Media companies cut thousands of jobs so far this year. They're not coming back. – Yahoo Finance

It’s been a punishing year so far for media workers, where layoffs already measure in the thousands.

Journalists and staffers at the Wall Street Journal (NWS), Vice Media, the Washington Post, Business Insider, BuzzFeed (BZFD), Sports Illustrated, and many other outlets were among the brutal wave of cutbacks, accelerated by an online ad market that’s oppressive to publishers outside of Big Tech.

The explosion of audience traffic that defined the COVID era has subsided, along with venture capital funding, as hopes of a digital resurgence of the news business falter.

What’s next for an industry recoiling from the pandemic boom and cratered ad revenues? More malaise, and the near certainty that most of the jobs are not coming back.

“What’s happening here is the ad revenue business model has collapsed,” said Victor Pickard, professor of media policy and political economy at the University of Pennsylvania’s Annenberg School for Communication. “Once that fell apart, there was no replacement. Paywalls aren’t going to make up that revenue.”

The industry had already been upended by the shift from print to online consumption of content. Social media feeds algorithmically turning users away from news sites, as well as ad dollars flowing to Google (GOOG, GOOGL), Meta (META), and increasingly Amazon (AMZN), have driven the most recent retreat.

While cases of mismanagement and strategic blunders have colored high-profile catastrophes in the media world, Pickard notes these are subplots to the root cause of the problem. Niche-oriented outlets have found some success, as has the New York Times (NYT), he said, but newsrooms of every other scale will confront the same dilemma of making money off sinking ad revenue.

“The industry has reached a point of no return,” Pickard said. “Unless we come up with a structural alternative that is not based on standard commercial market mechanisms, I don’t see the market supporting this level of journalism ever again.”

My own journalism career tracks the earlier excitement of a digital-first, social-led era, followed by convulsions across the industry, a decline of local news publishers, and most recently a sharp retrenchment.

BuzzFeed News hired me in 2015 as part of an expansion of its tech coverage and the launch of its San Francisco Bureau. But what was once thought of as a symbiotic relationship between digital outlets and mega tech platforms eventually dissolved, as the model failed to provide the financial support and dependable audience to sustain journalism built for the social web. BuzzFeed shuttered its news division in 2023, marking the end of an era. And the already greatly diminished company announced another extensive round of layoffs last month.

I joined the Washington Post in 2017 as the legacy paper geared up for a rapid expansion of its newsroom. Unending controversies and scandals of the Trump years gripped the national conversation and didn’t let go. The Post was ascendant even before the public health emergency of the COVID years kept audiences fixed to their screens. But the web traffic and subscriber growth didn’t last. After an initial round of layoffs last year, the Post shed roughly 10% of its staff through buyouts.

The bout of retrenchment also put to rest the fantasy that ultra-wealthy patrons would save the news business. Cuts at Time and the Post and one of the largest workforce reductions in the history of the Los Angeles Times underscore that even billionaire owners — Jeff Bezos bought the Post in 2013; Patrick Soon-Shiong took over the LA Times in 2018; and Marc Benioff acquired Time the same year — won’t always cover their newsrooms’ losses.

The collapse of the Messenger, whose business plan involved attracting massive web traffic from social and search and relying on digital ad revenue, further emphasized the difficulty of pursuing an outdated model.

“Advertising itself has been a game of bottom feeding for all publishers,” said Gabriel Kahn, professor of professional practice of journalism at the USC Annenberg School for Communication and Journalism.

“As currently constructed this is what I would call a failed market — not for advertisers, but for the publishers — this ad market is not constructed to give them any kind of real return and it’s getting worse and worse,” he said.

Social platforms have become more fractured and less hospitable to news, denying outlets what used to be gushes of traffic. Search is changing too. Updated displays for search results can eliminate the need to click through to a publisher’s website, severing the relationship between a reader and a news source. Google last month tested removing the News search tab.

The rise of AI tools could exacerbate that problem, further alienating news consumers from the outlets that unearth the information they seek. That’s one of the arguments advanced by the New York Times in its lawsuit against ChatGPT maker OpenAI and Microsoft (MSFT). Why subscribe to a newspaper when a chatbot (or a search engine or a TikTok influencer) can narrate the news for free?

A new generation of worker-owned, reader-supported ventures offers glimmers of hope. Or at least a different way of doing things. Instead of styling themselves as tech companies like the last iteration of media startups, chasing colossal growth with the pressures and conflicting mandates that come from corporate managers, investors, and debt financing, a new crop of independent outlets are relying on subscriber support.

“The readers have to realize that this work isn’t free,” said Jason Koebler, co-founder of 404 Media, the new tech publication that’s owned by four journalists formerly of Motherboard. Koebler said he’s optimistic that sites like Defector, Hell Gate, Racket, and Aftermath can succeed, freed from burdensome overhead and driven by focused editorial missions. The disintegration of the last wave of outlets offers a key lesson for Koebler: “We want to be ambitious with the journalism, but with the business we are conservative and very focused on being sustainable before we grow.”

Part of the appeal of subscription-based websites is bringing back an older web spirit, liberated from algorithmic sludge, of creating a destination again, said Nathan Grayson, co-founder of Aftermath, an outlet run by journalists hit by layoffs and site closures who reunited to cover video games and internet culture.

Grayson and others are under no illusion that smaller outlets will replace the staggering losses at much larger publications. “Things are taking on a new shape and new form and we don’t know what that looks like in a handful of years,” he said. But proving out a new paradigm in journalism can be its own success.

“Even if it seems like journalism is dying,” he said, “the necessity of doing it will not go away.”

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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