Google, Ad Tech, and the Gutting of the News Publishers

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So now we have another gutting, this time at the HuffPost, and omertà reigns.

This kind of thing – news publications with lots of traffic gutting their staff because they’ve been losing tons of money – has been happening for years, and these publishers and the media outlets that report on it are under some kind of omertà and aren’t talking about what is actually causing the losses that trigger the gutting. So now we have another gutting, this time at the HuffPost, and omertà reigns.

BuzzFeed – which acquired the HuffPost last November from Verizon, which had acquired it as part of its 2015 acquisition of AOL, which had acquired the Huffington Post, as it was called then, in 2011 – announced on Tuesday that it has laid off 45 HuffPost reporters, editors, and producers, and that HuffPost Canada will be shut down entirely. In addition, two executive editors resigned over the deal. So 47 people gone.

BuzzFeed CEO Jonah Peretti, one of the cofounders of the Huffington Post in 2005, told employees at the virtual meeting where the gutting was announced that HuffPost’s “losses last year exceeded $20 million, and would be similar this year without intervention. Though BuzzFeed is a profitable company, we don’t have the resources to support another two years of losses.”

So some hypothetical math: Let’s assume that these 47 HuffPost employees cost the company on average, benefits and taxes included, $150,000 each a year. This is probably way high since publishers are not known to pay rich salaries and offer huge benefits but stay with me for a minute. Shedding these 47 employees would then save the company $7 million a year. That leaves another $13 million to cut to reach break-even.

But wait… these people produced news content that generated pageviews that produced revenues from ads, and if you cut these people out, content is going to drop, page views are going to drop, revenues are going to drop, and you’re chasing a moving target.

BuzzFeed knew about these losses last year when it did its due diligence before it acquired HuffPost. BuzzFeed itself has undergone waves of layoffs in order to shrink itself to profitability.

Not once did BuzzFeed mention the reasons why HuffPost lost money last year, and the reasons why BuzzFeed itself had engaged in waves of layoffs of its own people. Omertà.

Other news publications have filed for bankruptcy without ever specifying the real reason for the losses. Big publishers like the New York Times and the Wall Street Journal have gutted their staff without specifying the real reason – the company that is the real reason.

But separately, the bad boy of news publishing, Rupert Murdoch’s News Corp, which owns the Wall Street Journal among many other publications, officially broke the omertà about the existential issue for publishers: Google’s total dominance in multiple layers at the core and all over internet advertising. And its abuse of power in that arena.

Last year, it was reported that News Corp complained to antitrust authorities in the US and other countries that Google was abusing its power and sucking revenues out of the stream that should be going to publishers. And I see what Google is doing to publishers every day on my own site.


To read the rest of this article, click here, and go to Wolf Street.


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