The pinch gets felt at Gawker towers…

Just had a wander over to Gawker and was sad to see this:

Yes, it’s true: Gawker’s sibling sites are laying off 19 people. This site is one of those that will be expanding. The internal memo is after the jump. Gabriel Snyder of W magazine will indeed be replacing me as managing editor and we are hiring two more reporters in short order. But it’s generally a miserable day. I’ll answer as many questions as I can in the comments.

• Gawker Media Cuts Jobs, Suspends Bonuses [Portfolio]
• Denton Shuffles Deck: Hires Snyder as M.E. of Gawker; Moe Tkacik Let Go [New York Observer]
• Black Friday At Gawker Media: 19 Layoffs at Blog Network [Alley Insider]
• April 2008: Nick Denton Shrinking Gawker Media, Ditching Three Sites [Alley Insider]
• July 2006: A Blog Mogul Turns Bearish on Blogs [New York Times]

I have some bad news. Here’s the heart of it: we are cutting 19 of our 133 editorial positions and suspending bonus payments at the start of next year. With the savings, we are increasing base pay and hiring 10 new people on the most commercially successful Gawker sites. But I
know that’s scant consolation for the colleagues we’re losing and for those of you who have been enjoying the bonus windfalls from breakout stories.

You can guess the reason for these brutal measures: the recession. Sure, the company is currently profitable and advertising sales are up by about 30% on their level of a year ago. Our biggest clients are consumer electronics and entertainment companies that are relatively
well insulated. And, yes, this is not the first time I’ve predicted doom: in July 2006, when we “battened down the hatches” and closed down Sploid and Screenhead; and in April this year, when we spun off Idolator, Gridskipper and Wonkette.

But now the credit crisis is clearly going to affect every sector of the economy. Advertising buys typically plunge after the Christmas shopping season, and 2009 is obviously going to be exceptionally difficult. We have to prepare for the worst, now, rather than when the worst comes upon us.

We never used to talk about the business side of the operation. Traffic was the only concern; my belief was that juicy news would draw the readers and the advertising would take care of itself. We were patient; even if it took four years for a site to develop the audience that finally registered with advertisers, we had the time. No longer. Sites such as Consumerist, whose success has been measured more in traffic and recognition than in revenue, now need to cover their costs. I can’t underline enough that this harsh commercial judgment is no reflection whatsoever on the editorial teams that are being cut.

Each of these sites performs a vital function. Consumerist provides an outlet for disgruntled consumers that exists nowhere else on the web; Valleywag has given puffed-up Silicon Valley the prick it’s long needed; and Fleshbot manages to be classy and filthy at the same time.
The site leads and writers on all of our sites have done exactly what we asked them to: work harder than the competition and grow the audience. It’s my commercial judgment that’s been at fault.

One reason we’re eliminating these positions is to reinforce the teams on the sites with the most commercial appeal—Gizmodo, Kotaku, Lifehacker and Gawker—and the properties such as Jezebel, io9, Deadspin and Jalopnik which are poised to join them.

One new recruit we’re confirming today is Gabriel Snyder from W Magazine in Los Angeles who, as managing editor of Gawker.com, will continue the site’s evolution into a national news and entertainment site. We are also hiring new contributors at Jezebel, Deadspin, Kotaku and io9.

Even in the growing editorial teams we need to control costs. And that means a new look at traffic bonuses. We’ve been spending $50,000 a month on average on pageview bonuses. The scheme has made writers hustle for traffic even in teams so large that there was a risk they
become lumbering. It’s helped us hit a record 274m pageviews last month, up 69% on last September.

Pageview bonuses will continue this quarter. And we are committed to pageview incentives, and to measuring performance by a writer individual pageviews, in the long term. But a first quarter spike in traffic — and the resulting bonus payments — could be dangerous if advertising markets are troubled next year. And we’re assuming that the economy is so volatile that most of you would like a little bit more predictability about your own income.

That’s why we’re suspending the pageview bonus for the first quarter at least, but making up for some of the loss of income by raising pay. If you haven’t recently agreed to a new rate, your monthly base amount will automatically be increased by 5% in January.

