"Nineteen jobs will be cut," my source says, with a formal announcement from Gawker Media coming later this afternoon. (UPDATE: Valleywag has already posted notice. Managing Editor Owen Thomas has laid off associate editors Nicholas Carlson and Jackson West and reporter Melissa Gira Grant.)
An internal e-mail circulated through the Gawker pipeline just 30 minutes ago:
I have some bad news. Here's the heart of it: we are cutting 19 of our 133 editorial positions and suspending bonus payments at the start of next year. With the savings, we are increasing base pay and hiring 10 new people on the most commercially successful Gawker sites. But I know that's scant consolation for the colleagues we're losing and for those of you who have been enjoying the bonus windfalls from breakout stories.
You can guess the reason for these brutal measures: the recession. Sure, the company is currently profitable and advertising sales are up by about 30% on their level of a year ago. Our biggest clients are consumer electronics and entertainment companies that are relatively well insulated. And, yes, this is not the first time I've predicted doom: in July 2006, when we "battened down the hatches" and closed down Sploid and Screenhead; and in April this year, when we spun off Idolator, Gridskipper and Wonkette.
But now the credit crisis is clearly going to affect every sector of the economy. Advertising buys typically plunge after the Christmas shopping season, and 2009 is obviously going to be exceptionally difficult. We have to prepare for the worst, now, rather than when the worst comes upon us.
We never used to talk about the business side of the operation. Traffic was the only concern; my belief was that juicy news would draw the readers and the advertising would take care of itself. We were patient; even if it took four years for a site to develop the audience that finally registered with advertisers, we had the time. No longer.
Sites such as Consumerist, whose success has been measured more in traffic and recognition than in revenue, now need to cover their costs. I can't underline enough that this harsh commercial judgment is no reflection whatsoever on the editorial teams that are being cut.
Each of these sites performs a vital function. Consumerist provides an outlet for disgruntled consumers that exists nowhere else on the web; Valleywag has given puffed-up Silicon Valley the prick it's long needed; and Fleshbot manages to be classy and filthy at the same time. The site leads and writers on all of our sites have done exactly what we asked them to: work harder than the competition and grow the audience. It's my commercial judgment that's been at fault.
One reason we're eliminating these positions is to reinforce the teams on the sites with the most commercial appeal—Gizmodo, Kotaku, Lifehacker and Gawker—and the properties such as Jezebel, io9, Deadspin and Jalopnik which are poised to join them.
One new recruit we're confirming today is Gabriel Snyder from W Magazine in Los Angeles who, as managing editor of Gawker.com, will continue the site's evolution into a national news and entertainment site. We are also hiring new contributors at Jezebel, Deadspin, Kotaku and io9.
Even in the growing editorial teams we need to control costs. And that means a new look at traffic bonuses. We've been spending $50,000 a month on average on pageview bonuses. The scheme has made writers hustle for traffic even in teams so large that there was a risk they become lumbering. It's helped us hit a record 274m pageviews last month, up 69% on last September.
Pageview bonuses will continue this quarter. And we are committed to pageview incentives, and to measuring performance by a writer's individual pageviews, in the long term. But a first quarter spike in traffic — and the resulting bonus payments — could be dangerous if advertising markets are troubled next year. And we're assuming that the economy is so volatile that most of you would like a little bit more predictability about your own income.
That's why we're suspending the pageview bonus for the first quarter at least, but making up for some of the loss of income by raising pay. If you haven't recently agreed to a new rate, your monthly base amount will automatically be increased by 5% in January.
The news about the job and bonus cuts will be demoralizing. The golden age of the blog is over, people will say. Gawker Media is behaving like those big media companies that we mock so easily. I could come up with some bullshit line about how much worse it would have been to wait until we were forced to control costs; or how much more unpleasant life will be at the many internet ventures and newspapers that won't make it through the downturn. I could give you my optimistic spin about the glorious future that awaits us on the far side of this downturn.
But there is no escaping the fact that we're losing some excellent colleagues and the environment next year will be bleak. The one consolation is that there will be plenty of news for us to break — starting with this email, which you are free to leak.
UPDATE 2:26 PM: Word is that it's unclear whether the sites will be shuttered or merely just scaled back to a minimum workforce.
UPDATE 2:44 PM: A different source says the sites are not getting shut down but will have considerable layoffs. (Update 3:00PM: Gawker Media managing editor Noah Robischon confirmed that no sites will be closed but there will be layoffs.)
What I'm wondering is: What's [publisher Nick] Denton's thinking? He's cutting back on Valleywag but putting even more resources into the traffic-leading Gizmodo site (and Kotaku, and io9, and Jezebel). Is he simply fattening the chickens before he sends them to slaughter -- in this case, to an online suitor for sale? (Just today, Gizmodo solicited help from readers to find open gallery space in NYC. Do I smell a gadgety, co-branded, moneymaking event?)