Last Week’s Media Layoffs Are Proof that the Business Model of the Industry is Like the Business of Sports

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Last Week’s Media Layoffs Are Proof that the Business Model of the Industry is Like the Business of Sports

Bryce Harper is one of the best players in baseball. The 2010 MLB Draft’s #1 overall pick has largely fulfilled the promise of his potential, and he is three years removed from one of the greatest seasons in the history of the sport.

Manny Machado is a prodigy who has also lived up to the promise of his no.3 overall selection that same season, and his top-shelf offensive and defensive talent has the added benefit of coming at the most important defensive position in baseball. Going by the Wins Above Replacement metric that doubles as financial framework of how MLB evaluates players, adding either of these guys to a team like the St. Louis Cardinals—who missed the playoffs by two and a half games last year—is the difference between playing in October and taking an early vacation.

So why hasn’t anyone signed them yet?

Because this is how baseball works now. Expensive veteran talent simply isn’t valued the way it used to be. Football too (and soccer, hockey and basketball to lesser extents). Let’s take All-Pro running back Le’Veon Bell as an example.

He is objectively, one of the best running backs of this century, and a perfect fit for the modern NFL’s emphasis on passing. Bell is a genius-level runner and a de facto wide receiver coming out of the backfield who can also hold his own against anyone as a pass blocker—making him one of only true three-down running backs in existence. You don’t need to know anything about football to watch this play and understand the greatness of Le’Veon Bell.

via GIPHY

Le’Veon Bell also didn’t play football this year. He’s a free agent now, and he did not play because of a contract dispute with the Pittsburgh Steelers. Without getting into the weeds too much of what happened: it essentially comes down to the fact that running back is a uniquely fungible position in the NFL—because the job of that person is to run head-on into people bigger than them all day long—so it doesn’t make a whole lot of sense to invest tons of money in a position you can lock down for four years on their rookie contract—especially in a sport where the average career length for all positions is three years.

Usually, NFL players cave in these situations because teams have an immense amount of leverage given the short period of time that these athletes can financially maximize their athletic peak. In a typical scenario, Le’Veon Bell would have come back to work this year, but in a defiant move for NFL labor rights, he sat out the entire season, demanding that he be paid what he’s worth. This hardline stance makes sense from his perspective because he’s already made a good amount of money, and history has shown that NFL teams like Pittsburgh will ride running backs like Le’Veon Bell into the ground during the final year of their contract, because they do not intend to sign them long-term.

What Le’Veon Bell, Manny Machado and Bryce Harper have in common is that they all look to be headed to a Hall of Fame career and they all are not currently employed by any team. While NFL free agency has yet to open, for most of this century, top-level players like Harper and Machado signed by the time MLB’s winter meetings ended in mid-December. Instead, we have entered a new era where a premium is placed on young, cheap talent, and titans of the sport like Harper or Machado still remain unsigned in late January. J.D. Martinez hit more home runs than anybody else in the past calendar year entering last year’s free agency, and he didn’t sign with the World Series Champion Boston Red Sox until after pitchers and catchers reported for Spring Training in mid-February.

Baseball and football have entered new eras where cheap talent is the only currency that teams value. Sure, the St. Louis Cardinals could add Manny Machado to a roster that just added the best first baseman in baseball, Paul Goldschmidt, and virtually guarantee themselves a spot in the playoffs this upcoming season, but there’s also capitalism to consider.

Every single baseball fan should be frustrated with their teams choosing not to get better right now, because every single major league baseball team has the money to spend on All Stars like Harper and Machado. Baseball teams are generating more revenue than ever and spending a smaller percentage of it on the roster than ever, as one of the great sports and politics writers of our era, David Roth, wrote over at Deadspin:

You probably also know this: since Alex Rodriguez signed his then-record 10-year, $252 million contract with the Rangers back in 2001, Major League Baseball’s revenues have more than doubled even when adjusted for inflation. Team payrolls, after a similar adjustment, have gone up by less than 40 percent; the richest contract in the game right now is the 14-year, $325 million deal Giancarlo Stanton signed in 2014. Teams, even big-spending teams like the Yankees, are spending significantly smaller percentages of their significantly larger revenues than they have in the past; at River Avenue Blues, Bobby Montano points out that the Yankees spent something like 30 percent of their revenue on player payroll, relative to the 85 percent that they spent back in 2004. That’s a lower percentage of revenue spent on payroll than the Rays. The teams that the MLBPA is suing for refusing to spend their revenue-sharing checks on improving their team are the most egregious offenders in the league’s ongoing soft capital strike—the Pittsburgh Pirates, who turn a robust annual profit, are among the most egregious of the egregious—but their cheesy selective austerity differs more from their peer teams in degree than in kind. The Chicago Cubs, who had an operating income of more than $102 million in 2017, are not reported to be interested in either Harper or Machado despite a hole to fill in their outfield and the fact that their shortstop is an abusive creep.

