No one - especially those of us trying to grow media brands - likes to see contraction in the industry. However, if we can learn anything from the cycles of hiring and layoff at major media companies, we'll report it. Earlier today, Vox Media announced it would be laying off 50 staff members - mostly in video production and at publications Curbed, SB Nation and Racked - and would be "re-assigning" another dozen.

It turns out that hiring at the company screeched to its lowest in 2 years in November 2017, possibly foretelling said layoffs.

If anything, today's news offers a cautionary tale, one that warns that no matter how big you've become, no matter how boastful you've been in the media about your reach and revenue, spending more than you make never works out in the end. Or, as Josh Marshall of Talking Points Memo warned us all in November, 2017 in the wake of BuzzFeeed layoffs:

A huge, huge, huge amount of digital media is funded by venture capital ...a key revenue stream of many digital publications has been on-going infusions of new investment.

Much of that investment has been premised on the assumption that scale – being huge – would allow publications to create stable and defensible business models. ... it essentially comes down to this idea: get big enough and you can solve the chronic problem of over-supply of publications in your favor through sales at volume and being able to command stable, premium advertising rates ... [but]investors are realizing that scale cannot replicate the kind of business model lock-in, price premiums and revenue stability people thought it would. 

In short, in their race to become media giants, companies like BuzzFeed and Vox are showing us that despite objective success in scale and reach, something in the "get real big" business model is not sticking. If I may (and as someone who has been on both sides of this story for the past two decades), it goes something like this:

  • Scale requires talent.
  • Talent is expensive, but you make a bet and spend more on that talent than you make, thinking that the eventual audience scale will bring advertisers who will offset costs for said talent. 
  • When that doesn't happen, because you're not the only game in town and advertisers are in love with inexpensive programmatic technology, revenue shrivels.
  • Then investors get antsy becasue they don't like it when you spend more than you make for too long, especially after you promised those big hires and investments would pay off.

If the data tells us anything, it appears that Vox purse-holders may have had that conversation last fall. That's because right around the time of Marshall's soothsaying (and BuzzFeed's layoffs), the company put the brakes on a 9-month hiring spree, which had ratcheted up from a low of 56 openings in February 2017 to an all-time high of 111 in November of the same year.

Spending more than you make never works out in the end.

Not all hiring slowed down around that time, though. Just before hiring activity slowed at Vox, sales openings jumped - and remained somewhat healthy - in a clear indication that the company decided it was time to invest in revenue builders.

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