A version of this annual memo was originally distributed to employees at BuzzFeed.
I’m writing my annual year-end memo to share thoughts on the huge shifts that are happening in the tech and media industries and the important role BuzzFeed will play in the coming year. As always, much of what is contained here I’ve learned from working with you, my talented colleagues at BuzzFeed, who teach me and challenge me every day.
During this election cycle in the U.S., but also in other countries around the world, the public was informed by social media platforms filled with user-generated content, fake news, low-cost and sensationalistic aggregators running sketchy ad arbitrage schemes, partisan hacks and political actors, and the opinions of poorly informed celebrities, internet trolls, and candidates themselves going "direct to consumer" with misleading information and unchecked lies. This is bad for democracy, dangerous for the world, and urgently important to fix.
At a fundamental level, these problems are symptoms of a wider shift in the economics of the media industry. Print revenue is decelerating at a rapid pace, cable subscriptions and TV ratings are starting to decrease even for live sports, and traditional media businesses are at various stages of a terrifying decline. Audiences are moving to more innovative, modern platforms created by tech companies in California like Google, Facebook and Snap. Meanwhile, media companies have been much too slow to shift to digital; they’ve clung to print and broadcast, even when it was clear audiences are moving elsewhere. This means the budgets for quality journalism are focused on the wrong places, creating a void that is filled by the cheapest possible content, often from questionable sources. The attention has moved, but the content-creation resources mostly haven’t.
The problem isn’t just affecting news. The entertainment industry has also been too slow to shift to digital, resulting in a lack of compelling storytelling on digital platforms. The vast majority of the budgets in the entertainment industry are focused on declining traditional platforms like linear television and cable. That wealth of creative expression needs to be redeployed to digital networks, where creative people can connect more closely with massive audiences and where it is possible to directly serve more diverse audiences as well as for people to share media with those who matter in their lives. Social platforms are reaching more people and having a bigger impact, but they are still not taken seriously by the biggest media companies with the most resources to invest, and this is limiting our collective creative culture.
We’ve seen the same thing in the advertising industry with television ads featuring celebrities, multimillion-dollar ad production budgets, and distribution through expensive TV campaigns, while the internet is still filled with poorly designed ads for teeth whitening, reverse mortgage pitches, and questionable fat-burning supplements. Attention has shifted to the web, but the ad industry still treats it as second rate, not deserving of the the care, attention, and creativity they reserve for other platforms. This creates a drain on the entire system by weakening the economics of digital content, making it even harder to support quality journalism and compelling entertainment. In fact, the ad industry’s slowness to shift to digital is at the root of the problems faced by news and entertainment. Social platforms can only optimize the content uploaded to their services, and when there isn't a solid business model for content, the void is filled with fake news, cheap entertainment, and deceptive ads.
Despite these problems and a challenging period of transition, the future opportunities for the media industry are gigantic. The global scale of “social” and “mobile” is almost unimaginably vast. Literally billions of people are accessing content on their smartphones, billions use social services, and the content these people are consuming hasn’t yet reached the full potential of the medium. Articles and text often mimic print formats from decades ago, video mimics tired TV conventions, and many ads still look like repurposed banners. The content and creative ideas that made sense in traditional media are being awkwardly ported to social and mobile. This means our industry has a tremendous opportunity to invent the future of content on social and mobile platforms. We can pioneer new creative practices, new formats, and better experiences for audiences. And our work will be seen by the biggest addressable audience ever assembled.
BuzzFeed is positioned to lead the industry forward and help the world catch up to the digital future. As the leading independent, pure digital media company, we've shown we can build a great business by embracing the internet instead of fighting it. We reach over 500 million people around the world with our content; our revenue grew over 65 percent this year continuing a trend of 25 quarters in a row of double-digit year-over-year revenue growth; we have prizewinning journalists around the world breaking important stories with major impact; we operate as a venture-backed tech startup with engineers and data scientists giving us advantages traditional media companies can’t match; and we create much of the most popular and compelling content on Facebook, YouTube, Snapchat and other digital platforms.