The business of media is not like the business of sports in the respect that media companies are just hoarding massive profits while cutting costs—if anything, it’s the opposite in media. Where the business of media becomes just like the business of sports is in its valuation of talent, and how being cheap is more important to the business of media than being great at your job.

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Last week was one of the darkest weeks in recent media history. Verizon announced that they would lay off seven percent of their staff across their properties (AOL, Yahoo and Huffington Post), which led to HuffPo axing their entire opinion section, including Pulitzer Prize finalist Jason Cherkis. You could create one of the most formidable reporting outlets in the world with the Verizon layoffs and the 200 (and counting) reporters that BuzzFeed let go just last week. BuzzFeed essentially excised a chunk of their soul—all in the name of profits and restructuring towards a new business model in media—per CEO Jonah Peretti’s e-mail to the staff announcing the cuts:

Over the past few months, we’ve done extensive work examining the trends in our business and the evolving economics of the digital platforms. We’ve developed a good understanding of where we can consolidate our teams, focus in on the content that is working, and achieve the right cost structure to support our multi-revenue model. We are confident the changes we are making will put us on a firm foundation and allow us to invest and grow sustainably for years to come.

Like baseball, the talent in the media free agent market right now is staggering. CEO’s worth $200 million like Jonah Peretti cry poor for their companies (all while wrongly telling their workers that they do not need a union), and they point towards an ad-based market that clearly is not sufficient to sustain the business of documenting the physical world around us. What Peretti’s e-mail to BuzzFeed employees lays out is how important profits are to media independence—otherwise you might wind up like my hometown’s beloved Denver Post, and lose most of your journalistic reputation as you become subsumed by a hedge fund only interested in squeezing your audience for every cent they can before tossing what is left of your newsroom into the dumpster once the profits have been exhausted. Peretti’s e-mail is simultaneously hypocritical given his net worth, and an incredibly depressing, sober and realistic acknowledgement of the dismal state of the business of media.

One of the problems with the business of modern journalism is its reliance on ad sales and the two titanic companies gobbling up those ad dollars while they funnel traffic to media companies across the web. Google and Facebook have done more to destroy journalism in this country than Donald Trump has. Those two goliaths are the subtext of all these media cuts. While it is a golden age for the business of TV news and vanguards of American journalism like The Washington Post and New York Times, the rest of us are drowning, desperate to scoop up what little ad dollars remain after Google and Facebook have quenched their thirst for unchecked profit.

If there is anything that the last week has taught me, it’s that the worst thing that you can do for your job security in most of this industry is to be well-paid. The BuzzFeed cuts are almost a literal example of what is going on with Major League Baseball, with A+ reporters like Kevin Collier, John R. Stanton, their entire national security desk, and countless others serving as the media’s versions of Bryce Harper and Manny Machado—being shoved aside for a new generation of cheap talent.

This sucks, and there’s no reason that it has to be like this. Podcasting has exploded in popularity, and due to the decentralized nature of podcasts’ distribution network, there is no centralized ad sales force like there is on the print internet with Facebook and Google. A great example of how effective the podcasting business can be is Bill Simmons’ The Ringer. The business is profitable, and most of the site’s revenue comes from podcasts. Google and Facebook are sucking up ad dollars that belong to publishers, and it’s time that the government stepped in and did something to protect its Fourth Estate.

To give you some perspective on how vital Google and Facebook are to the business of media, Alexandria Ocasio-Cortez shared Shane Ryan’s Paste article with her 2.67 million Twitter followers about how her appointment to the incredibly powerful House Financial Services Committee is proof that grassroots power gets results. I checked its traffic the following day on Google Analytics, and it was just the 7th most trafficked post in the politics section. It’s currently 45th in politics. If Twitter disappeared tomorrow, I’m not sure that we would notice if we were only looking at our traffic figures. However, if Google or Facebook simply tweaked their algorithm to devalue our kind of content, we could eventually go out of business.

We can fix this. Media doesn’t have to become like Major League Baseball, where the constant influx of young talent is forcing the OG talent to take pay cuts and worry about their job security. One thing that we can do right now without any wait time whatsoever that would be immensely powerful to not just the business of media, but to the business of the web, is to simply enforce existing anti-trust laws. They’re there. On the books. Right now. We just have to take these companies to court like we did with Microsoft, AT&T (twice), John D. Rockefeller’s Standard Oil, and many, many others.

It is impossible to run any kind of a business on the internet without Google and Facebook—just like it’s impossible for any player in baseball to play in the Major Leagues outside of 30 teams. The United States Congress has passed a law explicitly granting the NBA, NFL, NHL and MLB protected monopoly status, and by refusing to enforce laws on the books, it has implicitly granted Facebook and Google protected monopoly status as well. If we were to break up the ad sales market where media outlets didn’t have to subsist on two global conglomerates for the lifeblood of their business, the business of online media would look more like the decentralized nature of the podcast industry. Like the vast majority of America’s problems, we can fix this one—the only question is whether or not we have the political will to do what everyone knows must be done.

Jacob Weindling is a staff writer for Paste politics. Follow him on Twitter at @Jakeweindling.

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