A bright side to the financial stumbles of digital media

People who don’t work in the news media might not have noticed the outbreak of angst that followed the recent financial stumbles at young publications like BuzzFeed and Mashable.

It is true that the outlook is not great. But there is a bright side: The shakeout may end up taking all the air out of a little bubble that had inflated in the media world. So while Mashable, a website that recently announced cuts, BuzzFeed and others may not yet have found the secret sauce, many of the ingredients are there. Those will now be used, improved and added to new ingredients, in the hope of building news operations that can reach millions of readers with strong journalism while generating reliable profits.

One of the strengths of new publications was that they really understood that people found articles through social media sites like Facebook, where they are shared and used to start conversations. Last year, for instance, a survey by the Pew Research Center found that 61 percent of millennials got their news about politics from Facebook. Where the newer publications may have gone wrong is in producing too many stories that were designed primarily for sharing and quick clicks, a trick that readers can grow tired of.
The solution for this is not easy or cheap. It requires producing articles that are likely to start conversations on social media but also don’t overpromise and then underdeliver.
There are no shortcuts to producing such articles, but skilled social media editors with a nose for good stories that will also excel on Facebook, Twitter, Reddit and other digital hangouts can make a big difference.

The new publications also understood that a media organisation has to acknowledge the enormous reach of Facebook or Google and work with them to gain revenue. An article this month from my colleague John Herrman contained a chilling number: In this year’s first quarter, 85 cents of every new dollar spent on online advertising will go to Google or Facebook.

The pessimistic interpretation is that this shows how advertisers are shunning news websites in favour of social networks, and how publications will have to make painful compromises to gain a sliver of that advertising revenue.

There are some reasons for optimism here. News outlets that post quickly loading “Instant Articles” on Facebook have said these pieces enjoyed higher traffic than if they were posted into users’ feeds as slower-loading links. And Facebook has also been willing to make concessions to publishers on Instant Articles, showing that the company grasps how thin the media companies’ margins are.

Being a successful news company in these times also requires something less fun: stringent management of resources. Revenues may take time to grow, so costs will have to be contained even as new things are attempted.

New media companies, like any other fresh entrants to a sector, are prone to spending too much or underestimating the costs of expansion. They may make the same mistakes again as they pile deeper into video. Older media companies, because they enjoyed dependable revenue for decades, never developed a management culture that could nimbly deploy newsroom resources.

But that may be changing. The Washington Post’s series of articles on police killings was created with collaboration across the newsroom. “It eventually involved some 70 journalists from the paper’s national, investigative, metro, video, photo and graphics departments,” The Post said.