Month: December 2020

World events, such as the digital revolution, followed shortly by the Great Recession and then the platforms’ algorithm changes in the late 2010s, all mark specific eras of loss felt industry wide. But 2020 could possibly be the hardest and most impactful period of all.

The global pandemic threw an unexpected wrench into the business plans of media companies large and small, and for the unlucky, caused them to shut their doors — or shut down their websites — completely.

Here is this year’s round-up of the publications we lost, or ones that nearly tumbled to their deaths, in 2020.

RIP to the dearly departed

California Sunday
After losing its main means of making money — a tour of live performances — due to the pandemic, then failing to retain funding from Laurene Powell Jobs’ Emerson Collective in October, Pop-Up Magazine Productions was in a tight spot that caused the company to make cuts. Those cuts came in the form of shuttering its print arm, California Sunday magazine, and laying off 11 staff members from both that publication and Pop-Up Mag.

A print version of California Sunday had been distributed as an insert in the Los Angeles Times and the San Francisco Chronicle from October 2014 until May 2020, at which point it became digital only before shutting down completely this fall. Pop-Up Magazine is still producing video editions of its event-based magazine, as well as selling “issues in a box” that bring the event experience into audiences’ homes.

Man Repeller
The women’s style blog Man Repeller, which was first published in 2010 by Leandra Medine Cohen, shut down its site on October 19 following allegations of racism and classism against the founder and the publication. Medine Cohen told The Cut at the time that the site was shutting down because of “financial constraints” that kept it from being able to “sustain the business.”

The Outline
Bustle Digital Group’s tech-focused site, The Outline, was shut down in April just a year after it was acquired by the company. In addition to closing the site, 24 staffers were laid off from BDG. Despite ceasing publication, the company claims the site itself is not up for sale.

News publishers’ agency businesses
CNN’s short-form documentary production company Great Big Story bit the bullet in September this year, one day after signing a sponsorship deal from its largest advertiser — valued at more than $1 million. The five-year-old company was a place for creative freedom, but as Digiday previously reported, the writing was on the wall as it continually lost money and eventually lost the support of leaders at parent company WarnerMedia, which fought its own battle throughout the pandemic, before ultimately announcing layoffs this fall.

The New York Times’ experiential agency, Fake Love, also shut its doors after 10 years in June. The Times had acquired the company in 2016 as a means to increase its branded content business. In addition to Fake Love closing, 68 staffers, mainly in the advertising and marketing departments, were laid off.

Airline magazines
Delta Air Line’s in-flight magazine, Sky, ceased publication and laid off its 16-person staff, according to The New York Times. And Alaska Airlines’ Alaska Beyond Magazine stopped publishing its in-flight magazine, which had been published via Paradigm Communications Group, for the rest of 2020 and for the “foreseeable future,” to limit the spread of coronavirus, per the magazine’s website.

The Correspondent
As of Dec. 31, The Correspondent — The Netherlands-based De Correspondent newspaper’s English-edition — will shut down and stop publishing, according to the site’s homepage. As a subscriber-supported publication, subscribers were told they would receive a refund worth the remaining balance of their subscription during the first weeks of January.

The reasons for the shut down were largely financial, according to an internal memo reported by Neiman Lab. “We fell 3% short of our worst case-renewal target of 30% due to failed payments. We’re seeing an increase in churn, up to 25% for annual members, with many members citing financial problems and the Covid-19 pandemic,” the memo said.

Significant stumbles and shake-ups

Quartz
No, Quartz is not actually dead. In fact, its new owner, co-founder Zach Seward, has high aspirations for what Quartz can become as an independent media company. But let’s not forget the significant round of layoffs that decimated nearly half of its staff in May and the subsequent abandonment by its former owner, Japanese financial intelligence firm Uzabase in November.

What can be declared as dead, however, is the promise that Uzabase co-founder Yusuke Umeda made during a July 2018 all-staff meeting of Quartz after the company bought it off of Atlantic Media. At the time, he vowed that the publications would become “the number one business news site in the world within five years,” under Uzabase’s ownership, according to a previous Digiday report.

1843
The Economist’s lifestyle magazine, 1843, which was originally launched in 2007 as Intelligent Life before it was rebranded in 2016, went from a bi-monthly print magazine to a digital-only product in May. The lifestyle publication had a history of shutting down and relaunching in the past, with its most recent relaunch in 2019.

