The digital media rollup dream is dead for the moment — now it’s all about core brand strength
When a marriage or an engagement fails, it’s common for the participants to take time to work on themselves.
That’s where the digital media industry finds itself today.
After years of focusing on consolidating to better compete with Google and Facebook for digital advertising dollars, many of the most well-known digital media companies have abandoned consolidation efforts to concentrate on differentiation.
“What you’re finding is companies are trying to find a non-substitutable core,” said Jonathan Miller, the CEO of Integrated Media, which specializes in digital media investments. “The era of trying to put these companies together is over, and I don’t think it’s coming back.”
A 90% decline in BuzzFeed shares since the company went public in 2021, a failed sales process from Vice, the collapse of special purpose acquisition companies, and a choppy advertising market have made digital media executives rethink their companies’ futures. For the moment, executives have decided that more concentrated investment is better than attempts to gain scale.
“Right now, everyone’s trying to get through a tougher market by focusing on their strengths,” BuzzFeed CEO Jonah Peretti said in an interview with CNBC. “We’re in this period now where we should just focus on innovating for the future and building more efficient, stronger, better companies.”
What’s happening in the digital media space echoes trends from the biggest media companies, including Netflix, Disney and Warner Bros. Discovery. After losing nearly half their market values, or more, in 2022, those companies have emphasized what makes them different, whether it be distribution, brand or quality of programming, after years of global expansion and mega-mergers. Disney CEO Bob Iger said the word “brand” more than 25 times at a Morgan Stanley media conference this month.
“I think brands matter,” Iger said. “The more choice people have, the more important brands become because of what they convey to consumers.”
Making strategic decisions based on consumer demand rather than investor pressure is a pivot for the industry, said Bryan Goldberg, CEO of Bustle Digital Group, which has acquired and developed a number of brands and sites aimed at women, including Nylon, Scary Mommy, Romper and Elite Daily.
“Too many of the mergers were driven by investor needs as opposed to consumer needs,” Goldberg said in an interview.
The rollup dream’s rise and fall
From late 2018 to early 2022, the digital media industry had a shared goal. Pushed by venture capitalist and private equity investors who had made sizeable investments in the industry during the 2010s, companies such as BuzzFeed, Vice, Vox Media, Group Nine, and Bustle Digital Group, or BDG, were talking to each other, in various combinations, about merging to gain scale.
“If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti told The New York Times in November 2018, kicking off a multiyear effort to consolidate.
The rationale was twofold. First, digital media companies needed more scale to compete with Facebook and Google for digital advertising dollars. Adding sites and brands under one corporate umbrella would boost overall eyeballs for advertisers. Cost-cutting from M&A synergies was an added benefit for investors.
Second, longtime shareholders wanted to exit their investments. Large legacy media companies such as Disney and Comcast‘s NBCUniversal invested hundreds of millions in digital media in the early and mid-2010s. Disney invested more than $400 million in Vice. NBCUniversal put a similar amount into BuzzFeed. By the end of the decade, after seeing the value of those investments fall, legacy media companies made it clear to digital media executives that they weren’t interested in being acquirers.
With no strategic buyer available, merging with each other using publicly traded stock could give VC and PE shareholders a chance to cash out of investments that were well past the standard hold time of seven years. Digital media companies eyed special purpose acquisition companies — also known as SPACs or blank-check companies — as a way to go public quickly. The popularity of SPACs picked up steam in 2020 and peaked in 2021.
Deal flow accelerated. Vox acquired New York Magazine in September 2019. About a week later, Vice announced it had acquired Refinery29, a digital media company focused on younger women. BuzzFeed bought news aggregator and blog HuffPost in 2020 and then acquired digital publisher Complex Networks in 2021 as part of a SPAC transaction to go public. Vox and Group Nine agreed to a merger later that year.
BuzzFeed, generally thought by industry executives at the time to have the strongest balance sheet with the best growth narrative, successfully went public via SPAC in December 2021. Shares immediately tanked, falling 24% in their first week of trading. The coming weeks and months were even worse. BuzzFeed opened at $10 per share. The stock currently trades at about $1 — a 90% loss of value.
BuzzFeed’s underwhelming performance coincided with the implosion of the SPAC market in early 2022 as interest rates rose. Other companies that planned to follow BuzzFeed shut down their efforts to go public completely. Vice tried and failed. Now it’s trying for the second time in two years to find a buyer. BDG and Vox, meanwhile, abandoned considerations to go public. Vox instead sold a 20% stake in itself in February to Penske Media, which owns Rolling Stone and Variety.
