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Why BuzzFeed Is Closing Its News Division

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Why BuzzFeed Is Closing Its News Division

BuzzFeed’s decision to shut its news division — an innovator in digital journalism that published both prizewinning investigations and listicles designed to get clicks — drew many bittersweet tributes online.

But its closure is the latest reminder that digital media start-ups, which deep-pocketed investors once valued at astronomical sums, are facing headwinds. With even tech giants struggling to navigate hurdles like a declining advertising market, smaller companies are facing potentially existential crises.

“We’ve faced more challenges than I can count in the past few years,” Jonah Peretti, BuzzFeed’s founder and C.E.O., wrote to employees yesterday, citing the pandemic and a weak stock market. BuzzFeed and its peers have also suffered from the same drop-off in online ads that is forcing sharp job cuts at Alphabet, Meta and others. And Mr. Peretti admitted that he hadn’t focused enough on profitability.

Mr. Peretti also alluded to the disappointing market for SPACs, the blank-check funds that were briefly a popular way to take companies public. BuzzFeed used one to list on the Nasdaq in late 2021 — and ended up raising just $16 million, far short of the $250 million it could have collected.

Digital media start-ups have flailed for years. Analysts have long warned that these companies rely too much on social media to gain readers. Networks like Facebook and Google ended up keeping most of the available ad dollars, and are increasingly favoring content formats that yield less money for publishers. (Ben Smith, the former BuzzFeed News chief who now runs the start-up Semafor, wrote that his former employer wasn’t prepared for the evolution of social networks.)

BuzzFeed isn’t alone:

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  • Vice may close Vice World News, which produces content for international audiences, if it can’t find a buyer for itself, according to The Wall Street Journal.

  • Insider, which is owned by the German media giant Axel Springer, is laying off 10 percent of its staff.

  • Vox cut 7 percent of its workers in January.

  • A revamped Gawker shut down in February, while the Springer-owned Protocol shut in November.

Will shutting BuzzFeed News be enough to save BuzzFeed? Maybe, if it means that the company has to support just one online news operation. (Mr. Peretti said he’s making HuffPost, which BuzzFeed bought in 2020, its main focus for news publishing.)

BuzzFeed’s other operations are profitable, according to The Information. But investors still appear skeptical about the company’s prospects for survival: Its shares fell 20 percent yesterday, to 75 cents, though they’ve recovered some in premarket trading.

SpaceX sees the upside in a spacecraft explosion. The rocket company’s Starship prototype was destroyed in a fireball — sorry, a “rapid unscheduled disassembly” — over the Gulf of Mexico yesterday. But engineers at SpaceX, NASA and elsewhere said the launch likely yielded useful data to improve Starship, which is meant to eventually ferry astronauts to the moon and beyond.

U.S. home sales and prices tumble. Existing-home sales fell 2.4 percent in March from the previous month and 22 percent from March 2022; more striking was a 0.9 percent year-on-year drop in the median price, the biggest such decline in 11 years. Analysts cited rising mortgage rates, and the data will weigh on the Fed as it considers whether to raise interest rates.

Meta will slow hiring and may lay off more staff. Mark Zuckerberg, the company’s C.E.O., told staff members yesterday that the company had cut about 4,000 positions this week as part of a plan to lay off about a quarter of its work force. This will include closing Instagram’s London hub, less than a year after Adam Mosseri, the photo-sharing app’s boss, temporarily moved to London to build the business. He will relocate to the U.S.

Disney reportedly plans to escalate its fight against Gov. Ron DeSantis of Florida. The company is stepping up its lobbying efforts in the state’s legislature, with a focus on land-use bills that could affect the company, according to CNBC. The move comes as Mr. DeSantis and his lawmaker allies seek to unwind Disney’s efforts to reduce state control of its theme parks.

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Twitter finally began stripping users of blue check marks. The company made good on Elon Musk’s threat to remove the icons — previously meant to show that a user’s identity had been verified — from thousands of people who didn’t subscribe to the Twitter Blue service. But some celebrities, including LeBron James and Stephen King, were reportedly given “complimentary” (and unsolicited) subscriptions to Twitter Blue.

Treasury Secretary Janet Yellen’s speech on China yesterday drew attention for its conciliatory tone as much as the content of her comments: She called for a “constructive and fair” relationship with Beijing, while warning that economic decoupling would be “disastrous.”

China watchers noted the unusually calm message — but cautioned that it’s unlikely to resonate in Beijing.