The digital version of the magazine was folded into The Economist’s site as a vertical and at the same time, 90 employees — or 7% of The Economist’s staff — were laid off, according to UK-based Press Gazette.

Bonnier (U.S. edition)
Bonnier is shaking loose its U.S. arm. The talks around exiting the U.S. were first reported in February by The Wall Street Journal and came to fruition in September when the Swedish publisher sold seven of its U.S. motorcycle magazines to fintech company Octane. Then, in the following month, it sold off seven more of its New York-based special interest magazines to a private equity firm North Equity.

A special shoutout

Quibi
Though not a traditional publisher, we would be remiss to not include Quibi’s short but impactful life. The short-form video publisher came onto the scene on April 6 with a roster of 10-minute long shows featuring a splashy Hollywood cast. The company raised more than $1.75 billion from a high-profile set of investors but by October, the mobile platform fell short of its 7.4 million paid user target and subsequently shut down.

Case in point: The long-running, thorny issue of remuneration. 

Advertisers say they need agencies now more than ever, and in the throes of economic uncertainty, they are working their agencies harder. But agencies worry they’re not getting fairly paid for their expertise, and are trying to shift to a different business model where they are paid based on the efficacy of campaigns for clients, not the hours they charge them.

Consequently, there’s a lot more experimentation with remuneration. Take “The Pact” from Publicis Media, which launched earlier this year. The media agency will give marketers of small-to-medium-sized businesses a complete refund if it fails to meet agreed-upon performance targets like sales and customer acquisitions for campaigns. 

More recently, other agencies have pitched the prospect of being paid an annual retainer for 2021 far earlier this year than they would normally, framing it in terms of greater flexibility around payment to advertisers.

And they are going to push this narrative hard next year. 

“We’re moving more toward value-based compensation ideals,” said Patrick Affleck, CEO of Havas Media Group in the U.K. “We want to begin linking parts of our growth to the business objectives of our clients — something that is more common in the U.S.”

Advertisers are not going to suddenly scrap rigid labor-based fees in favor of performance-based remuneration en masse. Few advertisers would take such a drastic jump, given the huge amount of oversight and governance needed to stick the landing. 

But evidence of agency frustration with the current model is starting to pile up. Agencies have become more selective over the last two years about which pitches they participate in, only wanting to focus on those where they will make a reasonable profit. Limited agency talent and budgetary pressures will only heighten this selectivity going forward.

As business requirements change rapidly in part due to the pandemic, the desire for more flexibility among marketers is becoming more commonplace. 

It’s less the end of the FTE model in advertising, and more the beginning of the end of it.

Paying for a service based on the hours worked by a bunch of people at different levels hardly feels like the right way to reward an agency’s contribution during these unprecedented times. Not when those agencies are being asked to have a profound impact on businesses. 

And some advertisers are restructuring payment deals with agencies so there is less emphasis purely on labor-based fees. 

Often these conversations revolve around “fix and flex” models, where the fixed element is usually charged on a full-time equivalent basis or the number of full-time employees working on that business, while the flex part, which could be things like tech consultations or ad hoc buying of specialist digital channels, is typically charged on a day rate.

“The feedback we have received from many advertisers is that even if they haven’t implemented changes yet, it is an area they are looking at with greater scrutiny,” said Matthew Semple, director of media management practice lead for Ebiquity’s U.K. and international business.

This type of model isn’t that progressive, but the ability to implement it is far ahead of where it was during previous economic downturns thanks to the prominence of tech platforms.

Ideally, marketers want a model that’s somewhere in the sweet spot between revenue and media metrics. As one procurement director explained on condition of anonymity: “I am currently working on that path too and see that many agencies would prefer such a model, as they move away from a vendor that creates cost, to a vendor that delivers value. They feel they are less replaceable when they have moved across to the value side.”

The key here is to find a way where both advertiser and agency are exposed to the same level of risk and value.

“There is certainly a lot more experimentation as agencies look to move away from time- and materials-based remuneration to more output-based, or even SaaS-based models — particularly where proprietary technology is being provided,” said Ryan Kangisser, managing partner for strategy at advisory firm MediaSense.

