A Big, Bad Day For Media Layoffs

Plus: Canada steals America’s subsidized Fahrvergnügen ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

April 21, 2023

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TOGETHER WITH

Good morning and happy Friday.

Elon Musk no doubt woke up Friday with a deeply harshed mellow.

The morning after Tesla earnings revealed that Elon’s EV-maker saw net income fall 24% since last year, Musk’s biggest space rocket yet, at 394 feet tall, exploded shortly after liftoff on Thursday morning in what SpaceX described as a “rapid unscheduled disassembly.” As Tesla’s stock price fell with the wreckage of his spaceship, Musk might have felt the need to lash out, and haters think that’s just what he did when Twitter stripped users of their beloved blue check marks later in the day. But that’s a little unfair. Even if Elon did perhaps find time to partake in yesterday’s 4/20 celebrations, the plan to remove all those social media badges of honor was put in place well before World Marijuana Day.

Morning Brief

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Digital media bloodbath.

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Google’s AI fever spreads to its ads business.

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Volkswagen says “Oh, Canada!”

Media

Layoffs Come for BuzzFeed, Insider Newsrooms

The digital media doom loop continues apace.

Thursday delivered a double-whammy of bad news: the Axel Springer-owned Insider (formerly Business Insider) announced it was laying off 10% of its US newsroom staff, while BuzzFeed decided to shutter its entire Pulitzer and National Magazine Award-winning BuzzFeed News division.

What’s New is Old

The end of BuzzFeed News marks the end of an era for so-called New Media — one in which optimism reigned that social networks could be harnessed to tap a massive audience base. BuzzFeed rode that bullishness to extraordinary heights, raising nearly $700 million through 10 funding rounds and, at one point, reaching a valuation of $1.5 billion, according to CrunchBase. But relying on social media giants is a fickle game (may we invoke “pivot to video”?). BuzzFeed did manage to stumble into an IPO, unlike digital peers Vice and Vox, riding the SPAC wave in December 2021. But Buzzfeed’s share price is now down some 90% from its high-water mark, and closed Thursday trading well under a dollar.

Insider, meanwhile, has been living a much different, though no-less challenging life in the digital media world: that of a single piece in Axel Springer’s massive consolidated media empire (and Axel Springer itself is a subsidiary of private equity giant KKR). But scale hasn’t equaled success. Layoffs already hit Insider’s Axel Springer compatriots, including a 14% headcount culling at newsletter Morning Brew last month and the shuttering of Politico’s tech-focused sister site Protocol late last year.

Despite their different paths, management at both outlets were singing remarkably similar tunes on Thursday:

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“The economic headwinds that have hurt many of our clients and partners are also affecting us,” Barbara Peng, the president of Insider, Inc., wrote in an email to staff first reported by The Daily Beast. “Unfortunately, to keep our company healthy and competitive, we need to reduce the size of our team. ” Around 100 positions across departments will be eliminated in the cuts.

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BuzzFeed CEO/founder Jonah Peretti told staff he was “slow to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media” and that the layoffs are “clearly a massive failure on my part.”

BuzzFeed’s revenue chief Edgar Hernandez and operating chief Christian Baesler are exiting the company amid the layoffs, while Peretti told staff he is staying on as CEO, despite his massive failure.

Front Page News: It’s not just digital media players either. Also this week, the McClatchy-owned Miami Herald suffered a wave of layoffs, and sources told CNBC that ESPN is preparing for its own layoff wave. Meanwhile, NPR laid off some 10% of its staff in March, and the Jeff Bezos-owned Washington Post slashed 20 staffers in January. Ouch.

– Brian Boyle

Tech

Google Tells Advertisers AI Can Make Campaigns For Them

Google wants its ChatGPT rival to be an AI Don Draper.

According to a presentation for advertisers viewed by the Financial Times, Google is pitching AI-generated ad campaigns. Whether advertisers will put their faith in it remains to be seen. Obviously, Google does not and never will possess Draper’s flair for mixing an Old Fashioned, because who does?