Along this journey, we’ve created new business models for news, entertainment, and advertising. Earlier memos describe how we’ve grown with a vertically integrated model, expanded into video, mobile, and international, learned from media history, evolved into a network-integrated model, and embraced a cross-platform, global approach — and these strategies have served us well. In less analytical terms, we’ve thrived because of our enduring love of the internet. The romance started with cute animals, funny memes, and viral videos; it expanded to lists, quizzes, and “slidy things”; it blossomed into internet news, political scoops, investigative reporting, and election livestreams; and it cascaded into Tasty videos, exploding watermelons, and dozens of web shows with large and dedicated online followings.
The internet is incredibly good at unlocking the true preferences of consumers. Companies that fully embrace the internet are able to serve their customers better, grow faster, and have a bigger impact on the world. This isn't just important for us as a business, it is essential to culture, creative expression and democracy; it will help assure that quality news and entertainment thrive in places where audiences spend their time; and it will help us champion values that should be protected within our company and beyond: Diversity, equality, creative and journalistic freedom, accuracy, accountability, and transparency. As we continue to learn from the internet, I want to pause to look back at what the internet has taught us so far. Let's start at the very beginning, before digital media. Unfortunately this is how most big media companies still work today:
The biggest media companies spend many millions of dollars to make a TV show or movie or magazine, then they push that expensive piece of media through many distribution channels, and everyone in the audience experiences the same thing.
Next came early digital media companies, like Slate, Salon, Yahoo, and video companies like Vimeo and YouTube that took advantage of the internet to 1) distribute content instantly, 2) make entire archives of content available on demand, and 3) distribute content globally without operations in every country. These benefits solved huge problems for consumers: They could get content instantly; the distribution costs were lower than physical media, which enabled ubiquitous, free, ad-supported content; they could get the best stuff on demand from deep in the archives; and they could access content from companies based all around the world. Consumers got a “world wide web” instead of just whatever TV shows, newspapers, and magazines happened to be available in their hometown.
Next, companies realized that instead of just pushing the same content out to a massive audience, they could see how their audiences use it and learn about their preferences. The front-page editor can see which headlines are getting clicked, the video producer can see which videos are getting watched, the quiz author can see which results are most popular, and everyone can see the stream of comments, reactions, likes, and hearts. This flood of feedback directly and indirectly influences what content creators make next, like a stand-up comic reworking jokes based on how the audience laughed or a live musician learning from many shows the best way to get the crowd dancing. Media could function like a live show with audience feedback, but at massive global scale.
Many of the early digital players, like YouTube, became data-obsessed and built tools and algorithms based on user data. Netflix has taken this approach by focusing on recommending shows based on your viewing habits, and buying shows and commissioning “Originals” based in part on audience data. Although YouTube and Netflix started with digital advantages based on cheap, on-demand distribution, they soon realized the audience data and two-way connection has become a key competitive advantage. This dynamic feedback is impossible in print and broadcast — it is a clear example of another “digital advantage,” not possible in traditional media.
At this point, even with all this data and personalization, the industry was still thinking of audiences as a collection of isolated individuals. Then came social media, and we weren’t alone anymore.
The emergence of social media initiated the convergence of content and communication. Content wasn’t just being consumed for informational value; it became a way for people to connect with other people in their lives. This opened up the possibility of building a more intimate connection with audiences. The relationship between a media company and its audience will never be as intimate or meaningful as the relationship between two friends or two family members — but a media company can facilitate deeper connections than ever before if it can make content that the audiences can use to connect with each other.
This is why BuzzFeed has always focused on making content people share. Sharing is the clearest metric for showing that media is creating a social connection between people. It is why we obsess about “share statements,” or what people say when they share our content. It explains why we carefully study the exchange of value that occurs when sharing happens: What is the value for the person who shares? What is the value for the person who receives? And what does the activity mean for the bond they share with each other? Understanding the inherently social nature of media is one of the biggest “digital advantages.” But despite the rise of social media and the growth of BuzzFeed, it will still take years until most of the industry fully understands.
In the meantime, many of the most exciting trends in media are linked directly or indirectly to the importance of media facilitating social connection. It explains the traditional studios’ focus on “tentpole”- and “event”-based movies that bring people together, the reliance on franchises deeply connected to fandoms, the growing importance of live events that let people share moments, the growth of BuzzFeed, and the explosion of time spent on social platforms like Facebook, Snapchat and messaging apps. The most powerful media connects people, and people much prefer being connected than being alone.
