2019 Was A Tough Year for the Media: Nearly 8,000 lost their jobs. It will continue in 2020

Last year started off badly for US journalism, with more than 1,000 job loses by February. Unfortunately, that trend continued, with more than 7,800 layoffs by December, according to a Business Insider article.

That's a startling number.

For context, BI noted that "it's estimated that some 5,000 media jobs were cut from the market from 2014 to 2017." So nearly 50 percent more losses in one year than were lost in three years combined.

What's surprising is that the layoffs didn't hit only newspapers. (1 in 5 local newspapers have closed down since 2004.)

There were big loses in big-name online sites including BuzzFeed, Vice Media, Verizon Media, Bustle, Quartz, and more. For Verizon's media units, Yahoo, AOL and Huffpost, there had been two sets of layoffs in 2019, resulting in the loss of 830 media jobs. (This does not include 10,400 losses-by-byouts in other Verizon jobs.)

Gannett, which merged with GateHouse Media in December to become the largest newspaper publisher by circulation, cut 400 jobs at its newspapers around the country, including US Today. Entrepreneur laid off four editorial staffer, restructuring on digital offerings. Jet, Ebony and New York Magazine announced lay offs, too. For us, a big sentimental loss was that of Mad magazine, which announced it would stop publishing new content, affecting 10 staffers and hundreds of freelancers.

The Washington Post eliminated its free commuter paper, the Express , after 16 years, because it found that the young readers it was aiming for no longer picked up a free -- that's right, free -- edition as they hopped on the Metro. That's because they accessed news on their phones (something that hadn't been around when the Express was launched). That's not the only free commuter newspaper to fold. Metro Boston, another free commuter paper, suddenly shut down this month after 19 years, after its sister publications, Metro New York and Metro Philadelphia, were sold. Metro Boston had a circulation of 300,000 in 2005 but fell to about 50,000 in 2019, the Boston Business Journal reported. 

Sports Illustrated, which was licensed to The Maven, cut "nearly 40 staffers...(with) plans to replace some full-time positions with contract" writers. And there are serious concerns about quality of the product because contract freelancrs are required to write many more articles for far less money -- especially upsetting because SI has long had the highest standards in sports journalism.

There were also broadcast losses at NBC, ESPN, NPR, CNN, Disney (as the result of its acquisition of 21st Century Fox movie studio).

The Youngtown Vindicator ceased publishing around its 150th anniversary, the Cleveland Plain Dealer laid off 12 additional newsroom employees along with as many as 30 production jobs. The St. Louis Post-Dispatch announced 23 jobs axed, Dallas Morning News eliminated about 20 newsroom jobs and the New Orleans Times-Picayune laid off all its staffers after being acquired by the Advocate, a competing newspaper.

The concern about the loss of local news media is that it has implications for the communities in whcih they operate. For example, local news media tend to be more trusted that national media. Local media help support local organizations in the community, helping to provide a sense of community. And they keep the community informed about issues affecting them.

U.S. news media used to be able to count on advertising and subscription revenue to fund operations but the shift to online or app has reduced both revenue streams, but especially advertising revenue. Unfortunately, with a few exceptions, there seems to be no sustainable business model that will help keep news outlets in business. We expect some uptick in revenue in battleground states, thanks to the presidential election but that won't last.

Which means: we expect more layoffs in 2020 and 2021. So we ask marketers to consider finding ways to support media.

Wall St. Journal Validates Our "Business Model as Innovation" Predictions

When we recently evaluated our predictions for 2018, we gave ourselves a C for our prediction that said, "Innovation often will come via business models" (part of our "Key Predictions for Trends in 2018, Part II). 

Our basis for that grade was:  

We expected, for example, that upscale restaurants with a delivery-only business model (relying on mobile-ordering apps) would be a bigger trend than it turned out to be. There was some coverage of that sort of innovation – not so much of technology but in the use of technology – but it wasn’t a top story. 

