I wrote a book about the age of social news, and I won’t bore you with a lengthy postmortem of BuzzFeed News or a list of the mistakes we made along the way.
But Peretti is right: we, the internet generation, and our investors overestimated how big the business would get. We built a news division that gave us relevance to BuzzFeed at a cost we couldn’t justify, and we failed to create small, independent news businesses. Peretti is optimistic he can solve this problem with Huffington Post: “The Huffington Post was built as a front-page and a destination, and we were able to leverage our loyal readership to create a profitable business.”
But more broadly, his comments and Ramaswamy’s reflect a fundamental confusion of the news and media businesses. Indeed, news is a small and tough sector of the larger media business, but its influence is outsized. And, as I told Ramaswamy in our conversation, just as journalists often project political motives onto entrepreneurs, politicians often confuse media and journalism with pure politics.
Ramaswamy was right to reject the ridicule of journalists who lecture him on equity structures. But his analysis of the media business itself was incredibly naive. His pitch for BuzzFeed – to turn it into a platform for a broad range of video creators, a kind of YouTube with higher quality standards and a commitment to editorial openness – painted a decade’s worth of startup graveyards, some of which make BuzzFeed look like a big success. Rumble, which more or less adopted this model, lost $116 million last year. A few exceptions, like Nebula, run distinctly different businesses and have carefully moved away from the creator economy (Ramaswamy was an early investor in Rumble).
Ramaswamy’s own experience – creating a media outlet that doesn’t generate money or votes but is hugely important – is a description not of business but of politics.
And that was always another reason to buy the news. The most interesting thing Ramaswami said in the interview wasn’t just about return on investment. “When you think about making a difference in the private sector, the two rails that really matter are communications and financial services,” he said.
Musk executed this strategy on a much larger scale when he bought Twitter, and watched the company’s value decline as it moved further from a struggling advertising business into a bastion of polarizing politics. But he also had the larger impact he wanted on the American political conversation, rolling back the tide of progressivism and widening the space for a largely right-wing populist rise. He got a bang for his buck.
It’s unclear what the RamaswamyFeed deal will be — the company’s stock price has plummeted, but it could be worse! — and the entrepreneur seemed too confident that he wouldn’t sacrifice his company’s main assets: the large, apolitical readership of BuzzFeed and other outlets, and the large, progressive readership of HuffPost.
But BuzzFeed is much cheaper than Twitter, and the risk of losing millions of dollars may be worth the political and attention-grabbing reward.