The industry turns inward
Consolidation was always a flawed strategy because digital media could never become big enough to compete with Facebook and Google, said Integrated Media’s Miller.
“You have to have sufficient amount of scale to matter, but that’s not a winning formula by itself,” Miller said.
Vice’s deal for Refinery29 is a prime example of a deal motivated by scale that lacked consumer rationale, said BDG’s Goldberg.
“The digital media rollup has proven successful only when assets are thoughtfully combined with an eye toward consumers,” Goldberg said. “In what world did Vice and Refinery29 make sense in combination?”
Vice is engaged in sale talks with a number of buyers that fall outside the digital media landscape, CNBC previously reported. It’s also considering selling itself in pieces if there’s more interest in parts of the company, such as its TV production assets and its ad agency, Virtue.
Vice is a cautionary tale of what happens to a digital media company when its brand loses luster, Miller said. Valued at $5.7 billion in 2017, Vice is now considering selling itself for around $500 million, according to people familiar with the matter, who asked not to be named because the sale discussions are private.
A Vice spokesperson declined to comment.
“In the old days of media, with TV networks, if you were down, you could revive yourself with a hit,” said Miller. “In the internet age, everything is so easily substitutable. If Vice goes down, the audience just moves on to something else.”
Companies such as BuzzFeed, Vox and BDG are now trying to find an enduring relevancy amid a myriad of information and entertainment options. BuzzFeed has chosen to lean in to artificial intelligence, touting new AI-generated quizzes and other content that fuses the work of staff writers with AI databases.
BDG has chosen to primarily target female audiences across lifestyle categories.
Vox has focused on journalism and information across a number of different verticals. That’s a strategy that hasn’t really changed even as the market has turned against digital media, allowing Vox CEO Jim Bankoff the opportunity to continue to hunt for deals. Just don’t expect the partners to be Vice, BDG or BuzzFeed.
“We want to be the leading modern media company with the strongest portfolio of brands that serve their audiences on modern platforms — websites, podcasts, streaming services — while building franchises through multiple revenue streams,” Bankoff said. “There’s no doubt M&A is part of our playbook, and we expect it will continue to be in the future.”
Finding an exit
While executives may be making strategy decisions with a sharper eye toward the consumer, the problem of finding an exit for investors remains. Differentiation may open up the pool of potential buyers beyond the media industry. BuzzFeed’s emphasis on artificial intelligence could attract interest from technology platforms, for instance.
It’s also possible that there will be an eventual second wave of peer-to-peer mergers. While Integrated Media’s Miller doesn’t expect a future industry rollup, BuzzFeed’s Peretti hasn’t closed the door on the concept if market conditions improve. As executives invest in fewer ideas and verticals, the end result could be healthier companies that are more attractive merger partners, he said.
“If everyone invests in what they’re best at, if you put them back together, you’d have that diversified digital media company with real scale,” Peretti said. “That helps drive commerce for all parts of a unified company. I think it’s still possible.”
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
Social media restricted in Senegal amid political unrest – NetBlocks
NetBlocks metrics confirm the restriction of Facebook, Twitter, WhatsApp, Instagram, YouTube, Telegram and other social media platforms in Senegal on 1 June 2023. The measure comes amid widespread protests over the sentencing of opposition leader Ousmane Sonko.
⚠️ Confirmed: Metrics show the restriction of social media and messaging platforms including Twitter, Facebook, WhatsApp, Instagram and YouTube in #Senegal; the incident comes amid protests over the sentencing of opposition figure Ousmane Sonko
📰 Report: https://t.co/2ckQPxJ5j3 pic.twitter.com/MuohanLeCP
— NetBlocks (@netblocks) June 1, 2023
Real-time network data show the restrictions in effect on Senegal’s leading mobile provider Orange (Sonatel) with restrictions subsequently also observed on Free (Tigo). The study is taken from a sample size of 4000 measurements from 120 vantage points across Senegal. Unrelated platforms have remained available without restriction. This class of disruption can be worked around using VPN services, which are able to circumvent government internet censorship measures.
What’s happening in Senegal?
Ousmane Sonko, a prominent opposition figure in Senegal, has been sentenced to two years in jail on charges of “corrupting youth,” leading to widespread protests in Dakar and other major cities. The court acquitted Sonko of rape and death threat charges but found him guilty of immoral behavior towards individuals younger than 21. The sentence could potentially bar Sonko from running in the upcoming presidential election. Protests have broken out in response to the verdict, with Sonko’s supporters claiming the charges are politically motivated and part of a plot to stymie his political career
Senegal has a history of using social media restrictions to control protests. In 2021, NetBlocks found that authorities limited access to social media and messaging apps, in addition to measures targeting traditional media.
