Caught in the mushy middle: How Quartz fell to earth
In July 2018, Uzabase co-founder Yusuke Umeda addressed a room of anxious Quartz employees.
Staffers were reeling from the news that the business publication had been sold by Atlantic Media to a Japanese company largely unfamiliar to the U.S. media world. What, they wondered, did Umeda hope to achieve by purchasing Quartz?
Umeda said his goal, according to staffers at the townhall, was to turn Quartz into the number one business news site in the world within five years. Staffers blanched. Did he mean the biggest? The most important? Quartz to them was a quirky, chart-loving midsized publisher. The goal, not to mention the time-frame, felt unrealistic. Afterwards, someone at the company jokingly sent around a digital countdown clock to July 2023.
Publishing has gone through about a dozen life cycles since Quartz emerged as a darling of digital media eight years ago, spinning out genuinely innovative features: a sleek website and app, a trendsetting newsletter before newsletters were cool, fewer but better bespoke ads and a data team that works inside the newsroom. In 2016, at four years old, Quartz announced it had achieved an operating profit.
That would be the first and only year. Today Quartz is the latest victim of a digital media industry in crisis. Last month, the company laid off nearly half its staff in a major restructuring meant to retool the outlet around subscriptions in addition to advertising. The company eliminated 80 roles, shuttered physical offices in London, San Francisco, Washington D.C., and Hong Kong and reduced executive salaries by 25% to 50%. As of the first quarter of 2020, net advertising sales dropped by 54.1% year-over-year. In 2019, Quartz reported a $18.4 million loss on $26.9 million in revenue.
Built for the native ads era, Quartz’s current situation marks the end of a distinct chapter in media. There was a time when “digital native” businesses like BuzzFeed, Vice and Quartz represented a new vanguard in contrast to languishing print dinosaurs like The New York Times, Wall Street Journal, or Washington Post. In recent years, more legacy outlets have caught up, in large part thanks to pure copying or poaching the digital talent for themselves. As industry furloughs and layoffs continue, Quartz has joined a growing club of publications that seemingly got caught in the mushy middle of 2010s digital media, like Mic and Mashable. Not quite niche enough to be essential to a small group of readers, but not quite big enough to compete at scale. Coronavirus didn’t help.
The company now finds itself in a familiar media predicament: searching for diversified revenue streams in a bleak market. “Coronavirus caused a really dramatic decline in advertising across the industry and for sure at Quartz, and if it were a short-term decline that we could easily see past, then that would have been a very different story,” Quartz CEO Zach Seward said in an interview.
This account of what happened at Quartz is based on interviews with more than 20 current and former employees, executives, competitors, and ad industry sources. Together, a picture emerges of a once-promising digital news outlet whose focus drifted amid the boom-bust cycle of recent media years.
Once free, Quartz has a metered paywall. Once an ad-driven business, the company now hopes to build subscriptions in the middle of an ad market crunch. Once regarded internally as one of the nicest places to work in journalism, staffers learned in May that they too can be quickly cast aside, even during the economic and health uncertainty of a pandemic. The outlet’s story, Seward insists, isn’t over. “The history of Quartz won’t be written for quite some time. We’re only eight years into this.”
A more premium space
In 2012, Atlantic Media looked to launch a new publication covering the global economy. The business case made perfect sense. The media world was on the cusp of a huge resurgence. Digital advertising was growing at a rapid clip. The business journalism space had been mostly dominated by financial services behemoths like Dow Jones/The Wall Street Journal, Reuters, or Bloomberg, or high-priced print titles like the Economist or the Financial Times. These outlets were often tied to legacy structures or print products. While some digital newcomers like Business Insider aimed for massive reach, they pumped out slideshows and programmatic ads.
The Atlantic wanted to corner a more premium space, selling marquee advertisers on a new generation of yacht owners and Rolex wearers. A free and digital Economist for the budding millennial business elite. The concept oozed an Obama-era ethos of global interconnectivity. “When you walk through a busy Asian airport, nobody is talking about or thinking about the American economy. The world has gotten much bigger than that,” David Bradley, then the owner of the Atlantic magazine, told the New York Times upon the launch of Quartz. Under the leadership of editor-in-chief Kevin Delaney, a former Wall Street Journal editor, and publisher Jay Lauf, formerly of the Atlantic, the project began with a staff of 20 journalists and four premium sponsors — Boeing, Cadillac, Chevron and Credit Suisse.
Staffers from the early years say that Quartz was marked by a culture of experimentation and innovation codified by an internal buzzword — “quartziness” — a nebulous term loosely defined as the meeting of creativity, quirkiness and intelligence.
