The decision this week by the upcoming news and current affairs website Nukta to lay off 37 of its employees based in Pakistan may have come as a shock to many people, especially those in the media. However, it also serves to highlight the challenges faced by websites as they try to monetise and become financially sustainable, especially in the long run.
In a post on its official LinkedIn account, the management of the website (which is based in Dubai) said that it was letting go of 37 of its staff based in Pakistan. It said that it was making this difficult decision to become financially sustainable in the long run, of course, which won’t provide much solace to the families of the 37 staffers who have been let go.
Let us examine the mechanics of setting up and running a website in some detail. Drawing on my own experience of heading news and current affairs websites of two major news channels, I can say that even with the backing and support of a brand news channel behind your online operations, breaking even and making money can often be difficult.
Most TV channels and newspapers have to have websites as well because if they did not, that would indicate to their audience that either their priorities are not in order given that just about everyone nowadays turns to the Internet for news and information, and even for video content and/or that they do not have enough funding to be able to sustain and build a website.
In Pakistan, setting up a standalone website on its own is a difficult ask and requires commitment from investors and an understanding that it could take up to 3–5 years. Of course, investors are in it to get a return and make a profit; they are not there to finance websites (or anything else for that matter) out of charity or the goodness of their hearts.
So, understandably, not every investor will want to get involved in such a venture, and that is precisely why those websites that have links to an already established newspaper or news channel brand have a far better chance of making it to financial sustainability. If they do not even become financially sustainable, they can be supported by the operations of the newspaper or news channel, and the website is then seen by the owners/management as a kind of vanity project – something that they need to have so that their audience as well as advertisers (existing and potential) see that they are committed to a digital presence as well and that their brand is present there.
The usual model of monetising a website through increased visitors, impressions, and engagement will become redundant because of the increasing use of AI in news searches
It is in this context that laying off such a high number of staff by Nukta, even before a year had over from its launch, came across as a surprise. Those who invest in such ventures need to understand that this can take time. I can speak from personal experience, where a few years ago I was hired by an investor whose primary business was in healthcare to convert his newspaper into a digital news website.
This involved hiring a staff of 6–8 people, which is quite lean for such an operation, and also building a social media presence as well as having back-end support (for SEO work, etc.). Within the relatively short time of 6–8 months, the news website was getting over half a million views a month, and we were able to place Google Ads by then. In the last month before the investor pulled the plug on the operation, the website got around 800,000 views, and this would likely have risen further in the months to come. However, despite having deep pockets, the investor decided this was not enough. So, it is also a lot about having the right kind of investor – ideally someone whose primary field is media and who understands that breaking even, let alone making a profit, can take some time.
In the case of Nukta, the investor is a well-known real estate magnate, and one would have expected him to support the venture without making any drastic cuts for a lot longer than ten months. While the website has said it will focus on becoming financially sustainable, the fact of the matter is that such a drastic action is likely to overshadow all the good work and content that it has generated so far. In this, there is a lesson for others who want to set up digital news and current affairs websites: hire lean teams and do not overspend so much that your monthly payroll becomes an uncontrollable drain on your whole venture.
There is also another issue at hand, which one could argue may have already transformed the financial model of a media website, and this relates to the prevalence and use of AI in Google searches. Now, when you look up something news-related on Google, almost always the first entry you get is not for a particular news website but an AI-generated summary about the issue. While this may be helpful for the person looking for such information, it could prove to be disastrous for those operating news websites because Google search is effectively pushing their links much further down the search and prioritising AI-generated content.
The usual model of monetising a website through increased visitors, impressions, and engagement will become redundant because of the increasing use of AI in news searches. Only those news websites with considerable credibility and reader loyalty are likely to survive this because, in most such cases, users search the websites directly by name or URL. In that sense, new websites will face a very uphill battle to survive, unless they make content that stands out and creates audience loyalty – and for that, they will need investors with deep pockets.