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So, I took a deeper read of WWD's excellent article on Fusion. Two non-obvious things that were pretty important wwd.com/business-news/media/fusion-faces-new-reality-10736936/ ...Permalink On twitter.com
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1. The strong indicator that biz side believes journalist salaries have a ceiling and that ceiling is below what Fusion was paying.Permalink On twitter.com
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Followed by a strong indication, right or wrong, journalists tend to eat their own when strong signs of income inequality are obvious.Permalink On twitter.com
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The question of how much should journalists be paid is likely the number one issue dealing with the merge of Fusion and Gizmodo...Permalink On twitter.com
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In that the labor protections of unionized journalists are almost certainly the reason why Fusion's employees were hit hard.Permalink On twitter.com
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What this leads to is unclear. Journalists will likely see increasing salary pressure at an asymmetric rate. Good argument to unionize.Permalink On twitter.com
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2. That, putting aside the programmatic market, the direct sales market is shrinking. I've not seen numbers on this but...Permalink On twitter.com
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... the statements here, the centralization of the sales team, the events at Medium, all seem to indicate that...Permalink On twitter.com
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... companies under a decade old are unable to make significant strides in entering direct sales as a strategy. This is troubling...Permalink On twitter.com
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Because almost every news startup pitch focuses on branded content and direct sales as a differentiator.Permalink On twitter.com
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If that market is not just shrinking, but actively resisting entry, and resisting programatic has become a news startup trend...Permalink On twitter.com
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How are the young cool media companies on the block making money?Permalink On twitter.com
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I'm sure there are some shortcuts a smart company could take. But these types of moves are resisted as too uncool for these media startups:Permalink On twitter.com
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Engage fully in promoting and making PR heroes out of good sales people in the same way they do journalistsPermalink On twitter.com
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Or Competitively hire good direct sales people who have full rolodexes away from large old media companies.Permalink On twitter.com
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But media is ideologically opposed to giving sales the level of respect required to do either of these things. A bias carried to newbiesPermalink On twitter.com
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Conclusions: 1. asymmetric digital media labor unionization will lead to bad times for the un-unionized and increase stability for unionizedPermalink On twitter.com
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It is also likely to shrink the market but the market was bubbled so it's going to suck but be better for the industry long term :(Permalink On twitter.com
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(Not a criticism of unionization of labor I support it. What this indicates is that digital media workers are near criminally underpaid)Permalink On twitter.com
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(As I've noted before, the aspect startups tend to optimize their profits around is exploitation of labor, free & underpaid...Permalink On twitter.com
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... Because startups are built around essentially abusing labor, taking that away from them will cause them to collapse. Arguably a net goodPermalink On twitter.com
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but because these startups have no real business plan other than cutting worker costs, employment will be less available.)On twitter.com
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2. New digital pubs (say Vox) pushing direct sales, at least those with the same content profile as Fusion, are likely in serious trouble.Permalink On twitter.com
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Whatever they are saying about sponsored content, etc... if the direct sales market is shrinking and/or resistant to new entries?Permalink On twitter.com
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There is unlikely to be a sudden inflection point where these properties suddenly have enough traffic to make a difference.Permalink On twitter.com
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And if they are (for good reason) resistant to programatic, then their choices become betraying their intent or collapse. Likely:Permalink On twitter.com
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What we'll see soon is new media startups first betraying their intent, then dropping quality and finally collapse, one after another.Permalink On twitter.com
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Obviously a lot of guessing here based on company statements, but these seem to be issues increasingly worth speculating on.Permalink On twitter.com
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So props to kbsmoke for writing a great article with lots of red meat to sink our teeth into. wwd.com/business-news/media/fusion-faces-new-reality-10736936/Permalink On twitter.com
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