Buzzfeed Shows Not Everyone Can Build A Podcast Business
You can no longer just create content, build an audience & watch the money roll in - just ask Buzzfeed’s podcast team
Welcome to the TFC Newsletter Issue 4 - a weekly essay explaining the emerging landscape for creators & modern media brands
In some ways, podcasting seems like the easiest type of media to create. Several podcasts consist of a group of people simply having a conversation, or in some cases, a singular person talking aloud by themselves; either way, both approaches are common experiences in our everyday lives.
However, as explored in last month’s update about what makes The Receipt’s Podcast so good, it takes more than just an ability to talk, to hold an audiences’ attention and climb the barriers around distribution. And as last month’s announcement that Buzzfeed culled the majority of its podcasting talent and operations so it can focus more on its video content showed, having an audience for a podcast doesn’t automatically make it profitable enough to keep going.
The challenges around building a podcast business are different to those whose businesses are built primarily on text or visual media. This adds an additional layer of complexity to the idea that while technology has made it easier to start a media brand, it has never been harder to build a media business. Although Buzzfeed’s approach to creating content and developing audiences has had undeniable success, the doubling down of this approach meant that Buzzfeed’s podcasting efforts never really stood a chance.
The viral publisher vs the non-viral format
Typically known as a viral publisher, Buzzfeed has always treated its approch to content as a series of experiments in search of virality. By default, they tend towards content experiences that can be measured extensively, creating a continuous cycle of testing, creating and learning their way to understanding exactly what and why stories get shared. This means obsessing over metrics like traffic, open/click-through rates, page depth, headline/thumbnail optimisation, shareability, comment analysis and the like, with the goal of amassing large audiences and understanding the ideas and principles that lead to virality, which it can feedback into its editorial operations and commercial partnerships.
Much of this can be done with text and video based content, which lives either on their website, apps, or on social media platforms that generally offer back data back to publishers. However, the same can’t be done for podcasts, which are typically listened to through a variety of podcast apps - apps that notoriously give very little data back to publishers and creators. This, alongside the discoverability issues podcasts face outlined in a previous newsletter, limit digital audio’s ability to gain large audience numbers with the regularity, frequency and scale of other formats.
Podcasting’s relative incompatibility with Buzzfeed’s approach to content was less of a problem when the publisher was in growth mode and could afford to make bets outside of its strengths. However, last month’s cuts indicate that the company is increasingly focused on activities that drive profitability.
New media model, changing media economics
Buzzfeed’s maturation from a viral content creator, to a sustainable media business has been far from smooth. When the brand synonymous with Tasty videos and viral lists was at the height of its powers, it assumed it would be appropriately compensated by making money from the platforms it published on, illustrated by this model discussed by its publisher in 2015:This model and assumption would have been safe to make 20 years ago, when the supply to large audiences was limited, giving advertisers little choice. But with an unlimited number of blogs, news sites, content platforms, plus a few massive social platforms for marketers to choose from, page views on owned websites and apps have long been worth a fraction of their previous print equivalents. The result was Buzzfeed’s native ad campaigns, which were already relatively expensive to produce, were nowhere near enough to pay for its 1,600 strong staff.
The issues deepen when taking into account the platforms where the bulk of their 9bn monthly content views come from. Buzzfeed made only $52m from Facebook, Amazon, Google and Netflix in 2017, making up just 15% of their $350m revenue target for the year, a goal they allegedly missed by 15% - 20%. With such a clear mismatch between approach to content / audience development, versus monetisation models, Buzzfeed had to reapproach how it would build a business around its editorial expertise, leading to “9 Boxes”, its multi-revenue model:
The new approach meant building up new teams to take advantage of opportunities that were more likely to be monetised and better suited to Buzzfeed’s strengths. However, deciding to do things like putting programmatic display ads on its website (after famously criticising its use), creating AM2DM - its morning news show that was created exclusively for, and joint funded with, Twitter and developing and selling Tasty branded merchandise, comes at a cost.
Aligning content and audience strengths with monetisation strategy
The reassignment of Buzzfeed’s podcast resources in favour of more video content is unlike the previous cuts the company has made in the last 12 months. Recent reporting suggests that previous editorial and sales cuts made in the UK and US were the result of a lack in financial discipline, the natural consequence of a company with millions in funding in growth mode. In contrast, these podcast cuts were made so the publisher could invest in activities that would be more profitable, thus exercising the sort of strategic discipline needed for modern media organisations.
In focusing its efforts on video at the expense of podcasts, Buzzfeed didn’t trim its costs, rather it doubled down on the spirit of its nine boxes. In doing so, Buzzfeed clarified its criteria for initiatives that it will pursue going forward:
Taking advantage of its scale - In a world where anyone can create content, very few have Buzzfeed’s organisational ability to produce and distribute large amounts of text and video content to reach large audiences. The publisher’s most preferred opportunities will take advantage of either or both of its content creation capacities and audiences it has amassed.
Significant barriers to entry - Haunted by the media brands that copied its lists and food videos, Buzzfeed will gravitate towards monetisation opportunities with increasing barriers to entry that it is uniquely equipped to overcome. Few will have the leverage to start a daily morning show that streams live on Twitter like AM2DM, or the capital & brand recognition to sell a line of Tasty-branded kitchen products in some of Walmart’s 4,000 stores.
Meaningful revenue opportunity - Behind Buzzfeed’s content production and audience scale is a group of investors and stakeholders that are more interested in getting paid, than investing more money, so it can no longer afford to waste time and resources on expensive content and advertising products that don’t deliver enough revenue. Expect Buzzfeed to explore more ways to monetise its scale cheaply (programmatic banner ads & affiliate links), or pursue opportunities with companies like Netflix & Facebook that will cut large checks for premium video content.
Upon establishing this criteria, it’s clear podcasts do not compare favourably:
Scale - Podcasts uniquely do not take advantage of Buzzfeed’s scale in content creation (hence the talent cuts), nor Buzzfeed’s amassed audiences on social platforms due to the previously mentioned friction with podcast discoverability.
Barriers to entry - Buzzfeed’s axing of its podcast division suggests its access to talent does not help it rise above the difficulties of gaining meaningful podcast audiences. When coupled with the lack of barriers to creating and distributing podcasts, Buzzfeed has no legitimate defence or moat in podcasting.
Meaningful revenue opportunity - In the US last year, podcasts just attracted $314m in advertising revenue. Not only is the figure a drop in the ocean compared to the amount spent on digital advertising ($69.2bn) or radio ($17.6bn), the size of the entire US podcast advertising market was even smaller than Buzzfeed’s own revenue target for last year, making it even more difficult to financially justify.
As unfortunate as it is, when put all together, it certainly appears Buzzfeed made the correct choice. It is not possible to say what Buzzfeed’s podcast division could have been or done with more time and resources. But this is very much the point - Buzzfeed is a media company that is trying to prove it can operate profitably. Like many media companies, time and resources are less available than they were three years ago. And just like any company, executing strategy means learning what to say no to.
This article is not to say that large media companies can’t have successful podcast divisions. However, it should be clear at this point that making money from content is not an inevitability, regardless of how big a media company is or how good it is at creating content. Making money sustainably as a creator or media company is a function of aligning the approach to creating content and building an audience with appropriate monetisation strategies. To lean on a quote from strategy writer Ben Thompson, as a creator at any level, figuring out the relationship between those three elements is the only way to control your art:
“Controlling one’s own destiny, though, takes more than product or popularity. It takes money, which is to say it takes building a company, working business model and all”
Got thoughts?
Talk to me on Twitter or email me at bola@thefluidconcept.co.uk