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How BuzzFeed could have staved off its own demise

There aren’t a lot of constants in the media industry, but one thing you can always count on lately is BuzzFeed desperately trying to pull out of its death spiral. Its most recent gambit in those efforts is to sell Hot Ones, the popular YouTube series that it took over when it acquired Complex Networks several years ago.

Hot Ones continues to be a popular destination for both audiences and the A-list celebrities that participate in its mouth-scorching interviews, but BuzzFeed is still struggling to offload it onto a willing buyer. According to Defector, this is entirely because the company, in an effort to pay off its enormous debt, is setting the price way too high:

Back in 2021, BuzzFeed took on $150 million in debt to finance the acquisition of Complex Networks, which owns First We Feast, the media company that produces Hot Ones. It was a gamble that the acquisition would help contribute to a dreamy billion dollar valuation once the company went public through a Special Purpose Acquisition Company, or SPAC. The gamble didn’t pay off; the loan comes due Dec. 3 of this year, and BuzzFeed still doesn’t have the cash to pay it

BuzzFeed is now a walking punchline, and a general consensus has set in that its current predicament was baked in from the moment it raised gobs of VC cash at insane valuations. It’s often grouped together with other crash-and-burn outlets like Vice, Mic, and Mashable that lit money on fire in pursuit of terrible business models.

But while BuzzFeed was probably never worth the $1.5 billion investors valued it at, I also think it once had the potential to stabilize its business and reach profitability. No one can deny that, at its peak, it dominated online culture in a way that the other outlets I listed above never did. It minted several YouTube stars, launched an incredibly popular franchise (Tasty), and published Pulitzer-winning journalism. Millions of millennials took its quizzes while bored at work, and an entire generation of adults have distinct memories of phenomena like The Dress and the live video stream of a watermelon exploding under the strain of hundreds of rubber bands. 

So where did the company go wrong? I believe its current death spiral can be traced back to its disastrous SPAC IPO. CEO Jonah Peretti adopted the misguided view held by so many other media executives that the only way to beat Big Tech was by acquiring more and more media properties in pursuit of some Goldilocks level of audience scale. So in quick succession he made offers to buy both HuffPost and Complex Networks under the assumption that he could pay for them with the proceeds of the IPO. But when nearly all those SPAC investors pulled out, he went ahead with the acquisitions anyway by taking on an enormous amount of debt.

That debt not only kicked off the ticking time bomb that it’s now facing, but also ensured that BuzzFeed was spread too thin and unable to invest in initiatives that could have stabilized its business. For instance, nearly everyone in the media agreed that BuzzFeed News punched well above its weight in terms of journalistic impact, but the property suddenly found itself competing with HuffPost’s newsroom for resources, and Peretti simply couldn’t justify keeping both afloat. So he shuttered BuzzFeed News without even experimenting with paid subscriptions or other business models.

Today, BuzzFeed’s cultural relevance is pretty much gone. Other than Hot Ones, I can’t think of a single property from the outlet that garners much online discussion. When the company is mentioned in the news, it’s almost always a story about the sorry state of its stock price and/or business.

That’s kind of a shame! It helped launch the careers of some of the most successful journalists and creators working today, and yet it’ll probably be remembered as little more than the product of VC hubris and magical thinking.

What do you think?

How Local News Now built its loyal audience

Probably the chief worry right now in the media industry is how publishers will survive as large platforms like Google and Facebook continue to send less and less traffic, but Scott Brodbeck doesn’t lose much sleep wondering where his audience will come from. In 2010, he launched Arlington Now, and he’s grown the company into a network of news websites operating in the DC metro area. Not only is the network’s homepage traffic well above the industry average, but Scott is confident that his approach of producing differentiated content will protect him from platform disruption.

In a recent interview, Scott walked through every aspect of his audience engagement process, including how he automates his social media distribution, why he never shut down his website comments section, how he gets 40% of his audience to come to the homepage, and why he doesn’t bother with organizing live, in-person events:

In my view, I do think that the traffic has declined. I haven't looked at the latest numbers, but my sense is it has declined. But we also see a bit of an effect where it's become more of a hits business. It used to be we'd publish an article and we'd see an immediate traffic spike once we put it out on social. And we very rarely see that now. It's only certain stories that do that.And then the effect over time is it becomes a hits business where there are days where we'll have one article that'll do 10 times the readership of any other article and stuff that used to reliably do a few thousand views in a day are like doing a thousand, but that that one over there is doing like 10,000 or more. We don’t want to go overboard optimizing for readership, but we do want people to come to our site and consume our content. That's kind of the point of the whole thing we're doing here is we want people reading us, so I'd say it hasn't resulted in us adjusting our editorial strategy. It's just a recognition that whereas we might publish three things and they'd all do pretty well, we're going to publish three things, and one's going to do really well and the rest are going to do okay. That's kind of our expectation at this point.

Quick hits

TikTok briefly stole YouTube's thunder as a buzzy destination platform for creators, but now YouTube's dominance in both audience and monetization can't really be denied. [Business Insider]

Not every media business needs to generate a full time income. I'm noticing more and more freelance writers launch paid newsletters to supplement their freelance work. This makes it easier for them to turn down low-paying gigs and focus on the projects they're more passionate about. [Creator Spotlight]

The podcast market didn't crash; it just experienced a market correction after years of bad investments in celebrity-run shows that nobody listened to. But the shows that people do actually listen to are continuing to attract huge deals and payouts. [Bloomberg]

"Despite having more TikTok followers than Beyoncé or Reese Witherspoon, [Carlos Eduardo Espina] has received little attention in the national press, perhaps because his videos are mainly in Spanish." [NYT]

Every election cycle, podcasts wield more and more political influence, a trend that will probably only accelerate now that more shows are producing video versions for platforms like YouTube, TikTok, and Instagram. [Press Gazette]

It's usually a bad idea for a company to send bogus legal threats to a creator with a huge audience. [Tedium]

First the Washington Post. Now the Toronto Star. Is the dam breaking on micropayments? [Press Gazette]

Dropout has proved that a niche streaming service can become profitable as long as it remains lean. [Fast Company]

The rise of music streaming has caused artists to become more prolific in their song releases so they can compete in a super saturated market. [Business Insider]

I’m looking for more media entrepreneurs to feature on my newsletter and podcast

One of the things I really pride myself on is that I don’t just focus this newsletter on covering the handful of mainstream media companies that every other industry outlet features. Instead, I go the extra mile to find and interview media entrepreneurs who have been quietly killing it behind the scenes. In most cases, the operators I feature have completely bootstrapped their outlets.

In that vein, I’m looking for even more entrepreneurs to feature. Specifically, I’m looking for people succeeding in these areas:

• Niche news sites

• Video channels like YouTube, TikTok, and Instagram Reels

• Podcasts

• Newsletters

• Affiliate/ecommerce

Interested in speaking to me? You can find my contact info over here. (please don’t simply hit reply to this newsletter because that’ll go to a different email address. )

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