2019 was a transformative year for the U.S. news media industry, but it was also one of the most turbulent points in its history.
The big picture: There were enormous business challenges, which resulted in an unprecedented number of layoffs, desperate product maneuvers and fire-sale deals.
Driving the news: The impeachment of President Trump by the House of Representatives on Thursday was prompted by a whistleblower’s complaint, but the stage was set by the dogged reporting of many journalists across the country.
- But despite those efforts, the economic outlook of the news industry is still grim heading into 2020.
- The impeachment process has proven that voters are starting to tune out political coverage, which for the past few years has been the news industry’s biggest money-maker. That reality, coupled with an anticipated recession, has newsrooms on edge.
Where things stand: 2019 was a particularly brutal year for older news industries, like newspapers, magazines, television and radio. Revenue for television was down nearly 4% this year, and for print it was down nearly 20%.
- Legacy magazine brands that were once considered must-reads, like Sports Illustrated, struggled to find suitors. Magazine titans like Conde Nast are expected to miss their revenue numbers given a bleak advertising forecast.
- Univision, one of the largest media companies that serves America’s fastest-growing population, is looking for a buyer to help it crawl out of a massive debt hole, driven by a private equity investment gone bad.
Be smart: Legacy industries still continue to serve local news markets, which are mostly void of the same investments financially, and in tech and talent, as national outlets.
- The two biggest local newspaper holding groups — New Media (GateHouse and Gannett) and McClatchy, which collectively house over 700 newspapers — had a combined market cap value as of Thursday of less than $400 million. By comparison, Apple, which this year launched its own news product, is worth more than $1.2 trillion.
- Meanwhile, several other papers serving major markets closed, like the 150-year-old Vindicator in Youngstown, Ohio and the beloved OC Weekly in California.
Regulators, aware of the realities that legacy industries and local media face in a digital world, continued efforts to level the playing field this year, mostly by trying to roll back decades-old rules and legal agreements that may be keeping them from growing.
- But their efforts have proven mostly moot, as most consumers have already migrated away from those mediums to a handful of apps owned by Silicon Valley titans.
- Policymakers did began to more meaningfully consider regulating internet giants in 2019, but a gridlocked Congress and powerful lobbying forces have so far prevented any meaningful internet regulation from getting passed.
In the markets, a string of highly-anticipated IPOs faltered in 2019, which forced investors in private media companies to push for quicker paths to profit.
- Given that news is traditionally a slow-growth business, many desperate efforts to make money quickly, like launching half-baked subscription or video products, fell short.
- For some media upstarts, that pressure proved perilous. Splinter, the left-leaning news and opinion site, shut down this year after its parent company, G/O Media, was purchased by a private equity company for less than half of what it was worth just three years earlier.
- Its sister company, Deadspin, is now essentially defunct.
The big picture: As a result of these realities, investor sentiment in digital media has begun to slip, and investments in the sector are predicted to decline in the next decade.
- That matters because over the past few years, private investment into media companies soared, at all levels.
- Many of the venture-backed media companies that were expected to go public eventually, like Buzzfeed and Vice Media, no longer seem heading in that direction. Disney this year wrote down all of the $400 million it invested in Vice.
Between the lines: These challenges took a human toll on journalists and news industry employees around the country. By some estimates, nearly 8,000 people were laid off or lost their jobs in media in 2019. That level of attrition is on pace to be the highest it’s been since the 2009 recession.
Yes, but: The challenges that most media companies face have forced them to innovate faster, and in many cases, reach new heights.
- Most media companies distribute content to far more people than ever before through dozens of new channels ranging from Netflix to TikTok.
- Many broke stories this year that will define our generation, like The Washington Post’s investigation into the decades-long lies told by officials about the war in Afghanistan or The Miami Herald’s explosive reporting about Jeffrey Epstein.
The bottom line: But despite those feats, news media companies as a whole have mostly suffered — and there’s no sign that the economic outlook is going to get better any time soon.
The next killer smartphone app has arrived — and it offers the potential to transform how we communicate, share knowledge and even make new friends.
I am talking about voice-and-audio-based social networking startup Clubhouse. Its platform enables users to drop in and out of ephemeral chat rooms and take part in a range of gatherings, from small “water-cooler” type conversations to larger discussions featuring expert panels, often attended by thousands of listeners. Since its launch last March, Clubhouse has increasingly become a cultural phenomenon, attracting politicians, celebrities and experts from all walks of life. With its success and prominent backing, it may now be poised to upend the entire social media space.
