, publishers found themselves struggling to compete.
In the case of Buzzfeed News, their dependence on advertising revenue, combined with the consequences of tech giants' algorithm changes, ultimately led to their decline. The company was forced to cut staff, scale back operations, and eventually shutter its news division altogether.
BuzzFeed's office. (Photo by Jon Premosch, BuzzFeed News)
Lessons for the Future of Journalism
Buzzfeed News' downfall serves as a cautionary tale for the media industry, highlighting the risks of platform dependency and the need for a more sustainable business model.
As tech giants continue to wield immense power over the digital publishing landscape, it is crucial for publishers to diversify their revenue streams, exploring options such as subscription models, direct reader support, or partnerships with like-minded organizations.
Furthermore, governments and regulatory bodies have a role to play in addressing the monopolistic behavior of tech giants. By implementing measures to promote competition and transparency, they can help create a more level playing field for publishers and protect the future of journalism.
The collapse of Buzzfeed News' business model serves as a stark reminder of the dangers of relying on the whims of powerful tech companies.
In order to survive and thrive in the digital age, publishers must learn from this experience and establish sustainable, diversified business models. The future of journalism depends on it.