New York Times vs Buzzfeed
Buzzfeed, a company that has come to call itself a media operation instead of the social media distributor of clever lists, which it has been for several years, raised $50 mln, according to primary investor Andreessen Horowitz. According to several media reports, this values Buzzfeed at $1 bln, not far from the market cap of publicly traded The New York Times Company (NYSE: NYT), which sits at $1.9 bln. Many media experts expect the relative values of the two companies to reverse themselves soon. Buzzfeed, they would say, is growing rapidly and is the face of new media. The New York Times, on the other hand, is dying.
The Andreessen Horowitz rationale for the Buzzfeed investment is that BuzzFeed started out focusing on lightweight content like memes, lists, funny photos, etc. This led some industry observers to dismiss Buzzfeed as a “toy”. The company has since moved steadily up market, following the typical path of disruptive technologies. It now has an editorial staff of over 200 people covering a wide range of topics – politics, sports, business, entertainment, travel, etc – and plans to invest significantly more in high-quality content in the coming years.
Andreessen Horowitz’s partner Chris Dixon added: “BuzzFeed has technology at its core. Its 100+ person tech team has created world-class systems for analytics, advertising and content management. Engineers are first class citizens. Everything is built for mobile devices from the outset. Internet native formats like lists, tweets, pins, animated GIFs, etc. are treated as equals to older formats like photos, videos, and long form essays. BuzzFeed takes the internet and computer science seriously.”
Most critics say that the old media stalwart, The New York Times, has none of these things. It is not in the process of becoming serious journalism. It is one of serious journalism’s great stars. It would be hard to find a New York Times executive who prizes engineers above writers, reporters and editors.
So, at the traditional end of the serious journalist spectrum, The New York Times has been savaged. Its share price reached nearly $80 in April 1998, before broadband and Internet as we know it.
The stock trades at $12.50 now, after declining more than 20% this year. First among the reasons for the share price drop is the company’s earnings, which get worse every quarter. They were down 0.6% in the most recently reported quarter to $389 mln. The only contributor to the steadiness was the sale of digital subscriptions. They rose 32,000 from the period before to 831,000. The figure is impressive, but the growth rate has slowed from when the products were released. And digital advertising, which was supposed to be the New York Times’ salvation, grew only 3.4% to $41.5 mln, a growth rate that cannot offset the collapse in print advertising.
On the other hand, Dixon claims that Buzzfeed will produce “triple digit” revenues this year, which could be anything from $100 mln to $999 mln. And the company will be profitable. Presumably, its growth rate is spectacular, or Andreessen Horowitz would not have invested at all.
It is difficult to say how large Buzzfeed’s audience is compared to The New York Times sites. Chris Dixon says Buzzfeed reaches 150 mln a month. Industry audience measurement gold standard comScore reports that Buzzfeed has 26 mln unique visitors on desktops in the U.S. to The New York Times’ 31.8 mln. Buzzfeed’s audience has substantial reach beyond desktops to tablets and smartphones, so maybe Dixon is right about his 150 mln.
Even if Buzzfeed remains a jumble of simple lists, it is a jumble tens of millions of people want to read in much greater and greater numbers. Unfortunately, The New York Times is moving in the opposite direction.