However, in a Nov. 2, 2018 Wall St. Journal column that was published after we posted our grade, Irving Wladawsky-Berger, a regular contributor who formerly worked at IBM and served as a strategic advisor for Citigroup, HBO and Mastercard, actually supported our prediction about the importance of business models. The column makes the case that "It’s All About Business Model Innovation, not New Technology. New technology, no matter how transformative, is not enough to propel a business into the future." (In the interest of disclosure, I worked with Irving back in the days when IBM was a client at a former agency.)

According to his article,

Surveys show that most executives agree, and in fact, many believe that business model innovation is even more important to their company’s success than product or service innovation. 

Another key quote further validates the point we made in our initial prediction:

New technology alone, no matter how transformative, is not enough to propel a business into the future. Nor, for that matter, can past success justify existing business models. The business model wrapped around the technology is the key to its success or failure, argues Mr. Johnson, senior partner at Innosight, the strategy consulting firm he cofounded with Harvard Business School professor Clayton Christensen. 

Irving also outlines four key attributes of a successful business model:

1. Customer value proposition.
2. Profit formula.
3. Key resources.
4. Key processes.

He also identifies how tech can enable business models such as through

1. e-Commerce. (This was something that Irving pioneered at IBM.)
2. Digital platforms.
3. Models that turn data into assets.
4. Automation-enabled services.

You should check out his article to learn more and get more details on the eight bullet points. It's worth reading.

And, for us, while we won't go back in an improve our grade for this prediction, it's nice to get validation. 

Key Predictions for Trends in 2018, Part II

When we evaluated trends for 2018, we came up with more than five -- while avoiding politics. 

Here's what we're calling our Bonus Set of Predictions:

1.  The media landscape will change in 2018. Beyond newsroom layoffs and publication shut downs, which is upsetting, the media landscape will change in other ways in 2018, thanks to three deals: a DOJ-opposed AT&T -Time Warner combination, a more likely Sinclair Broadcasting purchase of Tribune Media, and a Disney acquisition of Fox’s TV and movie studios (but not Fox News, Fox Sports and Fox TV channel). If two of those three deals go through, expect others as defensive moves.  In an Internet of media choices, consolidation at this level may not be in the consumers’ interest.

2.  Artificial Intelligence and robotics, now interconnected, will continue to be “hot.” A.I. and robotics will be combined in articles (instead of considered separately as in prior years), and we expect to continue to see scare stories about a “robocalypse” in which A.I.-enabled robots replace human workers as well as more-reasoned articles that debunk the scare stories. We’re not as worried because there we think it will open other types of jobs, and that implementing A.I. seems inevitable because the potential benefits could be so significant. 

3.  Innovation often will come via business models. You might not be able to get a reservation at that great local restaurant you’ve been ordering from but that’s because of their delivery-only business model relies solely on mobile-ordering apps. By eschewing things like waitstaff, expensive leases, and needing to focus on turnover rates for tables, these restaurants are able to flourish in a notoriously tough sector. We expect coverage of that sort of innovation – not so much of technology but in the use of technology – to continue in 2018.

4.  Bitcoin and blockchain is hitting it big time. Lots of coverage. Still not mainstream but finally reaches a point where people who haven’t paid attention at least have heard of the two cryptocurrency terms.

5.  Is the internet dying? Long before the (possible) end of net neutrality, some have predicted that the internet is dying. The internet (which was once so important it was always capitalized) has been subsumed by apps and by Amazon, Apple, Facebook, Google and Microsoft, which control much of the online ecosystem, from app stores to cloud storage to online ads. Ending net neutrality favors those five companies, while making it harder for small disruptive startups.

6.  The first amendment becomes a battle-ground issue. Between campus culture wars (regarding who can speak on campus and who can disrupt those who try to speak on campus), varying definitions of hate speech and the more-open expression of bigotry, the fight to protect free speech will generate coverage in 2018. Part of the challenge is a polarize climate is finding the balance between allowing free expression and preventing bigoted express.

