This week, Vice, a publishing company once valued at $5.7bn, filed for bankruptcy. It is expected that a group of creditors will end up buying it for $225m.
Last month, BuzzFeed closed down its much respected news division. Another high profile brand, Vox Media, recently laid off 7% of its workforce.
These companies, once heralded as the future of news publishing, and the beneficiaries of eye-watering valuations, have sadly fallen on hard times.
Why? Margaret Sullivan, writing in the Guardian, sums it up in two words: the internet. We are still in the throes of the digital revolution and there are no settled business models.
She writes: “The problem in digital news? The audience, in many cases, was there. But the profits didn’t follow, or at least not in a sustainable way. Digital advertising revenue, once thought to be based on audience size, was going instead to social media platforms, particularly Facebook.”
Talking of Facebook, it is becoming increasingly clear that businesses reliant on social media platforms are particularly vulnerable. Mitra Kalita, founder and publisher of Epicenter-NYC, was quoted in the New York Times as saying, “We now know that a brand tethered to social media for its growth and audience alone is not sustainable.”
One of the ironies is that some legacy news publishers, those that have made huge strides to digitise their offerings, but which in many cases still have a significant print component, appear to be weathering the storm better than some of the pure plays.
This is due partly to the success they have had in diversifying their revenues. Sullivan continues: “The New York Times is thriving in the digital age, due partly to initiatives that have nothing to do with news – addictive puzzles, a cooking app and the product-review site known as Wirecutter.”
Many legacy publishers have also been putting considerable effort into developing reader revenues, to compensate for volatile ad revenues.
Another significant factor is the enduring value of having an established brand name and heritage. The Telegraph was first published in 1855, the New York Times in 1851, the Guardian in 1821 and the Times in 1785.
Challenges remain but it looks like venerable news brands like these have as much claim on the future of news publishing as the latest start-ups.
You can catch James Evelegh’s regular column in the InPubWeekly newsletter, which you can register to receive here.