It’s the advertisers with long standing agency relationships who appear to be asking most questions about whether the way they pay agencies is fit for purpose. On the flipside, those advertisers on the hunt for new agencies have different priorities.

“When you have relationships with clients based on historical performance that have delivered results then they tend to work better for both parties,” said John Swift, chief operating officer at Omnicom Media Group North America. “We have several of those types of relationships that have become stronger this year. Technology and people have strategic value, they’re not just costs.”

This is especially true for Vice Media Group, which is trying to stick a landing no other media company has even attempted. After years of building its name — and a $1.4 billion war chest of venture capital — by pitching itself as the next great youth culture brand, Vice Media Group has been busy rebalancing and refocusing itself more as a 21st century news brand. 

While the company draws in a diverse array of revenue streams — in addition to its news division, Vice Media Group operates its own creative agency (Virtue), a film & television studio business (Vice Studios), a linear cable channel which it co-owns with A&E Networks (Viceland), and a digital portfolio business, which includes its recent acquisition Refinery29 — it has spent a good portion of the past two years making news a more visible part of its brand and value proposition, in no small part to build loyalty with its existing audience that trusts its news coverage.

This year, the company launched Vice World News, a separate brand for its global news efforts. The brand will exist across linear and digital formats, with a fast-growing presence on Instagram as well as 25 different television series in production, many commissioned as part of an agreement with Antenna Media Group, which will distribute the content in markets ranging from Greece to Azerbaijan.

Vice News also expanded its audio footprint, launching a podcast partnership with iHeartRadio, the second it’s forged in the past 15 months (it announced a deal with Spotify last October).

Given the accolades Vice’s news efforts have received, the investments make sense. This year, Vice News won its first Pulitzer Prize for an episode of “This American Life” Vice helped create along with the Los Angeles Times. It also received another truckload of Emmy nominations — 18 to be exact — more than any other primetime news cast, the third straight year it’s accomplished that feat.

Add in continued growth from the rest of the business — Virtue added 61 new clients this year and the Studios business has 130 projects in development or production — and Vice Media Group is moving to turn a page and start a new chapter. The company said it is on track to be profitable in the fourth quarter of this year and expects all five lines of business to grow revenue in 2021.

But a news-ier Vice would sit on terrain that could be just as rocky as the outlaw turf it staked out years ago. News remains a category that many brands will not invest in, and the publishers who play in the space have enormous scale and resources.

On top of that, in many clients’ eyes, Vice is still chained to the bad boy reputation forged by Shane Smith, the company’s cofounder and executive chairman. Just as some continue to regard BuzzFeed as a repository of cat quizzes, despite its status as an affiliate commerce powerhouse and an award-winning news publisher, Vice is still thought of in ways that disadvantage it in its hunt for new business.

“If you ask me, what is my personal thought, I’d say that it’s a news brand,” said Bill Durrant, the founder of the media agency Exverus Media. “But if you ask me who they’re being compared against [by clients], it’s always against the lifestyle folks, the Complexes of the world.”

That disconnect creates a dynamic that seldom works in Vice’s favor in Durrant’s discussions with clients.

“[Some clients will] ask about it,” he said,  “but if we recommend it, they’ll say, ‘Well, hold on a second!’” 

Though Vice’s sales posture has softened in recent years, its executives say they are fine with being a bad fit for some advertisers. 

“Either you stand for something, or you stand for nothing,” said Nadja Bellan-White, Vice Media Group’s CMO. “And if you stand for nothing it impacts your bottom line. The brands that are attracted to us are interested in that truth.” 

Vice’s executives also dispute the idea that they are limiting themselves to news. While the company’s leadership allows that much of the company’s reputation — even its naughty side — was built on news content, its top executives insist that the other legs of the stool are just as important.

“News is often at the epicenter of the content at the other lines of business,” Bellan-White said. “The great reputation we’ve built is largely built on the back of news.”

“As much as it’s central,” Bellan-White added, “I cannot tell you that I don’t spend equal time on Refinery29 and i-D and Virtue and the studio business, which are equally valuable.”

But the company has also spent time concentrating more parts of its business under the News umbrella. In the spring, when Vice took its turn reckoning with the coronavirus’s impact on business, it eliminated 5% of its roles, most of them open positions concentrated in digital and international. After those layoffs, Vice moved a number of different pieces from the digital part of the company, including its technology news brand Motherboard, under the Vice News umbrella.