Clubhouse’s latest figures reveal how quickly it is growing. During a weekly town hall event on Sunday, co-founder Paul Davison said the app’s weekly active user base had doubled to 2 million over the last couple of weeks. He also announced the startup had raised another investment round led by venture capital firm Andreessen Horowitz, adding it now has more than 180 investors. While he didn’t offer any specifics, The Information reported on Friday that Clubhouse was getting interest at a $1 billion valuation. If true, that means the company’s value has risen by a factor of 10 since its earlier Series A round last May, also led by Andreessen Horowitz.
Something special is happening inside the Clubhouse community. Call it the power of the voice — and it’s what separates Clubhouse from other platforms. A short back-and-forth live conversation, with its nuance and tone, can build closer relationships more quickly than dozens of written posts and text messages sent through more established social networks such as Facebook and Twitter. Since I joined Clubhouse last summer, I met and became friends with professors, filmmakers, artists, engineers and more from places all over the world. It has been intoxicating listening to people’s life stories and absorbing their knowledge and experience, from learning how a streaming video executive greenlights projects to getting expert political analysis on the latest breaking news. It has easily become one of my favorite pastimes.
To illustrate the kind of agenda-setting conversations that are becoming a staple on Clubhouse these days, here’s one example: Earlier this month, the mayors of San Francisco, Miami and Austin congregated inside a “room” to tout their cities as good places for tech companies to do business. Thousands of executives, investors, and employees tuned in to the vibrant interactive panel. For an app like Clubhouse — or any social media platform looking to extend its influence and user base — this is the holy grail of the virtuous feedback loop, where the network effects of a large influential audience attract the highest-quality speakers and vice versa.
Impressive as Clubhouse’s latest metrics are, they may actually understate its potential. All the growth thus far has come largely by worth of mouth, and from only half of the smartphone market. The app still requires an invitation from a current member to join and is exclusive to Apple Inc. devices. So when the founders decide to open Clubhouse to the public and release an Android version, growth will take off to higher levels.
The nature of Clubhouse’s platform offers the potential for money-making opportunities. For instance, Clubhouse could take a commission from room admission fees for large panel discussions. Or, similar to Amazon.com Inc.-owned Twitch channels, it could offer monthly subscriptions for specific interest-based club rooms. One can also imagine users buying unique animated reaction emojis to give visual feedback to speakers and interact with other members of the audience. Of course, the ability to make money will also attract and retain the best room hosts for the Clubhouse ecosystem. On Sunday, Clubhouse’s cofounders said they will start testing ways for the platform’s creators to get paid through “tipping, tickets or subscriptions” in the coming months.
Clubhouse has its challenges. Like other social media networks, it has faced criticism for objectionable content that was broadcast on its site. Last September, Clubhouse was hit with a flurry of negative publicity when some speakers perpetuated anti-Semitic stereotypes. The startup needs to invest more aggressively in trust and safety features and hire content moderators to mitigate harassment. There is also competition on the horizon with Twitter Inc. testing its own audio chat room feature inside its app called Spaces.
But it may be too little too late for other players. While Twitter’s new service does offer some differentiated features – including real-time transcriptions that appear on screen and the ability to share tweets to the room for discussion purposes – it is thus far largely siloed around a specific account’s followers. It lacks Clubhouse’s distinctive serendipity that lets people from diverse backgrounds meet and form their own connections through their own wanderings. Clubhouse also is at a stage where it is adding new innovations on a near weekly basis — including different room types, activity-based notification feeds and event calendars. It will be difficult for any other company to catch up.
Of course, the app has benefited from the pandemic as people look for ways to socialize while avoiding in-person interactions and outdoor activities. But Clubhouse usage may prove more durable than many believe after daily life returns to normal. It’s a convenient, frictionless way to meet new people through the intimacy of conversation and listen to conference-like events that otherwise might be difficult to attend in person.
Perhaps most importantly is the stunning level of usage and engagement. On a personal level, since installing Clubhouse I have noticed my time spent on the app is significantly higher than any other social network on my smartphone — more than TikTok, Twitter or Instagram. It is a sign of how appealing audio-based social networking can be. And judging from the activities of my friend list inside the community, I am not alone. I have little doubt once Clubhouse opens up to the general public, its user base can grow into the tens of millions. The social media giants should be concerned.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the editor responsible for this story:
Beth Williams at firstname.lastname@example.org
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