What the lay-offs at Vice India say about the flux in digital media space
The company fired many of its employees on February 7.
Vice India laid off most of its employees in the India office on February 7. The teams mostly affected in the lay-offs were research, editorial and video production.
Earlier, Nancy Dubuc, the CEO of Vice, had indicated the company’s decision to trim its over 2,500-strong workforce. However, in a report, she had said this move would be effected not by laying off present employees, but through a hiring freeze.
The company had hoped to avoid bad blood that normally follows a lay-off process and hoped, instead, to trim its employee base through natural attrition.
On February 1, Vice decided to sack over 250 of its global workforce, a bid aimed at cutting costs, as revenue squeezes thin.
Vice isn’t alone.
Every new media company that thrived on the Facebook and Google-powered online publishing boom has now found itself struggling to meet revenue targets. In a bid to return to basics, it has trimmed its workforce substantially.
HuffPost, in January, sacked hundreds of its employees. This was closely followed by another new media giant, BuzzFeed.
What went down at Vice India?
According to a source in Vice India, the lay-offs were not sudden. “For quite a while, things have been a little weird in the office. We knew something bad was about to happen,” the source said.
“The human resource person is the first person to leave office, at 5pm, and we all know that. But of late, the HR guys began to stay behind late, often till midnight. Hurried meetings were taking place, and we knew the time was coming,” the source added.
According to another source, the staff was asked to report to office at 10am on February 7. The CEO of Vice India, Chanpreet Arora, was present. In the next few hours, each department was called in, and its members were laid off, complete with generous severance packages.
In the production team, most of the junior employees were sacked, while the senior ones were taken out of permanent payrolls and retained on a project-to-project basis.
The editor-in-chief of the editorial team, Rituparna Som, was asked to go, followed by another staff writer from the team. In total, the editorial team saw two employees go.
Asiaville tried to reach out to Som, but she declined to comment. From the research team, at least two employees were sacked.
On February 1, Dubuc sent out a mail to the entire team at Vice Global. In that email, which is in Asiaville’s possession, she wrote that after finalising the budget for 2019, the focus of the company has shifted to “executing our goals and hitting our marks. We will make Vice the best manifestation of itself and cement its place long into the future”.
In order to do this, according to Dubuc’s mail, it had become imperative for the company to “make hard but necessary decisions. Unfortunately, this means we will have to say goodbye to some of our Vice colleagues”.
“In this strategic restructure,” the mail says, “some departments will get smaller while others will expand.”
According to Dubuc, instead of organising Vice by country, they would be “creating a new operating structure around global lines of business – Studios, News, Digital, TV and Virtue. Support functions such as sales, legal, communications, marketing, IT, HR, business development and brand strategy will report into Brooklyn, or a designated central hub.”
The move outlined by Dubuc, was echoed By Hosi Simon, the CEO of Vice Asia-Pacific, in a follow-up email.
According to this email, also in Asiaville’s possession, the rationale behind the restructuring was to create a “One Vice”, rather than have segregated entities country-wise. Simon, in his email stated, that in accordance with the vision, it has become inevitable to also envision creating a “One Asia.” This meant being “organised and connected” through all the lines of their businesses, and not be separated by “language, culture, and territorial borders”.
Both sources said that this move, as outlined by both Dubuc and Simon, would basically mean consolidating Vice India and subsume it into the larger brand of Vice Asia.
Asiaville reached out to Josh Gardiner, Vice’s head of communications, and the story will be updated once he responds.
The Vice India office on Friday, February 8, wore a deserted look after lay-offs the previous day.
The problems at Vice come in the wake of global headwinds presently shaking up new media companies.
BuzzFeed, in January, sacked 15 per cent of its workforce, including its entire national news team, and one employee from BuzzFeed India was also sacked during the bloodbath, over dwindling revenue. Meanwhile, Vice, in 2018, projected a revenue between $600 million to $650 million, but is now expecting to fall short by $50 million.
While lay-offs are making news, we must also take into account the impact of changing algorithms of Facebook and Google.
In her new book, Merchants of Truth, former New York Times executive editor, Jill Abramson, has argued at length about how the new media ecosystem is in a strange position, wherein, while they are made to be reliant on social media companies – like Facebook and Google – for distribution of their content, these same distribution channels have ambitions of becoming publishers themselves.
Moreover, these companies keep a majority of the advertisement revenue for themselves, forcing new media companies to rely on scraps. The predatory behaviour by Facebook and Google, which is fuelling the recent algorithm changes on their sites, has come to harm a slew of new media companies who grew not too long ago on their backs.
"Basically, the situation now is that the venture funding for media has become crunched, forcing a greater drive towards profitability for these media firms," said Sameer Pitalwalla, co-founder and CEO of Culture Machine, a digital multimedia company. "In this drive towards profit, these firms have had to cut costs, since revenue growth is limited due to Google and Facebook eating up most of the growth, and personnel costs tend to be the highest line item for these media firms, and, hence, you see an attempt to rein that in," Pitalwalla added.
BuzzFeed, for instance, in its early days, exploited the Facebook share to make its content go viral. Vice, similarly, depended on YouTube, owned by Google.
According to industry insiders that Asiaville reached out to, changing algorithms are, however, one of the many factors plaguing these new media companies.
BuzzFeed, Vice and Vox, for instance, have tried to bypass the bottlenecks created by Facebook and Google by diversifying their revenue streams. All the three companies, for instance, have begun creating content for web streaming site Netflix. However, clearly, this is not enough, and no new media company has been able to crack the code of making money online.
With revenue dwindling, these new media publications have now been forced to return to basics, consolidate their growth centres, and cut back on those areas where they see less of profit.
At Vice India, for instance, both the sources point out, the branding and marketing verticals were clearly given a priority over editorial.
India, too, has witnessed a glut of new media-focused companies in recent years. While it may still be early years for us, it needs to be seen what the future holds.