Read at Axios
The Messenger, a digital news startup that launched with $50 million in funding last May, is planning to shut down operations, according to sources. The company, which was losing tens of millions of dollars, only brought in around $3 million in revenue last year. The demise of the company was foreseeable due to its flawed premise and the challenges facing the media industry.
The Messenger CEO and founder Jimmy Finkelstein came close to raising the cash necessary to keep the business afloat for several more months, sources told Axios, but ultimately failed to close a deal to keep the company afloat.
The Messenger was built on the flawed premise that a big, generic news audience has value, a premise that is no longer true in the current media landscape. Social media platforms are no longer freely distributing traffic to news sites, and the deprecation of third-party tracking cookies has made monetizing smaller, more loyal audiences with first-party data more important. The ad market slowdown has also made subscriptions a critical revenue stream for news companies. The challenges facing The Messenger were evident from the start, as industry observers doubted its projected revenue figures and the viability of its business model.
The Messenger was built on the flawed premise that a big, generic news audience has value. It doesn't anymore. Social media giants - eager to get out of the news business - no longer distribute traffic for free to news sites, forcing most news companies to rely on search traffic, which takes time to grow, or buying visitors.