The news about the job and bonus cuts will be demoralizing. The golden age of the blog is over, people will say. Gawker Media is behaving like those big media companies that we mock so easily. I could come up with some bullshit line about how much worse it would have been to
wait until we were forced to control costs; or how much more unpleasant life will be at the many internet ventures and newspapers that won’t make it through the downturn. I could give you my optimistic spin about the glorious future that awaits us on the far side of this downturn.

But there is no escaping the fact that we’re losing some excellent colleagues and the environment next year will be bleak. The one consolation is that there will be plenty of news for us to break — starting with this email, which you are free to leak.

You might not be au fait with Gawker, even if you’ve been a user of their network. For the unaware, let me give you an idea: if you’ve ever caught up with US political gossip using Wonkette, or found a workaround using Lifehacker, you owe Gawker. If you keep up with the world using the delightful Jezebel (see, there IS a way of doing that without being totally joyless) or indulge your sci-fi love with io9, you’ve got Gawker to thank. Hell, if you’re looking for, shall we say ‘adult’, entertainment over the net they’ve got something for you. They do a bunch of other stuff as well, but I guess you can take what’s listed here as a quick insight into my RSS toolbar…

In any case, the important thing, the thing I love most about the Gawker network, is that it offers a viable alternative model to the MSM. What started as a single blog about celebrity antics and media in New York has evolved into a fully functioning, comprehensive media outlet. You’ve got your sports, you’ve got your hints and tips, politics, porn, consumer advocacy – there’s so little that’s not covered. Better still, because each blog has a dedicated staff (and a seemingly endless pool of enthusiastic and quite brilliant interns), you get much, much more bang for your buck then you get with the MSM. Being online, with no limits on space, means that the coverage is far more comprehensive. I’ve never actually tested whether you can spend twenty-four hours on the network, excluding archives, without reading the same piece twice – but I’d be willing to bet money that you could.

Don’t get me wrong, I’m well aware that the big players in the MSM aren’t just sticking to one format or outlet. That would make no kind of business sense at all.  To my mind though, Gawker trumps more traditional outlets in two main ways:

1. As mentioned above, capacity for stories is limited only by the size of the workforce and the work-ethic of those who comprise it.

2. There’s something unmistakably open source about the whole enterprise. This is the real genius, and I’m afraid that my analysis probably won’t do it justice (I should really plan out these big posts before I start them). Bear with me…

If you think of the internet, or indeed the world at large, as a huge ocean with bits of information bobbing up and down in it then I think you can reasonably metaphorise media outlets as trawlers picking stuff up as they rove about.

The majority of these trawlers have restrictions on what they can pick up. Here’s an extreme, and theoretical example of what I’m talking about: suppose the Mail had a complete volte face in editorial policy on, say, immigration – suddenly you’ve got editorials saying that immigrants aren’t actually eating the Queen’s swans, articles suggesting it’s maybe time to let Diana rest… you get the idea. I’m guessing the response from the paper’s vast readership would start at non-plussed before very quickly morphing into anger and translating into dropped sales. The direct result of that would be the advertisers who bankroll the paper would start looking for somewhere else to hawk their carriage clocks…

In time, sure, it’s possible that the Mail would build a new readership, and use that to attract a new advertising base. That would take a while, however, and I’m not convinced they’d survive the interim. The same is true for any ad-funded media – editorial line set to agree with, rather than dramatically reshape, existing views in the target consumer. So far, so obvious.

Even in the case of media funded by the state there’s an insurmountable imperative to toe some kind of line. Take the BBC; while they have a theoretically untouchable funding stream the reality is that it’s a very precarious situation. A few years ago, the Beeb broadcast Jerry Springer: The Opera, sparking serious (if numerically insignificant) calls for the end of the license fee. Again, after the Hutton report into the death of Dr. David Kelly – which lay the majority of the blame at the feet of the broadcaster, there were questions asked about whether the public should continue funding such a scurrilous organisation. These and other examples suggest that there’s strict restrictions on supposed editorial freedom pretty much everywhere in the industry – if even the state broadcaster has to be careful about its output what hope is there for anyone else?