Ms. Yellen sought to clarify the Biden administration’s approach. Other officials have tried to strike a tempered tone: Jake Sullivan, the national security adviser, has said that competition between the two countries shouldn’t veer into conflict, while the climate envoy John Kerry has stressed that the U.S. could work with China on issues like climate change.

“China’s economic growth need not be incompatible with U.S. economic leadership,” Ms. Yellen said yesterday, so long as Beijing adhered to established international rules. She added that she planned to travel to China, which would make her the highest-ranking U.S. official to visit the country since Joe Biden became president, in a recognition of the deep commercial links between the nations.

But Washington is sending mixed messages. The sight last month of Congressional lawmakers grilling the C.E.O. of TikTok, the video app owned by ByteDance of China, played into Beijing’s belief that the U.S. wants to hold back its economic development.

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Even the Biden administration has been mostly tough on China. Just over a year ago, Secretary of State Antony Blinken called it the most serious “long-term” threat to the global order. And Biden reportedly plans to sign an executive order soon that would limit American investment in Chinese high-tech industries.

Yellen’s comments may not be enough to assuage China. Her speech clarified U.S. policy and offers “a dose of realism about the dangers of decoupling,” said Ben Bland, the director of the Asia-Pacific program at the think tank Chatham House.

But he added that from China’s perspective, U.S.-led efforts to “curb Beijing’s access to crucial technologies and build economic and security guardrails in the relationship may still feel like an effort to keep it down.”


— Joe Kiani, the founder of Masimo, a blood-oxygen measurement start-up. Kiani is one of several technology executives who told The Wall Street Journal that Apple reached out to discuss a potential partnership, only to later roll out competing technologies.


Silicon Valley Bank’s collapse last month was called the first “Twitter-led bank run,” with many speculating that social media posts about the lender’s woes helped spark the rush of withdrawals that caused it to fail. Now, a group of finance professors has put the theory to the test — and found evidence that supports it.

Social Media as a Bank Run Catalyst,a new working paper, analyzes extensive Twitter and bank-stock data before and during the run on SVB, showing that intense chatter on the social media platform preceded a sharp share price decline and increased the risk of a bank run.

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Discussion amplifies risk,” J. Anthony Cookson, an associate professor of finance at the University of Colorado Boulder and the report’s lead author, told DealBook. “SVB was a high Twitter conversation stock,” he added, as the bank had many depositors who were hyper-connected tech company founders, so they tended to be online and “very chatty.”

Coordination is a well-known element of bank runs. But the new paper suggests that social media creates more risk than the slow spread of information among personal connections. “The implication that social media matters for banking stability is potentially troubling because social platforms can spread inaccurate information, which could serve as a sunspot that leads to bank runs,” the researchers wrote.

Still, Mr. Cookson noted that study in this area is at the very early stages. “The billion dollar question,” he said, “is what do we do about this?”

Deals

  • The boutique investment bank Centerview Partners named Eric Tokat and Tony Kim as co-presidents, as the company identifies a new generation of leaders beyond its co-founders Blair Effron and Robert Pruzan. (FT)

  • Tiger Global reportedly told investors that its $12.7 billion venture fund had lost 20 percent on paper as of December, thanks to bad bets on FTX and other crypto start-ups. (The Information)

  • The Swiss government reaffirmed its $121 billion financial commitment to support UBS’s takeover of Credit Suisse, despite lawmakers’ symbolic vote to reject the move. (Reuters)

Policy

  • As part of their debt-limit plan, House Republicans want to recall billions in pandemic aid funds that Congress approved but that haven’t been spent. (NYT)

  • Canada agreed to nearly $10 billion in subsidies to convince Volkswagen to build a battery plant there instead of in the U.S., matching incentives the company would have received under the Inflation Reduction Act. (Bloomberg)

  • The Commerce Department fined the hard drive maker Seagate $300 million for continuing to supply Huawei even after the Chinese tech company was blacklisted. (CNBC)

Best of the rest

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  • Lachlan Murdoch, the C.E.O. of Fox Corporation, dropped a defamation lawsuit against an Australian publisher. (NYT)

  • Several Anheuser-Busch facilities, including a Los Angeles brewery, received threats of violence amid conservative outrage over the beer giant’s partnership with a transgender influencer. (CNN Business)

  • The M.L.B.’s Oakland Athletics are leaving California for Las Vegas. (NYT)

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

In a recent announcement, Snapchat revealed a groundbreaking update that challenges its traditional design ethos. The platform is experimenting with an option that allows users to defy the 24-hour auto-delete rule, a feature synonymous with Snapchat’s ephemeral messaging model.