In August 2013, when Steve Ballmer stepped down from Microsoft, Quartz’s headline highlighted the CEO’s personal windfall from the surging stock: “Steve Ballmer just made $625 million by firing himself.” The clever take helped Quartz’s version of the story rise above the rest in the early days of headlines engineered for the social web, where hundreds of thousands of pageviews, if not millions, hinged on framing. “That was a very archetypal way we responded to breaking news,” said Gideon Lichfield, then an editor at Quartz and now the editor-in-chief of MIT Technology Review. “We talked a lot in those days about ‘quartziness.’ To figure out the unexpected take or angle on something and write that.”
A Quartz style guide from the time encouraged reporters to “write at the intersection of the important and the interesting” and to “think social.” Stories should fall on the “Quartz curve,” meaning either short (less than 500 words) or long (more than 800 words), but not in the middle, a rejection of the typical length of a newspaper story in the mobile-reader ecosystem. The newsroom eschewed “desks” or “beats” and organized around “obsessions.” Africa’s economy is a beat, according to the style guide, but Chinese investment in Africa is an obsession — a phenomenon shaping readers’ lives and industries. “Obsessions” shift, while beats remain constant, in theory making Quartz’s newsroom more agile but in practice also permitting reporters to be more scattered.
Quartz quickly gained a reputation among media navel-gazers as one of the most forward-thinking newsrooms on the “future of news.” The company was regularly lauded across the trade press, including by Digiday, for experimenting with technology in ways both useful (compelling visual ads) and charming (a light in the newsroom letting staffers know when it was going to rain).
Before data-related editorial roles became industry standard, Quartz melded the product into the newsroom, primarily through its “Things” team led by Seward. A combination journalism and coding squad, Things introduced a tool that allowed reporters to quickly publish their own crude charts. In traditional newsrooms at the time, placing a graphic into a story could be a time-intensive group endeavor. Given that a headline promising “one chart perfectly explaining” a certain topic was then a reliable traffic-generating trope, the tool allowed Quartz reporters to be more nimble and independent. Visuals and interactives spread across the industry, and Quartz helped set the standard for what digital business journalism could look like. In short order, the company was generating praise and awards.
“One of the great things that Quartz did was really inspire newsroom leaders around the world to see news as a product and not just a chunk of text,” said Dan Frommer, a Quartz editor from 2014 to 2016 who now writes a newsletter called The New Consumer. “The fact that not only was everyone was allowed to — but was responsible for — their own charts led to a data and math literacy that a lot of places don’t encourage or mandate.”
As Quartz’s profile grew, so did its traffic. Less than a year after launching, Quartz hit 2 million unique visitors and surpassed the Economist, a moment seen at the time as a changing of the guard. It signed on more advertisers like Ralph Lauren, KPMG and Rolex.
Over the next few years, the Facebook referral gods delivered Quartz and a horde of other outlets booming traffic. The company expanded into new markets like India and Africa. By late 2015, it had a staff of 60 on the editorial side writing 50 to 60 pieces of content a day and was pulling in about 15 million monthly unique visitors. It dove into video and by March 2016, amid the video explosion on Facebook, reached 200 million views across platforms, the kind of milestone touted at the time by media executives who would later come to learn the fickle nature of Facebook video views.
Competitors for ad dollars saw Quartz as a model publisher. “When I was running Slate, I looked at them with admiration,” said Keith Hernandez, that site’s former president. For the first two years of the business, Quartz rarely made concessions on price, scoring CPMs of about $75, according to people familiar with the matter. Its in-house sponsored content unit worked with big brands to fashion custom, sharp-looking (and less intrusive) native and banner ads, rebuking IAB standard display ad units. When Quartz opened up its chart building tool to the public, GE was the founding sponsor.
The quality-over-quantity advertising mantra worked and Quartz’s prosperity reassured small and medium-sized newcomers that it was possible to score blue-chip clients with deep pockets. “There was a realization that the growth on Facebook was not going to be infinite, and that there might be a place for the middle class of publishing if you can create beautiful ads,” Hernandez said.
Quartz celebrated its fifth birthday in September 2017 amid a wave of optimism. “Quartz now reaches more than 100 million of you every month across various platforms. Just last month, our website had 22 million unique visitors,” Delaney wrote in a memo laying out the plans for the future. More expansion was on the horizon. There would be Quartzy, a new vertical expanding life and culture coverage, as well as Quartz At Work, to cover management and the workplace. An afternoon component was to be added to Quartz’s popular Morning Brief email. More video series would debut across Facebook, YouTube and Quartz’s site.
