New York Times Vs. Buzzfeed

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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 million, according to primary investor Andreessen Horowitz. According to several media reports, this values Buzzfeed at $1 billion, not far shy from the market cap of publicly traded The New York Times Company (NYSE: NYT), which sits at $1.9 billion. 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 went on to say:

BuzzFeed has technology at its core. Its 100+ person tech team has created world-class systems for analytics, advertising, and content management. Engineers are 1st 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 almost every quarter. They were down 0.6% in the most recently reported quarter to $389 million. 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 million, a growth rate that cannot offset the collapse in print advertising.

On the other hand, Dixon claims that Buzzfeed will produce “tripled digit” revenues this year, which could be anything from $100 million to $999 million. 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 million a month. Industry audience measurement gold standard comScore reports that Buzzfeed has 26 million unique visitors on desktops in the U.S. to The New York Times’ 31.8 million. Buzzfeed’s audience has substantial reach beyond desktops to tablets and smartphones, so maybe Dixon is right about his 150 million.

The New York Times media reported that David Carr recently wrote an obituary for print media companies, which include his own:

Setting aside the brave rhetoric — as one should — about the opportunity for a “renewed focus on print,” those stand-alone print companies are sailing into very tall waves. Even strong national newspapers like The Wall Street Journal and The New York Times are struggling to meet Wall Street’s demands for growth; the regional newspapers that make up most of the now-independent publishing divisions have a much grimmer outlook.

Carr went on to describe the ongoing layoffs at large print companies. What he did not say is that, based on his analysis of the industry, The New York Times is likely to go through a round or more of layoffs, following those it has already done.

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.