Illustration: Annelise Capossela/Axios
The shutdown of BuzzFeed News after years of painful layoffs and cutbacks represents the end of an era for the digital publishing industry.
Why it’s important: Companies like BuzzFeed, Vox Media and Vice Media that expanded quickly and raised a lot of money at high valuations are struggling in a dramatically different media landscape.
- Launched ahead of the 2012 election, BuzzFeed News quickly became known for quick viral scoops and extensive investigations, with an array of well-sourced reporters around the world.
- While the news arm lent credibility to BuzzFeed — which had previously been best known for viral, entertaining content — it was never a profit driver, relying on its parent company’s ability to keep it afloat.
- After BuzzFeed went public in 2021, keeping the news division alive became a responsibility for shareholders.
The big picture: The online publishing landscape changed after tech firms changed their algorithms in the late 2010s. Instead of pursuing scale, more publishers have begun to lean into products like newsletters and subscriptions.
- Vox Media raised $100 million from Penske Media earlier this year at a valuation roughly $100 million short of revenue. Vice Media is currently struggling to find a buyer who will value the company at more than $1 billion. It was valued at $5.7 billion in 2017.
- On Thursday, the Wall Street Journal reported that Vice Media is discussing shutting down Vice World News if a sale does not materialize in the coming weeks.
Driving the news: BuzzFeed CEO Jonah Peretti announced the news in a memo to all staff Thursday, just weeks before the company is scheduled to report first-quarter earnings to investors.
- In addition to closing BuzzFeed News, the company is also cutting 15% of its staff, or about 180 people. Two C-level executives are leaving.
Be smart: Even before BuzzFeed became a public company in 2021, it had long faced pressure from investors to divest its news business — and focus on more lucrative parts of the business, such as social video food brand Tasty and culture arm Complex.
- Executives tried to keep BuzzFeed News alive, opting for gradual layoffs in recent years. In 2020, the company acquired the viral left-wing news website HuffPost to help scale its news efforts.
Zoom out: Ultimately, the obstacles BuzzFeed faced were too great, and news proved difficult to monetize, despite the quality of its product.
- BuzzFeed News won several awardsincluding a Pulitzer in 2021. It was the first outlet to report how TikTok gained access to US user data in China, prompting renewed calls for the app’s ban in 2023.
- Perhaps the most notable editorial effort of BuzzFeed News was the decision in 2017 to publish the now infamous “Steele dossier,” an unconfirmed document that helped create a narrative of collusion between former President Trump and Russia.
- Ben Smith, who was BuzzFeed’s editor-in-chief at the time, wrote Thursday that he did not regret publishing the dossier, but regretted “not aligning a strong business with our news operation from the start.”
Status: BuzzFeed went public via a blank check merger in 2021, just as the market started to tilt.
- The vast majority of investors in the blank-check company that merged with BuzzFeed to take it public pulled their cash from the deal before it closed, leaving BuzzFeed with less cash on hand than it was betting it would have as a public company.
- The digital advertising market, on which BuzzFeed relies most for revenue, has slowed significantly in response to economic uncertainty. A downturn in the technology sector affected BuzzFeed’s affiliate marketing efforts.
- Dozens of media companies suffer from similar market conditions. Insider announced Thursday that it would lay off approximately 100 employees.
Buzzfeed’s strategy came under pressure as Big Tech platforms like Facebook and Google began to change their algorithms.
- It is known that Facebook pivoted its algorithm to focus on posts from friends instead of brands and media in 2018. Google changed its search rankings in 2019 to prioritize original reporting over aggregation.
- “I made the decision to overinvest in BuzzFeed News because I love their work and their mission so much,” Peretti wrote in a staff memo. “This made me slow to accept that the major platforms would not provide the distribution or financial support required to support premium, free journalism purpose-built for social media.”
With the numbers: At its peak, BuzzFeed News once had 250 employees. As of the announcement Thursday, 59 people worked at BuzzFeed News and 1,200 worked at BuzzFeed.
- One source said the company believes it can preserve about 25% of those roles by hiring some employees to other departments at HuffPost and Buzzfeed.com. The company will concentrate all of its news efforts going forward on HuffPost, which Peretti noted is profitable.
- BuzzFeed has suffered as a public company. The stock hit a record low on Thursday at 77 cents per share. BuzzFeed is currently valued at 107 million on the public market, about 4 times less than its 2022 earnings.
What you should see: BuzzFeed, Insider and other publications are beginning to experiment with ways artificial intelligence can help their companies become more efficient. A source said none of the eliminated positions at BuzzFeed will be replaced by artificial intelligence.