Senegal’s government has also faced a series of activist cyberattacks over the treatment of Sonko, which brought down several state websites and online platforms hosted on the government ADIE network earlier in the week.
NetBlocks recommends against the use of network disruptions and social media restrictions, given their disproportionate impact to fundamental rights including freedom of expression and freedom of assembly.
Internet performance and service reachability are determined via NetBlocks web probe privacy-preserving analytics. Each measurement consists of latency round trip time, outage type and autonomous system number aggregated in real-time to assess service availability and latency in a given country. Network providers and locations are enumerated as vantage point pairs. The root cause of a service outage may be additionally corroborated by means of traffic analysis and manual testing as detailed in the report.
NetBlocks is an internet monitor working at the intersection of digital rights, cyber-security and internet governance. Independent and non-partisan, NetBlocks strives to deliver a fair and inclusive digital future for all.
[ press | contact ] Graphics and visualizations are provided for fair use in unaltered form reflecting the meaning and intent in which they were published, with clear credit and source attribution to NetBlocks. Intellectual property rights are protected including but not limited to key findings, facts and figures, trademarks, copyrights, and original reporting, are held by NetBlocks. Citation and source attribution are required at the point of use.
Opinion: Social media, news outlets should kiss and make up – Winnipeg Free Press
The doctrine of mutually assured destruction — which arose in the 1960s as part of the global debate about the present danger of nuclear war — suggests that two opponents who are powerful enough to destroy each other will likely avoid conflict to ensure their mutual survival. One can only hope the world’s social media companies, and the most prominent news organizations, are familiar with the concept.
For many years now, governments in many countries have been sparring with the giants of technology and social media — Meta (parent of Facebook and Instagram) and Google in particular — to find a larger and more reliable revenue stream to support news organizations.
In short, traditional business models that sustained news organizations have been eviscerated by digital media, where the giants of the sector operate with a virtual monopoly that sucks up nearly 80 per cent of all money spent on digital advertising worldwide. Recognizing the important role that news organizations play in the fabric of democracy, governments have pressed social media companies to pay more for the news content that circulates on their platforms.
Although these battles have taken the combatants right up to the edge of mutually assured destruction, cooler heads always seem to prevail. However, there is always a chance that at some point, someone will do something really stupid.
The latest conflict surrounds Bill C-18, the Online News Act, which would force social media companies to negotiate more and better deals for the traditional news content they share on their platforms. It is expected to clear the Senate before Parliament breaks for the summer, and head toward proclamation.
The companies argue they already support Canadian news through things like the Google News Showcase, which pays modest sums to news organizations that agree to post there. They also claim the bill would massively inflate the amount of that support.
As a result, both Google and Meta recently threatened to block Canadian news content from their platforms if the bill is enacted without changes.
At this point, you should ask how a fight between governments and social media companies could qualify as a form of mutually assured destruction?
Many Canadians implicitly understand the damage that could be done to news organizations if they could no longer use social media to drive readers to their content.
This week, executives from some of country’s largest news organizations described the possible exclusion from social media as an existential threat that would erode both readership/viewership and what little digital advertising money they earn now.
However, what’s at risk for the tech companies?
Although different social media platforms have different purposes, a significant quantity of social media content is either postings made directly by journalists and news organizations, or by users reacting to news stories.
The tech companies regularly claim less than 10 per cent of all traffic involves news. And yet, social media is acknowledged as one of the most important tools for the distribution and consumption of news. Depending on the source, anywhere from one-third to half of all adults use social media to get their news.
Depending on the source, anywhere from one-third to half of all adults use social media to get their news.
Put another way, most of us have come to rely on the fact that social media includes news. By various estimates, somewhere around 75 per cent of Facebook users identify messaging friends and family as their No. 1 use. However, close to 60 per cent say they use Facebook to keep up on current events.
So, even if the amount of content is small, the interest it has for social media users is quite high. And in that equation, we find a reasonable amount of peril for the companies that operate the platform.
It’s also important to note that many social media companies are struggling to increase their audience. Facebook, in particular, is fighting against stagnating subscriber numbers; over the site’s total number of users has grown substantially in the last 10 years but has been steady at just under three billion for the last three years.
