BuzzFeed News shuttered: Here are 5 reasons why it failed
BuzzFeed News, the eponymous news division of BuzzFeed Inc, is being shut down. The Pulitzer Prize-winning news website was critical in shaping the internet media landscape of the 2010s. The shutdown is part of a new wave of layoffs at BuzzFeed, which will see the company's workforce reduce by about 15%. Let's take a look at what led to BuzzFeed News's end.
Tech giants reaped value from BuzzFeed News's content
BuzzFeed News's success was strongly linked to the social media revolution. The news division capitalized on the growing prominence of tech platforms to deliver stories catered to readers' interests. It believed revenue would follow. However, that's not what happened. It wasn't BuzzFeed that benefited from this. It was the tech giants that reaped value from BuzzFeed News's content.
Big platforms did not provide financial support
In his memo, BuzzFeed CEO Jonah Peretti said he "overinvested" in BuzzFeed News because he loved its work and mission. "This made me slow to accept that the big platforms wouldn't provide the distribution or financial support required to support premium, free journalism purpose-built for social media," he added. By the time he realized popularity does not always equal money, it was late.
New platforms like Instagram and TikTok hurt BuzzFeed News's prospects
BuzzFeed News's demise is also strongly related to the evolution of social media. The young generation has moved on to platforms like Instagram and TikTok. With them, digital advertising also went to those platforms. The newsroom's dependency on platforms such as Facebook hurt its prospects. Decelerating advertising is another reason cited by Peretti for closing the newsroom.
Investors have been unhappy with the newsroom for a while
The writing has been on the wall for BuzzFeed News for a while now. BuzzFeed's shareholders have been unhappy with the newsroom due to its lack of profitability. Rumors about investors pushing Peretti to shut down the news operation have been rife since the company went public. BuzzFeed News reportedly used to cost investors $10 million a year.
The SPAC IPO fiasco affected the company's financials
BuzzFeed News's demise is also related to its parent's 2021 IPO fiasco. The company went public through a blank check merger. However, investors in the special purpose acquisition company (SPAC) that merged with BuzzFeed pulled out their cash. This left the company with less cash in hand. This made keeping the news operation alive even harder.
Several media companies are struggling due to changing landscape
The digital media landscape that BuzzFeed News helped create in the last decade is changing again. Media companies that grew fast such as BuzzFeed, Vox Media, and Vice Media are now struggling. The uncertain economic environment, the fall in digital advertising, and the rise of AI have made it imperative for these companies to reinvent themselves.
