The Digital Media Bubble is About to Burst
While the DOW reaches unprecedented heights on the New York Stock Exchange, a recent wave of troubling reports are starting to spell out doom for the once booming digital media industry.
As others started to point out last Friday, digital media’s financial bubble, after years of large sum investment from capital, appears all but set to burst. Despite the field’s continued popularity and relevance in a year that’s yet to produce a single slow news day, financial returns have been underwhelming investors, and they are starting to worry if they’ll ever be able to turn a real profit off of their different ventures.
One of the most notable reports to come last week is of Buzzfeed failing to meet its revenue target for the year. Buzzfeed, along with Vice Media, which is also expected to fall short of its revenue goals for the year, had been hoping to use their brands’ momentum to go public in 2018. Such financial prospects seem brazenly unlikely for both companies now. In an even more bleak situation, Mashable, which only a year and a half ago was valued at $250 million dollars, is in the process of being acquired by trade published Ziff Davis for only $50 million. Other once promising digital publications like Mic and Quartz are also in the market to sell.
A major factor in digital media’s revenue problem is the duopoly over digital advertising that platform titans Google and Facebook have carved out for themselves in recent years. According to Fortune, “this year, the Big Two in internet advertising are expected to take half of all revenue worldwide, and more than 60% in the United States… in the U.S. market, no other digital ad platform has market share above 5%.”
Many outlets have attempted to adjust to the platforms’ different algorithms and pick up revenue by “pivoting to video”, a tactic that not only has led to major staff layoffs but also little positive return either. Video is not only expensive and time-consuming to produce of course, but Facebook itself admitted last year that it had overstated the metrics it used to sell so many outlets on making said pivot.
With the risk of sounding too glib about the circumstances, the failure of video to drive up ad revenue seems stupendously obvious to the many of us outside of decision-making positions. While Facebook had been able to provide convincing enough data, the assumption that video had such a high engagement rate seems completely disconnected from actual common user experience.
A mobile dominant field such as social media is dependent on engaging users with content that has a low bar of entry to engage with. Video not only requires much more data to load than with text or still images, but video also has an audio component, meaning that a user will either need headphones or have to play the sound off of their phone’s crummy internal speaker to fully engage with the content.
For instance, if you’re in a packed commuter train and are able to spare one free hand to scroll through Facebook your phone, it’s much easier to read an article than to watch a video. In that sense, instituting autoplay, as several platforms have done, is not the solution to video’s accessibility gap. If anything, the way platforms try to force your hand into watching video only serves to build resentment among users. As a heavy consumer of current affairs and news, I often find myself fighting against websites that would rather I watch the 90-second recap video than actually read the in-depth article I clicked for. The conflation of the desire for easy-accessibility with a more generalized belief that users are just lazy is perhaps the culprit behind such thoughtless tactics.
While investors in digital media may find themselves netting major losses in the wake of such risky and ill-informed decisions, it is labor, as always, that stands to lose the most from a digital media collapse. Indeed, publications like MTV News and Mic laid off much of their writing staffs earlier this year to make room for the video pivot. Similarly, when Verizon acquired Yahoo’s assets back in June, they combined them with AOL brands like The Huffington Post into a new subsidiary named Oath. After the deal closed, 2,100 staffers were laid off, about 15% of the work force.
It’s no surprise then that in the wake of such firings that many media outlets, such as Vice, Fusion, and most recently Vox have seen their staffs unionize. Response from management hasn’t been very warm though, as most unfortunately illustrated by the recent sudden shutdown of DNAInfo by founder and CEO billionaire Joe Ricketts just one week after their staffs had voted to unionize. Gothamist, acquired by Ricketts only earlier this March, was also shut down without warning.
While he initially claimed that the shutdown was a matter of the businesses failing, Ricketts more clearly vocalized his anti-unionist stance in a later blog post, saying that, “unions promote a corrosive us-against-them dynamic that destroys the esprit de corps businesses need to succeed. And that corrosive dynamic makes no sense in my mind where an entrepreneur is staking his capital on a business that is providing jobs and promoting innovation.”
Ricketts may very well be mourning the loss of capital, but it’s the many workers he has let go that have lost their livelihood.
Media consolidation in the wake of such a collapse also poses an existential threat to democracy and free speech, two American ideals that have already taken a heavy toll over the last year or so. Following the Herman-Chomsky propaganda model as laid out in their groundbreaking work Manufacturing Consent, itself published after a wave of media consolidation resulting from Ronald Reagan’s deregulatory agenda in the 1980s, a mass media that is owned by a select few corporations will ultimately serve its owners’ interests first rather than any sort of “objective truth”. The pair wrote that:
“[If] the powerful are able to fix the premises of discourse, to decide what the general populace is allowed to see, hear, and think about, and to ‘manage’ public opinion by regular propaganda campaigns, the standard view of how the system works is at serious odds w/ reality.”
For instance, if the GOP’s failure to pass Obamacare Repeal this year showed anything it’s that publicity and attention are the last things Republicans need if they want to pass such an unpopular legislative agenda. However, if the majority of mass media entities are owned by corporations and capital who would benefit from, say, conservative tax reform, then it is really only in their best interests to leverage their control of media to steer attention away from said legislative process.
This danger can be most immediately identified in the case of Sinclair Media, which is in line to sign a deal to absorb Tribune Media’s 42 TV stations than span coast to coast. Sinclair’s reach would nearly double as a result, from reaching 40 percent of American households to 72 percent. Trump Appointed FCC Chairman Ajit Pai is all but foaming at the mouth to push the deal through, already rolling back longstanding rules that could stand in the way of such mass consolidation.
Not only does Sinclair stand to benefit financially from this growth, but so does its influence on the general population. Sinclair has already weaponized their massive reach to push a hardline right-wing ideology into the mainstream by producing editorial segments that are then funneled down to local stations as “must run” programming. By pairing their propaganda with local news coverage — the media that Americans regularly say they trust the most — Sinclair has the potential to impact a number of viewers that dwarfs even Fox News’ sizable base of influence.
I have no track record when it comes to market predictions, but as a young professional who has spent the last several years trying to break into digital media, I can assure you that my pessimism is, unfortunately, grounded in a depressing reality. It’s hard to say when the collapse will happen, if it’s already in progress, or what it might look like. I have no real advice to offer to try and curb the worst of the fallout, but for media makers like myself it’s vital that even without structural and financial support that we continue telling stories that need to be heard.
As in the case of Harvey Weinstein and the many others who have been outed as abusers in recent weeks, media and storytelling does has the ability to pull the rug out from underneath even the most powerful of men. A free and fair press is a threat to all of them, and to all existing structures of power, as has always been the case. And as such, we must prepare to defend it.