Meanwhile, the ownership structure at Quartz’s parent company had changed. A few months earlier, David Bradley, the owner of Atlantic Media, sold a majority stake in the Atlantic magazine to Laurene Powell Jobs, the widow of Apple founder Steve Jobs. Quartz remained under the Atlantic Media umbrella, but Bradley made clear to those around him that the next generation of his family had no interest in becoming media barons. Speculation swirled that Quartz, an albatross around Bradley’s neck, was also for sale.
Market forces were also starting to shift. Facebook, humbled by the press for its central role in the spread of misinformation, changed its News Feed algorithm in January 2018 to emphasize user content over publishers’. News companies coasting on the traffic bonanza saw their audience drop. Quartz, for its part, had experienced this kind of whiplash before. In the early days, the site picked up hefty referral numbers from LinkedIn only to have that evaporate when the platform pivoted to hawking its own content. Before the Facebook algorithm change, but especially after, publishers including Quartz renewed their interest in search optimization to diversify their referral sources. For legacy sites, returning in part to a Google-driven model was familiar. That’s how it was done before the Facebook gold rush (remember “What Time Is The Super Bowl?”). But Quartz had missed much of that era of media.
“There was definitely a point where the shift in our referral traffic left us not entirely sure what the levers were,” said Kira Bindrim, Quartz’s executive editor.
The ever-changing flow of how digital publishers bring in traffic has been a source of much self reflection since the algorithm change. “The era of digital media in which everyone was measuring themselves by overall total audience at best was relevant in that era, but probably even then it was a bit of a fallacy,” Seward said. “I think everyone in their heart knew this all along, and that what mattered was the center of that bullseye — that strongly defined audience that was genuinely loyal.”
The boom times at Quartz created a more confused newsroom, current and former Quartz employees said. Gone were the days when the publication was principally set on trying to communicate sharp analysis about the global economy. The site covered news across the map, from geopolitics to culture. It scrambled to find ways into the defining stories of our time, from Trump to Brexit. Writers complained that the site had lost the sense of what was, in fact, quartzy. They were encouraged to “take swings” and pump out more content to see what would work. Reporters were expected to write 20 stories a month (often short pieces of analysis). Quartz articles started to look more like commodity news stories one can find elsewhere.
“In a strategic sense, Quartz lost focus from its original mission of being The Economist for the current era,” said one former staffer. “It expanded into different types of coverage areas and, judging from its output, seemed to stop thinking about how it could explain the world and the global economy to an audience of up-and-coming business leaders.”
“There was a time at Quartz not so long ago where we were really trying to serve people in that full spectrum,” Bindrim said. “Not only the way you need to do your job and understand the global economy, but also how you engage day to day with people and culture around you. That’s the part that we have moved away from more recently in the interest of serving people in the narrower sense.”
A slow contracting began on the business side. Native advertising became increasingly competitive. Every publisher across the industry operated their own custom ad shop. Campaigns at Quartz, one former business staffer said, needed extensive paid budgets to ensure traffic. “For a brand, getting some award because of a nice looking campaign — the value of that has diminished,” said the former staffer. “Brands aren’t willing to pay for that thing if it’s not really benefiting their business beyond sentiment. These were very expensive campaigns.”
Quartz’s ad work is high-touch, custom and by its nature difficult to scale. “The composition of our advertising is still tried-and-true display units and content work. But we have over the years adopted more standard ad units,” said Katie Weber, Quartz’s current president who has been with the company since 2014. The site, for instance, now offers a 300 x 600 mobile IAB unit, something that it did not a few years ago. The move echoes other native digital publishers, like BuzzFeed, who were automated ad holdouts until about two years ago.
Hernandez, formerly on the advertising side at BuzzFeed and Slate, said Quartz pushed the advertising envelope, but that it struggled to clearly define where it sat in the market. “Who were their competitors? Is it the Atlantic or Business Insider or are they up against the WSJ or FT? The answer was kind of ‘yes,’ so they became a smaller piece of the pie.” Brands today “love creative and the brand purpose, but at the end of the day they’re going to spend their money on things that work, and the things that work are Facebook and Google.”
The move to subs
In July 2018, Quartz announced that it had been acquired by Uzabase for a price between $75 million and $110 million, based on future performance (final sale price: $86 million). Uzabase had reached out to Quartz for a content partnership, and the talks turned into a full-scale acquisition. It was a coup for Bradley. Sources with knowledge of the company estimated that he was able to basically break even.
Staffers were stunned by the acquisition. Few had ever heard of Uzabase, which owns the Japanese subscription service NewsPicks. “In Japan, people were really willing to pay for the NewsPicks experience, and there are so many different alternatives in this market,” said a former business side employee at Quartz. “Japanese culture has a different relationship with media and less competition. I could just never see it taking off in the U.S.”
