Commentary

BuzzFeed's Woes Highlight Lopsided Economics Of User-Generated Content

News of job cuts at BuzzFeed and HuffPost – two of the few top pure-play digital media companies ranked by Comscore – has rattled the publishing industry and revealed many interesting insightsabout its economics.

The simple lesson is that publishers need to give readers a reason to spend more time with value-added news and information, and not with freely available user-generated content, the essence of social media.

Matthew Perpetua, BuzzFeed’s director of quizzes until getting cut this week, discussed these market dynamics in a blog post. “In the recent past, the second-highest traffic driver worldwide has been a community user in Michigan, a teenager in college who, for some reason, makes dozens of quizzes every week.”

That’s right, a volunteer who has nothing better to do on campus than to write quizzes like “Which Pop Diva Are You?” or “Would a Teen Think You’re Cool?” is a web-traffic genius. Call me old-fashioned, but don't college students have anything better to do, like going to keg parties or smoking tons of weed?

Anyone who is competing with volunteers for their very professional existence needs to re-think whether they want to be in the business of creating content.

Unfortunately, much of the media industry faces a similar existential threat because it’s competing with platforms like Facebook and Google that don’t have to pay for content. They’re all in the business of seeking the limited attention of media consumers, many unmoved by news and information about anything outside their immediate social circle.

Facebook peddles in people’s pictures of vacations, pets and grandkids — emotional pull is far greater than most professionally produced content. Smartphones level the playing field, letting consumers swipe past important, award-winning journalism as quickly as they scan pictures and posts from family and friends.

Google search results consistently point straight to Wikipedia, the online encyclopedia written mostly by volunteers. Google.org, the search giant’s charitable unit, has made token donations to the nonprofit Wikimedia Endowment and supplied technical support over the years. Google likely gets far more value from Wikipedia and its volunteers than any other company.

For advertisers, the key disadvantage to user-generated content is brand safety. Facebook, Twitter and Google's YouTube have had to put more time and money into policing content with algorithms and teams of human monitors.  

BuzzFeed also devoted company resources that added value to platforms like Facebook and YouTube, as New York's Brian Feldman writes this week. But those platforms don’t care whether BuzzFeed supplies the content or millions of unpaid people do.

“It’s kinda amazing how much revenue-generating traffic the site gets from unpaid community volunteers,” former BuzzFeed employee Perpetua wrote in his blog. “So, in a ruthless capitalist way, it makes sense for the company to pivot to having community users create almost all of the quizzes going forward. I understand math. I get it.”

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