There is enough evidence to make the case that both news organizations and social media companies are co-dependent. News is a popular feature on social media and given that Facebook and Google don’t create news content, they obviously have an interest in making sure someone else can.
How do we get beyond the standoff?
The smart money would say that Google and Meta are bluffing about cutting news out of the feeds Canadians receive. The companies tried a similar strategy in Australia, where news content was stripped from Google and Facebook in February 2022 for eight days.
The Australian government held firm, and the tech companies relented and struck deals to pay news organizations.
The question is whether the level of support demanded by Bill C-18 is so much bigger than what they’re providing right now that the companies are willing to edge closer to destruction.
As long as both sides are willing to acknowledge their co-dependence, everything will work out. Unless they forget about words like co-dependence. And then things will get ugly.
Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.
Will Google's AI Plans Destroy the Media? – New York Magazine
Early this year, Google teased a fundamental change to its core product, the search engine through which much of the world accesses the web. Soon, the company said, Google would start using AI to “distill complex information and multiple perspectives into easy-to-digest formats.” By May, the company had a real product to share.
For Google, it was an obvious and incremental feature update combining two of the company’s products: a text generator plugged into a search engine, basically. Searchers ask a question, and Google tries to answer it with short, article-style “snapshots.”
For publishers, however — of news, how-to content, reviews, recommendations, reference material, and a range of other content one might describe as existing to “distill complex information and multiple perspectives into easy-to-digest formats” — it looked like nothing less than an existential crisis. Google was getting into content, automating the work of its partners, and dramatically altering the terms of its informal deal with publishers that has sustained digital media for years: You make content; we send traffic; everyone sells ads. If this wasn’t a threat to journalism directly, it was certainly a threat to the journalism business. Google, it seemed, was eager to cut the publishers out.
It’s early, still, and AI search won’t threaten much of anything if it fundamentally doesn’t work, or if users don’t like it, which we’ll know soon enough. But it doesn’t have to be perfect, or even great, to dramatically alter the online economy. A stickier question is whether Google, possessed of a new capability to inflict massive harm on digital publishers and the web in general — and meanwhile battling very different firms for AI dominance — will decide, in the coming months, that it is in its own business interest to do so.
In its current form, Google’s Search Generative Experience will answer a question about the debt ceiling with a lengthy attempt to summarize the news.
Up top, searchers get a 272-word summary of the news with a bit of background. Its citations, which are hidden behind a small button in the upper-right portion of the screen, include a consulting firm, a think tank, and a slew of news organizations, including the New York Times, The Wall Street Journal, and NBC. Conventional search results are well beyond the bottom of the screen; on this issue, the information was accurate, though it’s still pretty easy to get tripped up.
Media executives are sounding the alarm. “Our content is being harvested and scraped and otherwise ingested to train AI engines,” said News Corp. CEO Robert Thomson at the INMA World Congress of News Media last week. “These are super-snippets containing all the effort and insight of great journalism but designed so the reader will never visit a journalism website, thus fatally undermining that journalism.” He added, “Content mining is an extractive industry.” Brian Morrissey, the former editor of the media trade publication Digiday, outlined publishing’s Google predicament at The Rebooting, predicting the decline of the web page in general:
As Google eliminated all credible competition, search became a mostly reliable distribution channel. The bargain was always for publishers to play by Google’s rules, then make money from ads that very often ran through Google’s ad stack and let them wet their beak. It was a roundabout way of paying tribute to the king. Nobody likes taxes, but if someone controls the distribution, you pay up …
That’s breaking. Google’s demo of its new AI-fueled search engine heralds a new phase of search that will throw the page’s central role in publishing strategies into question.
“From Google’s demos, what’s clear is less traffic will go to publishers,” he said. Less traffic means less of everything that keeps modern media companies afloat: advertising revenue, subscription conversions, e-commerce revenue.
“At the risk of overstating the potential consequences,” wrote Matt Novak at Forbes, Google’s search overhaul “will be like dropping a nuclear bomb on an online publishing industry that’s already struggling to survive.”
Google stressed that this was an experimental feature and that, for now, it would be limited to testers who opted in. Certain categories of queries would not trigger the snapshots, the company said — sensitive medical questions, for example — and each answer can be checked, sort of, by clicking a button that reveals linked citations for each sentence. Classic results would still be present, though less visible.
Still, the change would represent a fundamental shift in what Google does, how users interact with it, and how it interacts with the web around it. For billions of people, Google is the default interface for the rest of the online world. It’s the portal through which all other sites are accessed. It’s the box — on your phone or your computer or your tablet — with which you interact so often you take it for granted. It’s a de facto governing authority for the parts of the internet that aren’t hidden away inside social platforms and apps and has unparalleled sway over what gets seen online and by how many people. If implemented at all, by virtue of Google’s size, it would have a significant effect on traffic for pretty much any digital publisher.
