HuffPost’s mass redundancies, Snackable TV's Sydney closure and Mashable’s rumoured exit from Australia is the first indication the ‘digital media crash’ has hit Down Under.
In the US there has been widespread coverage of what Digiday is calling the “pivot to reality” for digital media with BuzzFeed and Vice missing their revenue results, Mashable selling for a fifth of its one-time valuation and widespread redundancies at digital publishers.
Today, AdNews revealed that digital youth title Snackable TV has closed its Sydney operations and made several staff redundant over the last six months.
The news comes the week after HuffPost announced its divorce from Fairfax and subsequently a significant scale back of its operations in Australia.
Sources in the market are predicting that Mashable will dramatically cut back its Australian operations or exit altogether and it's thought BuzzFeed could move to a slightly smaller team. It's US and UK teams have been hit with redundancies in past weeks.
While HuffPost’s closure is largely due to a change in global strategy for the organisation rather than a reflection on performance, it struggled to differentiate itself in a market that has a proliferation of digital media brands that are all chasing the same ad dollars. Mashable faced the same issue and when it moved away from its social media focus and moved into mainstream media, it became a jack-of-all-trades, but a master of none.
When HuffPost launched in 2015 it went up against established players News Corp and Fairfax, as well as The Guardian, which has a similar editorial stance on environmental and political issues. This year has also seen the force of Nine become another strong contender in the digital space, revamping its online assets.
HuffPost’s model relied largely on advertising revenue, which is a common downfall of digital media publishers as they place all their eggs in a shrinking basket.
Snackable TV had a better chance at standing out from the crowd, solely producing short-film content around the themes of gaming, culture and music, instead of focusing on editorial content.
But it had significant competition in BuzzFeed, which has a global brand and reputation, as well as Nine-backed Pedestrian TV and Ooh!Media-owned Junkee Media, which both have been slowly building their audiences for over a decade.
Another issue for Snackable TV was its unsustainable business model, as well as what former employees described as questionable management, with the site not running advertising on its site or offering a subscription service. It relied on branded content, but ex-employees told AdNews it struggled to land deals as it didn’t have the eyeballs of other youth titles.
Founder Kate Edwards says the business will reopen in Byron Bay, but now it has burnt through its $300,000 Jobs for NSW loan, it will be forced to redefine its business model.
Local sources believe the Australian market will be less impacted by the digital media crash in comparison to the US market, where ballooning valuations had been leading VC funding.
But that doesn’t mean Australian digital-only publishers will escape unscathed as they remain beholden to the iron grip of Facebook and Google, which is leaving little ad revenue for publishers to fight over. There is also increasing concern around the safety of programmatic, which is often the system used to book ads on digital sites.
A top media boss previously told AdNews that publishers are being “held to ransom”, forced to give away free content to Facebook and Google to reach an audience, but seeing little revenue return.
Once a beacon of how a digital company could adapt to the shifting media ecosystem, BuzzFeed’s Tasty is an example of a thriving platform that has seen significant declines in its readership, which BuzzFeed attributes to Facebook once again changing its algorithm to value watch time over shares.
Wow – Buzzfeed's Tasty has dropped from 74m FB interactions in May 2016 to 20m in September 2017, according to CrowdTangle pic.twitter.com/PUFwwEwGns— Max Benwell (@Max_Benwell) October 30, 2017
Facebook changing its algorithm is a regular gripe for publishers, which often pour thousands of dollars into adapting their content to be Facebook-friendly, only to have the algorithm change again.
Facebook is still largely viewed as a foe of publishers, whereas Google is moving into friend territory, with publishers considering its decision to ditch its “first click free” and boost subscriptions a positive move.
While Facebook and Google are making attempts to work better with media companies, it’s a sad truth that the digital duopoly has made the digital media business tough and closures are a result.
In 2016, AdNews asked top media execs from Fairfax, News Corp, Yahoo7 for predictions on what the media landscape would look like this year. A common theme in those predictions was consolidation.
Pedestrian TV co-founder Chris Wirasinha seemed to have it right, predicting: “2017 will see further consolidation and acquisitions within the digital publisher market and at least one international entrant forced to either exit or downscale its offering.”
It may have taken the greater portion of 2017 to come true, but it seems these predictions of consolidation in the media industry are now coming home to roost.