The Rundown: Digital publishing’s crash landing

What comes next is what we termed the “pivot to reality,” a return to basics as publishers give up on get-big-and-rich-quick schemes that might work in attracting venture capital in favor of the tried and true. There is more sober talk in publishing heading into 2018. Tend to your brand. Differentiate your content. Build direct connections to your audience. Get meaningful numbers to convert to subscribers. Build ancillary revenue streams in events, agency services and commerce. Do not pin all your hopes on a fickle ad market and a Hail Mary that video ad dollars will magically appear.

Media has never been a business for the faint of heart. There are a lot of easier ways to make money. The sale of Time Inc. for $2.8 billion to Meredith underscores just how quickly the most powerful can be brought to heel. Nobody will confuse Mashable for Time. But more Mashables will inevitably appear. LittleThings, a Facebook-fueled feel-good publisher, is considering putting itself up for sale. Vice and BuzzFeed are scrapping IPO plans. Gizmodo Media Group is looking for capital.

There are, however, signs of hope. The New York Times has managed to do what many thought was impossible: It pivoted its entire business model. The Times now boasts 2.5 million paying digital subscribers. The Washington Post has topped 1 million digital subscribers. The Financial Times now has 700,000 digital subscribers, up 14 percent over the year. The Guardian now has 500,000 paying users, pioneering a unique membership strategy that bears watching. On a local level, the Minneapolis Star Tribune has made headway in getting readers to pay. Plays like The Information, Stratechery and The Athletic show that passionate audiences, ideally with a corporate card, will pay for content.

Beyond ads and subscriptions, enterprising publishers are finding new money in commerce posts that might not win many awards but can supply a healthy margin business by driving sales. Barstool Sports has proven the model of a modern publisher: building a commerce business that’s a third of its revenue, thanks to a legion of passionate fans.

Advertising remains a very good business model for publishers. BuzzFeed, Vice and others going through rough patches are still growing substantially, although not at the level of expectations they signed on for when taking massive funding rounds. Bustle Digital Group, for instance, is touting 50 percent digital ads revenue growth for the year. For Bustle CEO Bryan Goldberg, the problem is not ads; it’s mismatched growth expectations. 2018 will bring a new sobriety to digital media as the heady days of hockey stick growth, in audience and revenue, give way to the grind-it-out reality that’s always been media. — Brian Morrissey

Wired goes paid
Mashable, the onetime digital media darling that rose to prominence on its coverage of social media phenomena, is sold for a fifth of its one-time valuation. Wired, the Condé Nast glossy, is planning to erect a paywall on its site. At first glance, these two recent stories may seem like different outcomes in the struggles that publishers have in forging a business model in the digital world. They share another lesson, though. Part of Mashable’s downfall was that, awash in outside funding, it started expanding its editorial mandate to general news around 2013. A site known for covering internet memes was now suddenly covering elections and Ebola. Wired, once strongly identified with science and technology coverage, also expanded its coverage over the years into entertainment, pop culture and food.

We now see how that turned out. Mashable trimmed its sails in 2016 and reverted to its core coverage, but that earlier editorial expansion, along with other missteps, cost it with readers and advertisers. Wired is also moving away from general-interest stories and focusing on coverage for the tech-obsessed in hopes of getting readers to pay. Trump’s election and subscription bump showed us that people will pay for news if it’s high-quality and distinctive, which conflicts with the scale-driven approach many publishers embraced of trying to be all things to all people. Mashable’s move into general news is a hard pivot to execute credibly. Hopefully Wired got the memo in time. — Lucia Moses

For the TV guys, Facebook’s Watch is not a big deal yet
Facebook’s fledgling video-viewing section, Watch, has become a major area of focus for digital publishers looking to make money by selling shows to Facebook. Media brands inside major TV companies, including NBCUniversal, Turner and Scripps Networks Interactive, are also actively producing shows for Facebook. But while Watch might be an important revenue and distribution opportunity for digital publishers, it’s not viewed in the same way by some top executives at these major media conglomerates.

“When I think of Watch as a distribution channel, it’s not moving the needle for us,” one senior network executive recently told me. “We’re not running around beating our chest over Facebook’s Watch numbers internally.”

The indifference toward Watch comes as the major media companies look to play hardball with the platforms. For instance, Facebook still controls all of the ad inventory within its mid-rolls program; YouTube, Twitter and Snap, meanwhile, allow media companies to sell into the ad space against their content. TV-network sales executives are using this to press Facebook to improve its video monetization programs.

“We want to push them and say, ‘We’re going to partner with one of you, not all of you,’ and really gain some leverage,” said another network exec. “Facebook Watch has not been an out-and-out success; I don’t need to bend over backward to prove that it’s a thing. I also don’t need to keep my content up [in places] where I don’t like the economics.” — Sahil Patel