This is a facet of the larger AI story — which is to say it’s about automation. But it’s also a story of a large platform deciding to compete more aggressively in the marketplace it controls. With snapshots, Google is pushing into some of the most lucrative parts of the content business over which it already exerts enormous influence. That the sorts of content it seems to be automating first are explainers, guides, and product rankings is no coincidence — these are styles of content that publishers currently produce with Google traffic in mind. If Google hired tens of thousands of contractors to produce “snapshots” and product recommendations for popular searches, it would be easy enough to conceptualize and very bad news for a number of Google-dependent online industries; that it’s doing so with “generative AI” suggests that what was holding it back from attempting to replicate or replace some of the most trafficked sites on the web wasn’t some lofty notion of how Google should function as a market or an ecosystem, some sense of stewardship over “the web” as a concept, but cost.
A lot of dark predictions about AI are counterintuitively sort of naïve, imagining the technology as a distinct and novel entity with its own motives or as a phenomenon that will be evenly experienced across the economy. Google, here, teases a more familiar story, utterly devoid of novelty: Large firm seeks efficiencies and uses machines to achieve them.
The doomsayers have a point, in other words: If Google commits to summarizing more and more of the content it used to serve, the companies that make it are in for an even worse time than they’re already having. The vast majority of publishers are individually insignificant to Google and have no collective power to speak of. With apologies to Mr. Thomson, News Corp. properties, with their search-engine-optimization teams and content strategies, are already scrounging for traffic from the margins of Google’s user experience. As any SEO professional will tell you, it wouldn’t take something so dramatic as an “AI-search makeover” to lose a significant chunk of your inbound readership from Google. Small mysterious updates to its search algorithms have pitted publishers against the company’s machine-learning systems for years.
In publishing, however, there is also a tendency to overestimate the forecasting abilities, and general competence, of larger and more successful technology companies. Google, one of the largest tech companies in the world, has a lot to gain and lose by altering search, which generated $162 billion of Google’s $224 billion in advertising revenue in 2022. It has skin in the game. Will Google users be happy with a machine-improvised Wikipedia article at the top of their search results? Will it change their relationship to the sponsored links at the heart of Google’s business? Will they take product recommendations seriously from a Google bot? Will Google’s AI testing phase result in doubling down on content automation or quietly rolling it back? Will that be because users don’t care for it, or because they do, but it’s in a way that threatens Google’s business? Their predicament is the AI dilemma in not-so-miniature: a confrontation with the essential weirdness of generating synthetic information.
Replacing outbound links to the web with machine-synthesized summaries of the web is both an obvious use case for generative AI and a direct threat to the economy in which a range of content — including journalism — is currently produced. But its success depends on a few assumptions: that the summaries are good or, far more important, that people think they’re good and trust them; that, in the long term, there remains sufficient scrape-able content to summarize; that the web ecosystem Google will be exploiting won’t be itself overrun with AI-generated content, leading to a death spiral of content credibility and relevance; that stepping deeper into the content business makes any sense for Google, the leadership of which might be acting out of fear of missing out on the next big thing, at the company’s peril. Some of these issues are less speculative than others. For decades now, the entire web has been optimizing itself for Google, modifying and producing content with search traffic in mind; Google, which was built around the idea of surfacing and organizing the world’s information, has instead created the mother of all spam problems, which it struggles daily to solve.
But from the user perspective, Google as an AI-powered answer engine is also uncharacteristically aligned: It casts present-day Google Search as something broken that needs to be fixed — which, well, maybe it is. Rather than contending with a cluttered interface and a gauntlet of advertising to get to a credible link, the company has teased something clean, clear, and refocused on results. The company’s AI-search demos have doubled as scathing critiques of the mess that search has become and of a business model that depends on interruption, diversion, and extra engagement. Maybe this pristine alternative vision is indeed what we end up with, in which case the web as we knew it is shoved off the page, a decades-old online civilization of websites reduced to training data for slick chatbots.
Or maybe, after a brief detour, Google’s true identity as an advertising business reassumes control and once again draws it, and its users, back into the lucrative mess, where they will continue to tap and click their way through interfaces that are designed as much to monetize them as to assist them in anything resembling a “search.” For Google, it might be better to have a web to exploit than to have no web at all.
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