7.  Millennials’ impact will change how companies market products and services. Currently America’s largest generation (sorry, boomers), millennials have had a significant impact on the workplace. In 2018, marketers will increasingly realize they need to change how they reach the 4.8 million 26-year-olds, and the millions of others currently 25, 27 and 24 as they encounter life-defining moments that include: choosing a career or to enter the gig economy; buying or renting a place to live, along with renovating or making repairs; taking on different responsibilities such as paying taxes and keeping track of their finances, including retirement; getting married, deciding whether or not to have kids and/or get a pet, and cooking. Millennials’ preferences and needs have already spawned new apps and services to deal with these responsibilities and choices. For example, we’re seeing a rise in food-delivery apps from restaurants that offer only takeout (not sit-down) service because they have a kitchen but no need for a dining room. We also expect a trend that began in 2017 to continue: companies will continue to develop educational programs such as classes, online tutorials and how-to videos on what the Wall St. Journal called “such basic skills as to mow the lawn, use a tape measure, mop a floor, hammer a nail and pick a paint color.” We also expect millennial preferences to become the default choice; for example, doorbells may become vestigial as millennials text, not ring, when they arrive at a friend’s house.

8.  Smart-Home automation will gain acceptance but still a niche offering. Smart homes are preferred in some markets by some buyers but not everyone wants them or values them yet. That said, smart home technology and appliances are getting easier to find, install and deploy. One possible driver of smart home tech could be counter-intuitive: with a growing population of seniors aging in their homes, their adult children may insist on installing tech that can help them monitor their parents. As long as the internet doesn’t crash, adult children will be able to check in on their parents, adjust heating and air conditioning (already possible with Nest and other devices), turn on lights and get help via apps that their parents may not have figured out. As tech-friendly boomers age in their own homes, expect them to embrace smart-home technology. We think Internet of Things (IoT) will continue to be a widely used phrase but that “smart home” is a more user-friendly term that may be easier to market. By the way, the biggest smart home tech segment will continue to be intelligent personal assistants like Amazon Alexa and Google Home speakers.

9.  The ranks of unicorn startups will grow but expect a backlash because unicorns are difficult to sustain. There’s a lot of money being thrown around, which is why we expect some of the enthusiasm for unicorns to diminish. It’s been very difficult to maintain a $1 billion-plus valuation in a meaningful exit. Also, we think New York Times tech columnist Farhad Manjoo is right when he said, a continued threat for startups is that just “fewer than 1 percent … end up as $1 billion companies” and that the Frightful Five (Amazon, Apple, Google, Facebook and Microsoft) can out-pay key employees (an issue in the A.I. space), out maneuver or just invest in startups and co-opt them.

10. Religious nonprofits will be able to publicly make political endorsements, but doing so will change how they are perceived. As this is written, the GOP is discussing whether to eliminate the Johnson Amendment, which prohibits nonprofits from endorsing political candidates. We think Congress will repeal Johnson because it’s a campaign promise President Trump made. However, we think – and some, who otherwise hold opposing views, agree that it will affect how American’s perception when religious organizations are turned into political action committees. 

In our next post, we will post a set of ongoing trends that we think are important to keep in mind.

Is Twitter's $1B Valuation an Example of Dot-Com Bubble Redux?

According to TechCrunch, Twitter is being valued at $1 billion. Meanwhile, one valuation for BusinessWeek came in at $1.00.

Could there really be such a huge gap between the two properties? BusinessWeek reporter Stephen Baker mused about this in his blog posting, "Could Twitter be worth one billion BusinessWeeks?"

Since Twitter has no revenue model in place, it's easy to consider that we're back in the dot-com bubble days. AOL was once considered to be much more valuable than Time Magazine. Does anybody remember AOL?

I like Twitter, and it's certainly generating load of coverage -- Jay Leno mentioned it at least three times during last night's show. But I have to wonder how much can Twitter be worth when the site generates no revenue.

Do you think Twitter is worth $1B? Do you think BusinessWeek is worth $1.00? Let me know.