Monday, July 27th, 2009

Gawker Media is the Goldman Sachs of the Internet

FIRINGWhat we've seen in companies that have been successful through the last year-so we're excluding, say, the car companies and most of the media companies oh and real estate and physical goods, etc.-is they've both shed staff and, both independently and relatedly, increased their revenues. Interestingly, this graph from Gawker honcho Nick Denton is pretty darn similar to what it would look like if you graphed Goldman Sachs' expenses and revenues, with even some similar trending during the same quarters! In both these cases, on the micro-scale of Gawker Media, as a small company, and the macro-scale of a big one like Goldman Sachs, there's no decline in revenue from their creating more unemployed non-spenders, which both did in fairly severe layoffs. Gawker Media revenue doesn't depend on its sites' readers being employed-unemployed people read the Internet just fine, even if it's in their parents basement. And GS certainly doesn't depend on the little people for its income. So both can indulge in fairly hard-core cost-cutting and then find themselves rolling in cash without any negative expense besides the most nebulous: ill will.

13 Comments / Post A Comment

Ill will? Against Gawker Media? I don't understand. Who would harbor this ill will, and how would it manifest itself?

KarenUhOh (#19)

That chart has an overbite. Careful if it tries to kiss you.

Hey, this means they have enough money to hire Bonnie Fuller now!

sigerson (#179)

Wait, where is the 40% drop in ad revenues that Denton kept screaming about?

Urbania (#94)

right between 07q4 and 08q1? although i'd say it's more like 36% rounded up.

nicknotned (#1,218)

Internet advertising is seasonal and the Christmas shopping season is usually the strongest period of the year — which is why it's often misleading to compare with the previous quarter.

As for the 40% drop in ad revenues: the newspapers will almost certainly see that decline; ad pages are down by even more than that at some magazine titles; even online advertising is down at companies like Yahoo and AOL. (Just not at Gawker Media and a few other online properties like Thrillist and Break. Sorry!)

Nick Denton

Urbania (#94)

when is there ever a decline in revenue from laying off employees? isn't the point to reduce your expenses?

the big question is does GM have a long term model by constantly firing expensive labor and hiring cheap (but talented) labor. i can see keeping a big portion of the writers churned and taking advantage of the fresh points of view, but there is something to be said for keeping a few powerful voices around for a decade or so. that kind of editorial vision you can't buy. or can you?

Presumably the employees are the ones who make things. You know, that you can sell.

Urbania (#94)

of course but they didn't fire everyone. and the same strategy hasn't worked at other banks (or newspapers). or blogs?

KarenUhOh (#19)

I think the Emperor has been parading around in his Business Suit for the better part of a decade now.

HiredGoons (#603)

What's Black and White and Red All Over?

dweeb (#437)

Wait, LolCait's an expense?

BadUncle (#153)

Not in another 5 hours, sadly.

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