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FutureStarrBreaking News: BuzzFeed News to Shut Down Amidst Layoffs
BuzzFeed, one of the pioneering forces in online journalism, will soon close its news division after pioneering it for years. Although Pulitzer Prize-winning, its economics fell prey to digital publishing -- becoming unsustainable over time.
Since its creation in 2011, this division had failed to find a viable business model and consistently lost money, leaving its reliance on advertising vulnerable against sudden downturns in demand.
BuzzFeed's CEO Jonah Peretti sent an email to staff on Thursday informing them that its News division would close due to cost-cutting efforts, with layoffs impacting business, content, technology and administration teams as well as international markets. The layoffs will affect staff across these teams.
BuzzFeed may be best known for its viral content, but its News division also produced some serious journalism. They won a Pulitzer Prize in 2021 for reporting on China's internment camps; and also released the Steele dossier which contained salacious allegations about President Donald Trump.
Since digital advertising's decline has put pressure on companies like BuzzFeed to reduce costs and save money, major publishers such as News Corp are cutting staff. Some publishers such as Newsweek have taken this route, with more to follow suit in coming years.
Peretti revealed in a memo that he over-invested in BuzzFeed's news operation because he so greatly valued its mission and work, but failed to recognize that tech platforms weren't willing to help support it and keep BuzzFeed operational.
According to Akerlof, these layoffs would affect about 15% of BuzzFeed's staff of 1,200 individuals, as the decelerating ad market, shrinking SPAC market, audience and platform shifts as reasons for these cuts.
BuzzFeed's business, content and tech departments will all be affected by the layoffs, along with international operations and Christian Baesler and Edgar Hernandez - both executives at BuzzFeed - who will leave in 2019.
BuzzFeed News Division has experienced significant financial setbacks over time. Struggling to secure enough advertising, its profits have all but vanished since going public in December 2021.
Peretti sent an internal memo on Thursday informing BuzzFeed employees that its focus moving forward will be "reducing layers in the organization, streamlining product mix and doubling down on social-media creators, as well as adding AI into sales processes". While his company will still produce viral content such as listicles, Peretti plans on scaling back how often stories are published while simultaneously increasing revenue from existing products such as Listicles.
Thursday afternoon, CEO Jonah Peretti informed his staff of BuzzFeed's plan to cut 15% of staff - about 180 people from business, content, administration and tech teams across their entire operation - via an email sent directly from him.
Peretti identified several reasons for his news division's inability to increase revenue growth in a memo sent earlier. These included overinvesting in news teams and overly relying on social media distribution platforms; further admitting he could have performed better.
Layoffs come at a time when online publishers are experiencing difficulty due to declining advertising spending from Facebook and Google and reduced web referrals from Facebook. Journalism sites that once thrived have struggled, having had to adjust their business models or turn to free content in an attempt to generate more revenue.
Peretti admitted he had no choice but to scale back on the news division's operations and that major platforms weren't willing to provide necessary distribution or financial support for premium journalism designed specifically for social media platforms.
BuzzFeed News' staff cuts are especially painful; previously regarded as an industry leader and winner of a Pulitzer Prize for their coverage of China's mass detention of Muslims, this division had long been considered an industry leader.
Peretti has come under pressure from several large shareholders to close down BuzzFeed News, which lost $10 million last year, which may have contributed significantly to BuzzFeed's unstable stock market valuation.
BuzzFeed's decision comes at a time when many of its rivals in online media have been struggling, including Mic Network which was sold to Bustle for under $5 million last December, Vice Media which announced an indefinite hiring freeze, and Verizon who recently cut seven percent from its media group.
Layoffs at digital media companies are part of an overall effort by digital media firms to reduce costs and make their businesses profitable. While BuzzFeed saw its ad revenues surge significantly last year - surpassing $300 million - they still lost money overall; to become profitable they will need to invest more heavily in content licensing agreements and e-commerce initiatives.
BuzzFeed News, which rose to fame nearly a decade ago and won multiple Pulitzer Prizes for digital news reporting, announced Thursday it will shut down amid layoffs affecting approximately 15% of its staff (around 180 individuals). A memo sent by CEO Jonah Peretti informed staffers of this decision.
As it grapples with falling ad revenues, industry downturns, and economic uncertainties, Vice News and Vox have taken similar measures. They have either scaled back operations or sought buyers in order to remain financially sustainable.
Ad spending decline and the rising popularity of video platforms like YouTube and TikTok have had a devastating impact on new media companies. They've lost ground to traditional outlets which can draw in younger audiences with engaging content.
Unprofitability also poses a problem for digital content companies like BuzzFeed; costs related to producing high-quality journalism have skyrocketed over time, necessitating reduced investment in its news division in favor of supporting other lines of business.
Peretti informed staff in a memo that due to insufficient funding of BuzzFeed News as a standalone operation, it would need to close its division. He expressed his disappointment over this news while noting it will form part of negotiations between Peretti and employees union, BuzzFeed News Guild.
He cited factors including the Covid-19 pandemic, slump in tech industry employment and declining stock market as driving forces behind his decision. Some employees who are being laid off will be redistributed within the company according to their skills and experiences.
BuzzFeed's decision to close its news division follows its January announcement of using artificial intelligence to produce content for their website, sending shares skyrocketing 150% at first before gradually falling back down again amid widespread industry unpredictability.
Peretti informed staff in a memo that BuzzFeed News will close and that all news efforts will instead focus on HuffPost, acquired in 2020. He further revealed plans to reduce BuzzFeed's business, content and tech divisions by 15%.
As advertising revenue declines across news media industries, leading once-prominent digital names to suffer financially. Just last week, NPR laid off 100 employees while the Washington Post cut their Sunday magazine as well as other jobs.
BuzzFeed was first launched in 2006 and since then has amassed an array of products - listicles, quizzes, food and video content. BuzzFeed won its inaugural Pulitzer Prize for reporting on China's mass detention of Muslims in 2021.
Peretti informed staff Thursday in a memo sent out via email that their news operation had become too costly to sustain and it was time for change. He suggested it would be beneficial to refocus their business around core brands.
Peretti says his company had implemented cost-cutting measures, yet was still struggling to be profitable. He cites factors like "pandemic," a tech recession and decelerating digital advertising market as driving forces behind his decision.
He emphasizes that, unlike Buzzfeed's brand reliance on social platforms, HuffPost doesn't rely as heavily on them - which allows media companies to focus their resources on engaging readers while cutting costs.
Peretti also indicated in his memo that, as part of its plan to cut approximately 15% from its workforce, budgets, open roles, travel, and discretionary expenses will all be reduced in an effort to achieve that reduction. CRO Edgar Hernandez and COO Christian Baesler will both leave as a result of this plan.
BuzzFeed News was established by editor-in-chief Ben Smith in 2012 and won a Pulitzer Prize for international reporting in 2021. While initially it pioneered social media news coverage, in recent years it had lost ground to competitors such as The New York Times and Wall Street Journal.