In late 2018, Quartz unveiled a paid membership offering — $14.99 a month or $99 a year — promising more content and events for Quartz devotees. Six months later it put in place a metered paywall. “The major change following the acquisition by Uzabase was to focus on building the subscription business,” Seward said. “There’s no doubt that having diversified revenue streams is critically important for us and any media business today. Any strong subscription business has only ever been built slowly and steadily.”
Some reporters balked at the paywall and subscription model, as writers who want their work seen by the most possible people often do. Others felt like the job itself had mostly not changed. Newer features were given prominence, like “field guides,” deeply-reported stories about the state of an industry or topic. Today, the Quartz homepage appears more like a NewsPicks-style curation tool — highlighting stories from other outlets in addition to Quartz — than a traditional publisher homepage.
As of the end of April, Quartz had 17,860 paid members. According to the latest Uzabase filing, the site makes $118,000 in monthly recurring revenue from subscriptions. “We’re covering the global economy for smart ambitious young professionals who want a more global view of business journalism than they get elsewhere, and trying to be as useful to that group as possible,” Seward said. Quartz is luring in new subscribers from places like its existing newsletter audience, according to Weber. She aims to grow the subscription revenue to 50/50 with advertising. “That doesn’t happen overnight and won’t happen this year,” Weber said.
Quartz employees question their parent company’s patience. Uzabase said the goal for the restructuring is to “build a foundation for profitability between 2021-2022.” According to Uzabase’s 2019 financial report, total revenue at Quartz, which primarily consists of advertising, dropped 22% to 26.9 million last year from $34.8 million in 2018 .
Quartz today, current and former employees say, looks and feels a lot different. In the years since the acquisition, the company has shed some of the definitive products that made it a frequent subject for the media press. The Quartz app, an award-winning mobile news product in the style of a chatbot, was retired in 2019 in favor of a newer product built around the NewsPicks app infrastructure. It debuted with fanfare: “Quartz Pros” like Richard Branson and Sallie Krawcheck offered in-app commentary. But Quartz ended the contributor program and the service now looks like a typical news publisher app. According to Apptopia, the new Quartz app has been downloaded about 700,000 times since it launched in November 2018.
As the culture shifted, the company in the past two years lost some of its key editors to places like The New York Times, Reuters, and Medium, sapping morale. On the business side, chief revenue officer Joy Robins decamped for the Washington Post. The newsroom also had to deal with two tragedies, the deaths of editors Lauren Brown and Xana Antunes, both from cancer. “Both of their deaths hit us really hard,” Seward said. “We felt those deaths the way a family would feel them. I was really proud of how everyone was there for each other.”
In October 2019, the attrition culminated with the exit of Delaney, now an advisor and New York Times opinion section senior editor, and Lauf, who became chairman and later moved to an advisory role. “They were really the heart and soul of Quartz, and it could never be the same without them,” said one former staffer. Seward, a co-founder, was named CEO and Weber was promoted to president.
Returned to unparalleled
By March of this year, Quartz employees were bracing for layoffs. Two smaller rounds of layoffs in 2019 had already exposed some of the uncertainty surrounding the business. When the pandemic broke out, Seward indicated that cuts were on the horizon (at the end of last year, Quartz had 188 employees).
The layoffs were deeper than expected. Management rejected offers from the Quartz editorial union to hold buyouts or a workshare program, tactics that had been utilized by other struggling news outlets in Covid-19 times. The company declined to comment on negotiations, but Seward said it made more sense to do one severe cut than several over a longer period of time.
For now, the layoffs have left staffers feeling dazed. Practically the entirety of Quartz’s geopolitics team was laid off ahead of an enormous political story. The award-winning video team was also shown the door. “None of the cuts we made were easy or obvious,” Seward said, adding that Quartz was proud of the quality of the video work but that it had never been able to figure out a way to generate significant revenue from it (particularly after Facebook curtailed its news video exploration).
Delaney said the core of Quartz hasn’t changed. “In the beginning, we built the premium advertising business around that connection with readers,” he said. “Today that forms the foundation for a business that’s both premium advertising and subscription.”
As reporters get back to work, those who survived the layoffs have returned to an unparalleled news moment, with coronavirus raging, a recession and protests erupting around the world. “My sense is that many in the newsroom are still very sad, and we’re all sort of reckoning with a company that made decisions that we didn’t expect,” said Annalisa Merelli, a current Quartz reporter. “It feels like dating after you’ve been married.”
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