“What we’ve put a lot of focus on this year, in order to better serve audiences and brands, is putting more of the news-style content into the Vice News bucket,” said Jesse Angelo, Vice’s global head of news and entertainment.

Those changes, among others, have helped nudge’s traffic upwards slightly this year. Since the pandemic began, Vice Media Group’s unique users have been up 15-20% year over year, though the increases have been narrowing.

But in a world where publishers of all different kinds are competing with one another (and competing with platforms too), scale remains a concern. Vice claims it reaches 380 million unique users around the world, up slightly from the 350 million it claimed it would reach following its acquisition of Refinery29 last year. About half of those users, Vice says, are outside the U.S. “If you’re going to compare them to an NBCU or a Warner, certainly their reach is a problem,” said Carrie Drinkwater, executive director of investment activation of Mediahub.

Drinkwater stressed that most clients don’t regard Vice as a scale play and that she sees a lot to like about the year Vice Media Group has had. In addition to the strength of its news brand — “I think the way they do news is a little less polarizing [than competitors],” Drinkwater said — she singled out “Dark Side of the Ring,” a Viceland show about wrestling, as a potential franchise in the making, and added that the company’s made great progress around using its audience data.  

“They’re what you think their brand is supposed to be,” Drinkwater said. “They want to be edgy.”  

Nearly 30 retailers have filed for bankruptcy so far in 2020, closing thousands of stores. But a few of those businesses have been acquired by consortia like Authentic Brands Group. Most recently ABG has purchased Brooks Brothers, Forever 21 and Barneys — all ailing for their own set of reasons.

ABG’s philosophy seems simple, and predicated on past wins: buy low and eke out profit any way you can, every step of the way. That includes brand partnerships, licensing and keeping only the aspects of the business that have been shown bring returns. In 2020, that model was able to reach a scale never before seen. Retailers left and right have been crashing and burning, and ABG has been waiting in the wings to scoop up the right properties.

In August, ABG and Simon Property (via a combined entity called SPARC — Simon Properties Authentic Retail Concepts) scooped up Brooks Brothers at the discount price of $325 million. ABG expects to sign partners for Brooks Brothers furnishings, underwear, neckwear, hosiery, footwear, fragrance, beauty and other categories, or, as ABG’s CMO and Nick Woodhouse put it, “redefine the brand promise and reclaim its heritage with an eye focused on the future.” The project was one of cutting costs, focusing on the most profitable locations and quadrupling its online presence.

For years, ABG has purchased different businesses with the tying bind being that they had instant customer recognition. The portfolio includes Sports Illustrated, Juicy Couture, Frederick’s of Hollywood and Elvis Presley. For most of these, the play has been to license the name out and bring in cheap revenue. According to the New York Times, these names put together have brought in $15 billion annually.

But the coronavirus has laid bare how vulnerable many of these businesses are. Indeed, the long-term problem facing many legacy retailers came to a head over the course of weeks. Businesses like department stores, which have spotty e-commerce footprints and long relied on mall locations and in-store traffic, saw sales dry up. This past September, J.C. Penney reported $694 million in revenue, compared to $1.01 billion the same period a year earlier. Even Nordstrom — a department store considered to be better prepared for industry headwinds than most legacy players — saw sales drop 53% during the second quarter of 2020.

ABG’s counter is to add real estate to the mix. Working with a leading developer means more options open up in the game of buying retailers on the cheap. “By having your business partner be one of your biggest landlords, you can get a break on rent and make sure your locations are very strategic,” said retail consultant Rebekah Kondrat.

It’s a mutually beneficial relationship, said Kondrat; ABG gets to wield its axe to whittle down a brand, and “Simon gets to keep its mall occupancy and anchor tenants in those malls.”

Still, the time is ripe for more moves. Older brands are continuing to stumble, and repo men are preparing for the almost certain fire sale. Who’s next? Some experts believe Sur La Table or even a mall staple like AMC theaters. “What happens if those [mall] tenants go under?” asked Kondrat. “Do you buy them too?”

Whoever it is, the billionaires are keeping an eye out. “We are certainly not done with the fallout,” said retail analyst Steve Dennis. “There are going to be incredibly great names and assets that are available at incredible prices.”