The internet has since its inception (and I think it’s fair to say that we’re still very much looking at the infancy of the net) been a haven from this kind of thing. Blogging is, to my mind, probably the purest form of media out there. Right now you’re reading Dedalus/Icarus – a media outlet operated, governed and serving me and me alone. It’s true that I have to abide by the loose rules set out by WordPress, but if at any point I found myself uncomfortable operating within those spacious limits I could easily switch to an alternative means of publication. There are, in any meaningful sense, no external controls on my output. As far as I can be said to have an editorial policy it can be summed up as ‘what I feel like writing about’ – and if my readers don’t like it, well ok. My traffic’ll die off, but I won’t be losing any sleep or money on the deal. Better yet (to return to my earlier metaphor) this trawler of mine can pick up whatever the hell it likes – if it’s on the internet I can link to it; the freedom is limitless.

Of course, this freedom and lack of structure has an adverse affect on consumer numbers – D/I is never going to be anyone’s first resource for information on, well, anything; but that’s a function of the way I choose to use the medium, and not an inherent problem with the format at all. The Gawker network was, as far as I can see, an elegant union of complete editorial freedom with the potential for mass impact. By uniting diverse subjects under a common, recognisable (but not intrusive) brand Gawker established itself as a great force in new media. If you liked Wonkette’s unabashedly left-wing political stance you could be reasonably sure that you’d get on with the parent site as well, and so both grew (to the point that Wonkette, along with Idolator and Gridskipper, could be profitably sold off earlier in 2008). Moreover, with limitless space and all of the internet to reference, this network of blogs could cover whatever they liked in whatever detail they thought appropriate. Returning to Wonkette – you’ve got links on there to Fox, to MSNBC, to white supremicist anti-Obama literature, to the Mudflats blog (currently one of WordPress’ fastest growing, but kind of dependant on the election of McCain-Palin to hold onto its stature in the long-term), to all kinds of places. The fact that all the right-wing links get mercilessly skewered, while the majority of left-wing ones are given good reviews, doesn’t actually matter: the point is that the site has a level of cross-referencing to other outlets that’s absolutely unprecedented in the MSM. Again, any blog can do that, but the genius of the Gawker model remains that they preserved that quintessentially small-fry ability even though they’d grown into a major media player.

Of course, to achieve that growth while sustaining quality required expansion of the team. In turn that’s dependent on money and the advertisers who buy it. I guess we should have seen the warning signs in Nick Denton (founder/owner of Gawker Media)’s April 14th memo announcing the sale of Wonkette, Idolator and Gridskipper. In that memo Denton, who as you can see from the announcement above is admirably straight-talking, didn’t skip around:

Why these three sites? To be blunt: they each had their editorial successes; but someone else will have better luck selling the advertising than we did.

That kind of honesty is rare in business, and I guess that the reporters, editors, and everyone else who works for Gawker Media should be thankful for having a boss who doesn’t duck the big issues (come on, he gave blessing to the leak of an internal memo! Who else does that?)

The news that Gawker Media is letting 19 staff go from its less commercially attractive sites, while adding ten staff to the more popular ones, is worrying because it suggests that the business model isn’t robust enough to withstand adverse economic conditions. Granted, the current economic conditions are particularly adverse, but it outright sucks that this has to happen. In the memo Denton mentions The Consumerist as a site that will now have to pull its weight in terms of revenue generation. The sad fact is, and I’m sure that this won’t escape anyone, that a site like Consumerist can’t pull its weight without drastically changing. No company is going to risk a big media buy on a site which is so uncompromising in its attacks on shoddy products. I hate to say it, but if I had to nominate a Gawker site most likely to be shut down in the next year, it’d be this excellent one.

None of this is the fault of management at Gawker; it’s a case of horrible circumstances undermining one of the only major bastions of editorial independence left. The Mails of this world have a business model which is fundamentally stable, but which ossifies journalistic endeavour and pushes an orthadoxy which will only ever change extremely gradually. What Gawker brought (brings) to the table is a model which is shakier, but which is fundamentally better for journalism and for the consumer. I just hope they’re able to adapt to reduced circumstances and fight through for better economic times, because the world needs them.