The last few years have been rough on the media business, and the past week has been a real doozy. The media have been crunched between bad economic news (more layoffs) and worse reporting (fake Cohen testimony, fake Vietnam Veteran, etc.). I posted this tweet yesterday as a response to a post by my podcasting partner Stacy McCain—
This morning, Charlie Martin has a post over at PJ Media that expands on the economic wisdom in Pablo’s reply.
Some years ago, I crunched numbers from the New York Time‘s 10K financial statements and found that a single copy of the Times cost them about $4 to print, ship, and sell. At the time the cover price was $1; to make a profit they had to sell more than $3 worth of advertising or something. (Now you know why they, and many other publishers, have turned into tour organizers and sell merchandise.)
A single column of the paper version of the Times costs between 1¢ and 10¢ to print; delivering a similar amount of advertising, with full-color graphics and even video, costs between one and ten million times less, and can be targeted to the guy who just googled for fly-fishing gear instead of everyone on the Upper West Side.
When your competition can deliver a better product for 0.000001 times as much, your business model has big problems.
When new technologies make a product obsolete, it’s time to look for a new business, and that new business will undoubtedly require a new business model. If the cost of entry into journalism is vastly reduced and there are vastly more people able to engage in reporting, then some of those new competitors will drive out some of the old players. That’s the free market at work as people vote democratically with their wallets. As Stacy notes in a post today,
Liberal journalists do not want to admit that their political bias may be a major reason for their industry’s decline, but when the money crunch hits, they insist that their work is valuable to “democracy.” But what did BuzzFeed do to attract hundreds of millions of dollars of investment capital? Quite simply, they figured out how to game the Facebook algorithm for cheap hits with clickbait, which might have been good for BuzzFeed’s traffic numbers but didn’t do anything in terms of creating an informed citizenry.
It seems to me that BuzzFeed’s core problem is that it can generate lots of clicks, but those clicks don’t generate successful advertising impressions. BuzzFeed’s cost per million views may be dirt cheap, but the cost per sale seen by the advertisers is too high. The site’s product does not attract serious, qualified eyeballs for its advertisers. One of the consequences of a free market is that our competitors are free to out-compete us.
So BuzzFeed is laying off 400 employees, 15 % of its staff. That means that they had close to 2,700 people on the payroll. Now, Stacy and I haven’t been able to lose millions of dollars a year of other peoples’ money, but our blogs have generated modest profits. The Other McCain operates with one full-time and two part-time bloggers. Hogewash! gets by with me part-time and the occasional assistance of members of the Vast Hogewash! Research Organization.
To paraphrase Instapundit: You’re gonna need a smaller blog.