To recap, each of these digital advantages unlocked benefits for consumers:
- Instant access to fresh content
- On-demand access to entire media libraries
- Nearly free distribution enabling many free ad-supported services
- Global distribution providing access to content from every market
- Data about audiences allowing personalization and customization of content experience
- A feedback loop between audiences and content creators making media production more dynamic and responsive
- Social experiences where people can use content to communicate and connect with the people who matter to them and weave media into their daily lives
We should always be asking ourselves: How can we more fully align our activities with 1–7? How can we push these digital advantages even further? And how can we search for additional digital advantages that haven’t emerged yet?
Perhaps you are working on BuzzFeed News: How might your work have a bigger global impact (#4) and provoke more discussion (#7)? Perhaps you are on the Tasty team: How can you provide better access to the entire Tasty library (#2) and get interesting recipe ideas through interacting with our audience (#6)? You might work on the advertising team making branded content that could be distributed even more frequently and rapidly (#1) and be even more personalized and targeted (#5). Or maybe you are making a show like “Broke,” “Violet,” “Try Guys,” “Unsolved” or “Worth It,” and you can combine all seven advantages by creating something available instantly, with all past episodes on demand, distributed for free around the world, with unique data on your audience’s preferences, a creative feedback loop that lets you learn from each episode to improve the next one, and social distribution that helps a rabid fanbase connect with the people who matter in their lives. Or you might work on BuzzFeed’s tech, product, or data science teams, where you are building the tools and technology for each of the examples above, helping to make this entire system work, and creating the core architecture that lets a next-generation media company take full advantage of the internet. The point is we are just getting started, and there is much more we can do to push these digital advantages further.
As a company, we’ve continually made decisions embracing the internet, both because we love it and because it is the best business strategy. It will take decades for analog print and broadcast to decline, and TV will continue to be very profitable for many years, but in the long run, the internet will win. In the long run, the internet always wins. This is why we take such a long-term perspective at BuzzFeed: We know we need to be patient for the “digital advantages” to fully prevail, and it’s why we’ve raised so much capital, so we have the luxury to be patient through ups and downs along the way. This is why we’ve expanded internationally to grow our content’s global reach. It explains why we’ve remained independent despite acquisition interest in us and consolidation in our industry. It is why we are partnering with NBCU instead of getting into the traditional media business ourselves. It is why we’ve hired talented generalists and entrepreneurial employees who care about connecting with people and inventing new formats and approaches. It is why we’ve continually launched new initiatives like Tasty or the Product Lab to extend digital advantages to new categories. We are building this company together, for the long term, in a way that maximizes the power of “digital advantages” and allows all of us to do work that has the biggest possible impact.
In the new year, I’ll be meeting with every team at the company to discuss how we can apply these digital advantages to the work we are doing. Every individual and team at BuzzFeed should have the ability to entrepreneurially pursue these digital advantages. I know we can find more ways to use the internet to build an even closer relationship with our massive global audience and help that audience connect with one another. Looking forward to seeing you soon!
Finally, I want to thank you for your hard work, creativity, and intelligence: You are why we’ve gotten this far, and I can’t wait to see what you will create next. The work you do matters more than ever, the stakes are higher, and the responsibility bigger. I know we will rise to the challenge and do big things together in the coming year that help the entire media industry adjust to the rapid, destabilizing shifts in the world.
It is such a pleasure and privilege to be on this journey with all of you!
Jonah Peretti is the founder and CEO of BuzzFeed, the social news and entertainment company that provides a pioneering mix of breaking news, entertainment and shareable content. After co-founding The Huffington Post in 2005, he launched BuzzFeed in 2006 as an experimental lab that focused on tracking viral content and making things people wanted to share. Before BuzzFeed, Peretti experimented with viral projects and studied how information and ideas spread through the web. A graduate of the MIT Media Lab, he has taught at NYU and the Parsons School of Design. Reach him @peretti.
This article originally appeared on Recode.net.