When you cover the publishing business, you get used to hearing bad news. Still, you don’t become so jaded that you chalk off layoffs or brand closures as business as usual. You can’t help but think about the people affected and the hard work that was put in to building a company or brand.
Occasionally though, hearing certain bad news can stick with you a bit longer and make you think harder about its greater implications. Last night when I heard LittleThings was abruptly shutting down my initial feelings were not atypical. Yet, the more I thought about it the more I started to become concerned with what it could mean for a lot of other publishers.
LittleThings was a digital media startup that began in 2015. Its model was built around the recognition that Facebook’s platform was a potential gold mine for publishers that could develop highly-shareable and social-friendly content that could generate massive amounts of engagement and traffic, which could then equal ad revenue. And in less than three years it amassed a Facebook following that was just a tick under 13M. For context, that’s an audience half the size of AARP The Magazine, which purportedly has the largest circulation of any magazine.
More impressive, last year LittleThings averaged 110M monthly unique visitors and netted over 3B video views. But as impressive as those numbers are, it still relied on Facebook to drive its business. For whatever reason, it either hadn’t figured out a way to better diversify its business model, or hadn’t looked hard enough yet because things were going well, or at least well enough.
It’s easy to sit back and analyze a company’s failures in hindsight and then offer prescriptive remedies. But let’s get real, if there were more soothsayers in media, Blockbuster Video would still be a living multi-billion-dollar company, and local newspapers wouldn’t be fighting to stay alive.
LittleThings’ fate is symptomatic of what could reasonably be a devastating ripple effect that could change the trajectory of publishing. I know that sounds extreme, but I really don’t think it is.
Facebook’s benevolence when it comes to publishers has been in question for a couple of years, but it’s last algorithm change seemed to be a total gut punch. The social media giant’s decision to favor friends and family over publishers was a clear indicator that it’s finally comfortable monetizing its insanely large user base without much, if any, help from publishers.
That’s not merely my opinion; Campbell Brown, Facebook’s head of news partnerships, didn’t mince words when she recently said, “If anyone feels this isn’t the right fit for them, then they should not be on Facebook.” She then doubled down and essentially assessed her own role as seemingly insignificant. “People don’t come to Facebook for news. They come to Facebook for friends and family.”
Not only do studies show that’s not true, but Brown’s position is likely Facebook’s, which means the platform is done pretending it cares about publishers or that it needs them (although it is throwing “local publishers” a small bone with a new digital subscription pilot program). But why should it care? It’s become a digital advertising behemoth; and as a publicly-held company it’s driven by its bottom line and not its user experience or helping other businesses thrive.
Facebook’s ideological awakening claimed its first victim this week. As soon as it instituted its new algorithm preferences early this year LittleThings’ organic traffic declined roughly 75 percent. The company’s founder and CEO Joe Speiser said in his memo to staff that no previous tweak to Facebook’s feed had close to that kind of impact, and that this shift was “hammering its profit margins,” leaving them with no other recourse than to shut down.
It’s not fair to completely blame Facebook here. It doesn’t have a responsibility to publishers to prop them up and allow them to thrive. But at the same time, it’s reasonable to wonder whether Facebook thinks about the consequences of its actions, or worse, if it’s in fact fully aware. What’s more, it’s reasonable to wonder what it will do next and what that impact will be.
LittleThings wasn’t unique. A lot of publishers still depend on Facebook. Some have similar business models, whereas others are more diversified. Nevertheless, everybody relies on it to some degree to drive traffic and serve as a home away from home.
So with that in mind, nobody in publishing should feel comfortable right now. It seems clear to me that what happened to LittleThings will happen to others. But the exact level of carnage is uncertain. However, if any publisher thinks this will all blow over and self-correct, they will almost certainly be in for a rude awaking.