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Future of digital journalism in question as BuzzFeed and HuffPost lay off 1,000

Future of digital journalism in question as BuzzFeed and HuffPost lay off 1,000

Revenue-per-click, the business strategy that has informed digital publishers for years, was effectively pronounced DOA this week as leading players in a sector once viewed as the future of journalism announced deep cuts.

In a letter to employees headlined “Difficult Changes”, the BuzzFeed founder and chief executive, Jonah Peretti, said the company would reduce headcount by 15%, or about 250 jobs, to around 1,100 employees globally.

Buzzfeed made its numbers last year after missing them in 2017 but Peretti told employees revenue growth was not “enough to be successful in the long run”. By reducing costs, he said, “we can thrive and control our own destiny, without ever needing to raise funding again”.

At the same time, Verizon said it would trim 7% of headcount, about 800 people, from its media unit, which includes HuffPost, Yahoo and AOL. Another signal of distress came on Friday when Warner Media announced it would close its digital investment arm, WarnerMedia Investments.

The job losses followed sales or cuts at Mic, Refinery29 and elsewhere. But publishing as a whole had already shrunk sharply. By some estimates the shift to digital has resulted in an overall reduction in the business of 50% to 80%.

Built on the expectation of fast growth in advertising sales, companies like BuzzFeed and Vox Media have instead found that Facebook and Google – “the duopoly” – have simply tightened their grip on digital advertising revenue.

The two giants are expected to take more than half of global ad spending by 2020 and Analyst EMarketer anticipates their market share to grow by 75% between 2017 and 2020, compared with 15% growth for other digital media companies.

The BuzzFeed cuts, which follow a round in 2017, are part of a streamlining operation to ready the company for acquisition or merger, perhaps with a direct rival like Vox or Vice.