The proposed change aims to introduce a “Never delete” option in messaging retention settings, aligning Snapchat more closely with conventional messaging apps. While this move may blur Snapchat’s distinctive selling point, Snap appears convinced of its necessity.

According to Snap, the decision stems from user feedback and a commitment to innovation based on user needs. The company aims to provide greater flexibility and control over conversations, catering to the preferences of its community.

Currently undergoing trials in select markets, the new feature empowers users to adjust retention settings on a conversation-by-conversation basis. Flexibility remains paramount, with participants able to modify settings within chats and receive in-chat notifications to ensure transparency.

Snapchat underscores that the default auto-delete feature will persist, reinforcing its design philosophy centered on ephemerality. However, with the app gaining traction as a primary messaging platform, the option offers users a means to preserve longer chat histories.

The update marks a pivotal moment for Snapchat, renowned for its disappearing message premise, especially popular among younger demographics. Retaining this focus has been pivotal to Snapchat’s identity, but the shift suggests a broader strategy aimed at diversifying its user base.

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This strategy may appeal particularly to older demographics, potentially extending Snapchat’s relevance as users age. By emulating features of conventional messaging platforms, Snapchat seeks to enhance its appeal and broaden its reach.

Yet, the introduction of message retention poses questions about Snapchat’s uniqueness. While addressing user demands, the risk of diluting Snapchat’s distinctiveness looms large.

As Snapchat ventures into uncharted territory, the outcome of this experiment remains uncertain. Will message retention propel Snapchat to new heights, or will it compromise the platform’s uniqueness?

Only time will tell.

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Catering to specific audience boosts your business, says accountant turned coach

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Catering to specific audience boosts your business, says accountant turned coach

While it is tempting to try to appeal to a broad audience, the founder of alcohol-free coaching service Just the Tonic, Sandra Parker, believes the best thing you can do for your business is focus on your niche. Here’s how she did just that.

When running a business, reaching out to as many clients as possible can be tempting. But it also risks making your marketing “too generic,” warns Sandra Parker, the founder of Just The Tonic Coaching.

“From the very start of my business, I knew exactly who I could help and who I couldn’t,” Parker told My Biggest Lessons.

Parker struggled with alcohol dependence as a young professional. Today, her business targets high-achieving individuals who face challenges similar to those she had early in her career.

“I understand their frustrations, I understand their fears, and I understand their coping mechanisms and the stories they’re telling themselves,” Parker said. “Because of that, I’m able to market very effectively, to speak in a language that they understand, and am able to reach them.” 

“I believe that it’s really important that you know exactly who your customer or your client is, and you target them, and you resist the temptation to make your marketing too generic to try and reach everyone,” she explained.

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“If you speak specifically to your target clients, you will reach them, and I believe that’s the way that you’re going to be more successful.

Watch the video for more of Sandra Parker’s biggest lessons.

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Instagram Tests Live-Stream Games to Enhance Engagement

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Instagram Tests Live-Stream Games to Enhance Engagement

Instagram’s testing out some new options to help spice up your live-streams in the app, with some live broadcasters now able to select a game that they can play with viewers in-stream.

As you can see in these example screens, posted by Ahmed Ghanem, some creators now have the option to play either “This or That”, a question and answer prompt that you can share with your viewers, or “Trivia”, to generate more engagement within your IG live-streams.

That could be a simple way to spark more conversation and interaction, which could then lead into further engagement opportunities from your live audience.

Meta’s been exploring more ways to make live-streaming a bigger consideration for IG creators, with a view to live-streams potentially catching on with more users.

That includes the gradual expansion of its “Stars” live-stream donation program, giving more creators in more regions a means to accept donations from live-stream viewers, while back in December, Instagram also added some new options to make it easier to go live using third-party tools via desktop PCs.

Live streaming has been a major shift in China, where shopping live-streams, in particular, have led to massive opportunities for streaming platforms. They haven’t caught on in the same way in Western regions, but as TikTok and YouTube look to push live-stream adoption, there is still a chance that they will become a much bigger element in future.

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Which is why IG is also trying to stay in touch, and add more ways for its creators to engage via streams. Live-stream games is another element within this, which could make this a better community-building, and potentially sales-driving option.

We’ve asked Instagram for more information on this test, and we’ll update this post if/when we hear back.

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