The Atlantic is seeing surging subscriptions and has a billionaire backer, yet it's still cutting 17% of staff. Here's what it means.
- The Atlantic just laid off 17% of its staff after seeming to be doing everything right as a modern publisher, with a diversified business and billionaire backer in Laurene Powell Jobs.
- But recent subscription gains came too late and weren't enough to offset deep declines in its advertising and events business.
- The situation also shows the limitations of billionaire patrons to rescue journalism.
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Its coverage of the pandemic has been widely considered some of the best out there.
Yet it still had to lay off 68 people, or 17% of its employees.
"We have signed up more than 90,000 new subscribers since March. But these crucial gains have not forestalled abrupt and dramatic losses in our advertising and live events businesses," the company said on Thursday.
The pandemic has turned entire industries such as travel, tourism, and restaurants on their head. Companies that had shaky businesses before are now even more at risk.
But the cruelty is that even things that were an advantage before are suddenly a cause for vulnerability. That's exactly the case The Atlantic found itself in with live events.
When every publisher was trying to diversify away from advertising, The Atlantic was the one to emulate. Its events business has accounted for fully one-fifth of its revenue.
Its highbrow Aspen Ideas Festival was the biggest and most famous, but The Atlantic, aware of the demand for smaller, more accessible ones and the need to stay ahead of the growing number of events put on by competitors, had started putting on smaller ones, shaking up the format, and increasing their entertainment value. At one point, back in 2014, I wrote, it was putting on some 125 events a year. That revenue evaporated when the coronavirus forced live events to be canceled.
The Atlantic also depends on digital advertising, and like countless other media outlets, saw that revenue tumble in the wake of the pandemic.
What about its vaunted subscription growth? The Atlantic launched an online paywall in September, and it boasted of adding nearly 170,000 new subscribers since. But The Atlantic's paywall was delayed by 18 months, while other news publications sprinted ahead. All that made it a somewhat tough sell when readers are already getting tapped out by paywalls popping up on other news and culture sites like Slate, The New Yorker, and, yes, Business Insider.
And at $50 a year at the low end, those digital subscriptions were a fraction of the revenue The Atlantic made from advertising.
The Atlantic had invested heavily in the paywall — it had been profitable until recently, when it went on an 80-person hiring spree, with many of the new hires to support that effort. Then pandemic struck and decimated other parts of The Atlantic's business.
The staff cuts set back The Atlantic roughly to its pre-expansion level, when headcount stood at about 330 people.
Then there's the billionaire issue. Surely Jobs could have bailed out the company, right? But this example also shows the risk of publishers depending on billionaire funders lately, like Marc and Lynne Benioff (Time) and Dr. Patrick Soon-Shiong (the Los Angeles Times) to save them. Even civic-minded publishing patrons that start out with good intentions can lose interest or have limits to their support.
We don't know what Jobs' thought process was about the current situation. But in the past, she's made clear the publication wouldn't be a charity case and that she expected it to become viable.
Every funding model for journalism, whether it's advertising, readers, philanthropy, or billionaires, has its critics and limits. This case shows clearly the limits of the last.
Other models are working at companies like The New York Times, with more than 5 million subscribers carrying the company, IAC's Dotdash, which built a profitable business on evergreen content, and Complex Networks, which has intellectual property it monetizes in a variety of ways. The Atlantic's plight doesn't mean all media outlets are doomed.
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Source
https://www.businessinsider.com/the-atlantic-cut-20-of-staff-despite-subscriptions-growth-analysis-2020-5?IR=T
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