If You Don’t Like What’s Being Said, Change The Prompts

Google was beaten to the punch by Microsoft-backed OpenAI debuting ChatGPT to the public, and then Google rushed its own Bard product to market in a halting bid to keep its search engine down with the kids. But now it’s trying to bounce back by applying Bard to its gigantic digital ad business. In the presentation viewed by the FT, Google tells advertisers they can plug in creative assets like ad copy and visuals into the machine and voilà: an ad campaign.

The big question is if advertisers will trust Bard to accurately represent their products. One source told the FT that they’re definitely worried:

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“It is optimized to convert new customers and has no idea what the truth is,” the source told the FT. Google told the paper it would put up strict guardrails to stop the tech from going seriously off-piste.

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A report from Bloomberg this week suggests Googlers themselves do not have a ton of faith in the product, both ethically and functionally. According to Bloomberg, ahead of Bard’s February public launch, one employee posted internally saying: “Bard is worse than useless: please do not launch.”

It’s hard enough deciding whether to put your faith in the hands of a chatbot, but what about a billionaire whose whole brand is unpredictability? Elon Musk attended a marketing conference this week in a bid to court advertisers back to Twitter. Musk said he wants to achieve “a sensible middle ground” between letting the twittersphere say what it wants and making it a place where advertisers don’t have to worry about their ads appearing next to… dicey content.

Battle Royale: Musk dangled the possibility of legal action against Microsoft after the company announced it’s removing Twitter from its advertising platform, meaning advertisers using its Smart Campaigns product won’t be able to tweet or otherwise move within the twittersphere. The exodus comes after Twitter changed its rules to force large enterprise customers like Microsoft to pay at least $42,000 per month.

– Isobel Asher Hamilton

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Manufacturing

Canada Matches US Subsidies to Land Volkswagen Gigafactory

(Photo Credit: Julian Hochgesang/Unsplash)

Sounds like the Great White North just cut a great big trade deal, eh?

On Thursday, Canada finalized a deal to provide what could total more than C$13 billion in government subsidies over the next decade to help fund a Volkswagen EV battery gigafactory in Ontario. It will be the German car company’s first outside of Europe, and also a major indication that other nations are willing to go toe-to-toe with Joe Biden’s Inflation Reduction Act.

Not the Only Game in Town

Last year, Congress passed the IRA to provide $370 billion for clean energy production and green manufacturing in the US. While that is a lot of money, if the demand is there, the government could dump even more funds into the initiative. This possibility has countries around the world – most of them US trade allies – pulling at their collars, trying to find ways to provide similar subsidies to tech and industrial companies or risk falling behind in the Green Revolution economy.

At one point, VW was reportedly eyeing Oklahoma as the site for their new factory, but decided to go with Canada, once it matched the subsidies the US would have provided for a taste of American-made Fahrvergnügen:

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The gigafactory will be roughly the size of 350 American football fields – sorry, make that about 1,000 hockey rinks – and will cost about C$7 billion to build. The plant will be located in the city of St. Thomas, a Loony’s throw from America’s own Motor City, Detroit. The VW plant will potentially create thousands of new Canadian jobs.

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Even though the government has set aside more than C$13 billion for the project, Bloomberg reported that the contract stipulates Canada’s production subsidies will stay in place only as long as the IRA is in force. If the US reduces its incentives for clean manufacturing, Canada’s will go down as well.

“You have to look at what others are doing, and particularly in our case, what the US is doing,” industry minister François-Philippe Champagne told Bloomberg. “What’s the cost of inaction?”

How much is too much? While Prime Minister Justin Trudeau and Champagne see this as a huge win for Canada, some officials fear the government is putting too much pressure on itself to keep up with the US. Conservative Leader Pierre Poilievre tweeted, “This money belongs to Canadians. Not to a foreign corporation. Not to Justin Trudeau.” And at a speech in Washington last month Finance Minister Chrystia Freeland praised the IRA’s goals but said such an enormous reliance on the tax base could leave the US and other countries in a “race to the bottom.”

– Griffin Kelly

Extra Upside

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Humble folks without temptation: Paramount sues Warner Bros. for $52 million over ‘South Park’ streaming rights.

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Expect more meatballs: Ikea will open new stores in $2 billion US push.

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