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Daily Kos is laying off staff. Here are the two painful reasons why [1]

['Daily Kos Staff', 'Backgroundurl Avatar_Large', 'Nickname', 'Joined', 'Created_At', 'Story Count', 'N_Stories', 'Comment Count', 'N_Comments', 'Popular Tags']

Date: 2023-01-25  

Daily Kos is blessed in that, unlike most media outlets, we have multiple sources of revenue. It’s why we were able to resist the media industry’s downsizing trend as long as we did. Here’s our three main revenue sources:

Advertising

Self-evident. That’s what funds most media.

Community contributions

That’s you.

Email list-building

This is the one that many of you may not know about. Our email list is one of the most active in progressive politics, and Democratic campaigns and allied issue advocacy groups want to reach those activists. So we help campaigns and organizations build their email lists with opt-in petitions. We've never, ever sold or rented emails without permission.

Each one of these buckets has contributed roughly about a third of total revenue, with community contributions a little higher than the other two.

Two things happened over the last year that completely upended our business.

1. Donald Trump was no longer president

What can we say? Trump was good for the media business. It’s why the traditional media gave him 24-7 coverage. It also motivated our supporters to record heights in readership, engagement, donating, and taking action. We did our job and got rid of that menace (at least temporarily), but now the entire media ecosystem has been suffering a resulting hangover . Look at news reports of layoffs and the quarterly financial reports of publicly traded media companies, and you’ll see a pretty consistent trend—a drop of about one-third in visitors/readers/viewers. Even social media outlets have suffered, all except for TikTok—and even they've just announced a hiring freeze.

Look at our own pageview stats:

Daily Kos traffic, 2015-2022

Donald Trump generated a ton of pageviews, giving us around 50 million per month. 2020 was a presidential year, so we hovered around 60 million monthly pageviews that year, with big spikes in November (we won!) and January (the insurrection). After that? Our numbers, like everyone else’s, plummeted. We lost around half of our peak traffic, dropping to around 30 million monthly pageviews. That was understandable! Everyone was burned out and exhausted. With President Joe Biden in charge and Democratic majorities in Congress, people didn’t have to remain in a perpetual 24/7 state of vigilance. That wasn’t a bad thing for us as individuals. That pace was unsustainable. And it was, needless to say, great for our country.

But that’s the irony of the situation that we find ourselves in. Fox News does better as a business when Democrats are in charge, and we do better when Republicans are. We’d rather they not be in charge, and we’ll fight our asses off to make sure they are defeated everywhere they pop up. But that reality has consequences for our business.

Fewer pageviews and lower engagement (comments, diary writing, recommending) means less advertising. We actually had more potential advertisers last year than we had pageviews to display those ads. And as you’re all aware, our pages are already overloaded with ads. We can’t add more. It would make the site unreadable, further harming our audience.

That said, we expected this dropoff and planned for it, anticipating about a $700,000 deficit. We could have managed that shortfall with a combination of cash reserves, non-employee cost cuts, and normal employee attrition (for example, we didn’t replace two executive departures). We were vigilant, but not overly worried. And with a presidential cycle ahead (which features that guy, the former one), we might have even been able to ride out this downturn.

But then we got hit with something we didn’t expect, and it upended our business.

2. Our list-building business was disrupted

Remember, our list-building business accounted for about a third of our revenue, and it helped pay for much of the cool content we all enjoy on the site. All was great until new competitors entered the space using tactics we refused to utilize—namely, outright renting or selling email addresses with no opt-in or consent whatsoever from the people they were contacting.

Suddenly, campaigns decreased the size of their buys or skipped us altogether, as these new players had vastly more emails to offer (tens of millions more). There was no need to deal with the hassle of ethical “opt-in,” and on top of everything else, they were cheaper. Daily Kos users who opted into other campaigns' email lists via our list were consistently among the most enthusiastic activists any campaign could ask for, but it didn’t matter, because everyone on our email list was likely on these other, larger lists.

That market shift cost us $5.2 million in revenue over the last three years, including a a precipitous $2.5M drop below expectations last year alone. Along with the decline in pageviews, we were now over $3 million in the hole—a catastrophic 20% drop in revenue.

It gets worse than that. These email providers have sold their names to so many people that they’ve effectively burned out those lists . (You guys have definitely felt it, as is evident in this community story , and this one .) So not only did we lose our list-building market, but our own fundraising became more difficult. We had to send more emails asking you, our community, for money to hit our fundraising goals. You can see then how that can become a self-defeating vicious circle.

And that’s why we are where we are today.

So where do we go from here?

Many are imploring us, here on the site, to save our writers’ jobs. To be clear, it’s not just writers impacted—the cuts are company-wide—but I realize those are the folks most visible to you. Regardless, the only choice we have is to make the painful cuts now, or we may need to make even deeper, more drastic ones later this year that would greatly diminish what we do. Even now, we aren’t cutting as deeply as we likely should because we still have faith in both the community to help us ride this out, and the news cycle (ahem, McCarthy, Trump, and DeSantis) to increase readership and engagement the latter half of this year. We’re certainly not out of the woods.

Any effort to try and fundraise to fill the gap ignores the fact that we’d be trying to fill last year’s gap, while still needing to fill this year’s gap. And I assure you, we worked hard to raise what we did last year. You might’ve even seen our fundraising emails, repeatedly warning that the only way we’d avoid layoffs was from community support.

And the thing is, you guys responded! Community donations is the one revenue stream that actually did well last year! But as amazing as you all are, we can’t keep asking you to give more and more. Every time we do, some of you tap out. You’re not an ATM. While this viral diary wasn’t directed at us, specifically, the sentiment applies to our donors as well. Our donation revenue stream just isn’t large enough to realistically support the staff size we have.

Again, this wasn’t just a temporary traffic downturn. We could’ve ridden that out. It was the wholesale disruption of a major multi-million-dollar revenue source. And that means that we have no choice but to regroup.

We’re productively working with the Daily Kos News Guild to ensure all affected employees have a generous severance package. As a company, we’ve never skimped on pay and benefits (easily among the best in the industry—ask them!), and we’ll similarly do everything possible to help affected employees. From the day we hired our first employee, nothing has been more important to me than our staff.

That’s it, those are the cards. We’ve laid them out to our staff, the union, and now you. I share everyone’s desire to avoid all of this. Of course we all do. There’s no vulture capitalism at work here. No hedge fund squeezing profits. No investors looking for a payoff. No banks calling in their loans. No executives banking profits. There’s nothing salacious about it, just brutally depressing math. All our earnings have always been reinvested into the business or allied non-profit organizations doing great organizing work. But now, because of the two factors I've outlined above, we’re left with no choice. We have to adjust accordingly.

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[1] Url: https://www.dailykos.com/stories/2023/1/25/2149207/-Daily-Kos-is-laying-off-staff-Here-are-the-two-painful-reasons-why

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