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Who Killed The Messenger? Jimmy Finkelstein Doubled Down on a Failed Media Business Model | Analysis

The sudden shutdown of Jimmy Finkelstein’s The Messenger on Wednesday – eight months and more than $50 million after its launch — was the latest distress signal from the world of digital news media, where the business model of traffic-for-advertising has proved to be unsustainable.

Despite the failures of BuzzFeed and Vice among others in 2023, Finkelstein still spent profusely to launch a start-up he was convinced could buck the trend. He offered salaries that were two and three times market rate for journalists in order to fill a newsroom that could make an instant impact on the marketplace, offering supposedly apolitical news to a nation that was already consuming its news on TikTok.

When the end came, staffers were not offered so much as a day of severance.

“We delivered beyond expectations in just seven months – with the traffic results to prove it,” said editor-in-chief Dan Wakeford in a farewell message that reflected exactly the flawed business logic behind the company.

To its credit, The Messenger had 11 million unique visitors in December 2023, according to Comscore, and a massive 89 million page views. But that was an insufficient amount to sustain a newsroom of 200 people. And it was a business model that had been abandoned by most in digital media in favor of lightweight newsletters and subscription like those offered by Puck and Semafor.

On Tuesday, the company said it was laying off 270 people. Finkelstein, the founder and chief executive of The Messenger, said in a farewell note to his staff that he was “personally devastated.”

“We exhausted every option available and have endeavored to raise sufficient capital to reach profitability,” Finkelstein wrote. “Unfortunately, we have been unable to do so, which is why we haven’t shared the news with you until now. This is truly the last thing I wanted, and I am deeply sorry.”

The Lure of Web Traffic

In the last two decades since venture-backed digital media sought to challenge traditional media outlets, Big Tech companies have tightened their stranglehold on digital advertising, choking off the revenue pipeline that sustained digital businesses.

Google and Meta have led the way in swallowing the traffic-driven business model, with dire consequences for all media outlets, but especially those that relied on traffic from those partnerships. Google, Meta and Amazon now account for about 60% of all online advertising revenue.

The results have been devastating for a series of digital news businesses, including Vice Media, which declared bankruptcy in 2023 and BuzzFeed, which effectively shut down news and pivoted to e-commerce. Hundreds of jobs were lost in those closures.

Vice founder and former CEO Shane Smith and Jonah  Peretti, founder and CEO of BuzzFeed
Vice founder and former CEO Shane Smith, and Jonah Peretti, founder and CEO of BuzzFeed (Getty)

In an environment where legacy news media are also cutting staff by the dozens, digital media now faces a true crisis.

Meanwhile, January 2024 has proved to be devastating for legacy media outlets that have seen direct advertising plummet and the stall-out of subscriptions, including The Washington Post, which cut 240 people from its newsroom, The Los Angeles Times, which this month slashed 120 newsrooms jobs, or about 20% of its staff; Sports Illustrated, which laid off its entire staff of about 100 under a new owner; and Time Magazine, which had significant layoffs.

Still, not all digital start-ups are in freefall. Smaller, more-focused outlets that have formed in the past two years, including Puck News and Semafor, are surviving and even thriving because of models that are largely free from interference from Google and Meta. Puck began essentially as a newsletter and a podcast, while Semafor started as a website and is a collection of newsletters. While Puck relies heavily on subscriptions and event sponsorships, Semafor is currently free to access and still relies on advertising along with event sponsorship. Both news sites are geared toward educated, affluent audiences.

Messenger missteps

Finkelstein told the New York Times in March that he planned to hire 500 journalists and build a website to emulate journalistic institutions like “60 Minutes” and Vanity Fair.

With previous experience investing in publications like The Hollywood Reporter and owning The Hill which he sold to Nexstar for $130 million, Finkelstein attracted $50 million in investments for the untested start-up. But the business, based entirely on digital ad revenue, burned through $38 million during eight months of operation in 2023, and generated only $3 million in revenue. Those close to the platform’s investors confirmed the figures to TheWrap in early January.

Among the expenditures were more than $8 million spent on multiyear leases in offices in Florida, Washington D.C., and New York City.

Two insiders at the start-up blamed president Richard Beckman for much of the overspending on offices. Its massive New York City base was housed in a tony Financial District building in downtown Manhattan, above the high-brow Japanese restaurant Nobu.

The Messenger signed a 41,854-square-foot sublease with Orchard Technologies for the 25th floor at L&L Holding Company’s 195 Broadway, insiders told TheWrap.

One former staffer speaking on condition of anonymity said that The Messenger started in a modest WeWork space in Midtown Manhattan before Beckman went on a “massive real estate spree. He was acting like money was no object. He very much misrepresented the financial situation of the company in terms of revenue.”

After Beckman announced his exit on Jan. 2 on LinkedIn for health reasons, cost cutting began, including 20 layoffs. Beckman initially projected The Messenger would make $100 million in 2024.

Travel, meals and entertainment expenses at The Messenger were estimated to be more than $1.7 million by the end of 2024.

Even as advertising budgets were being cut throughout 2023, the company blindly staked its future on a massive ad turnaround, forecasting it would bring in more than $18 million in direct ads and $37 million in programmatic advertising, it said in a document to investors.

Neither Finkelstein nor Wakeford responded to phone calls from TheWrap on Wednesday.

The final weeks

The Messenger insider described the last month at the start-up as “a sea of confusion” for staffers.

Finkelstein said he was aggressively seeking extra funding, but he wasn’t updating his staff, fearing further leaks to media, which he claimed were damaging his hopes of obtaining further investment.

“The editors urged reporters to keep their heads down and keep working despite the huge anxiety gripping the entire workforce,” a source said.

Now 270 people have lost their jobs, 200 of them journalists, and sources say there will be no severance pay.

While there was some original reporting and scoops, such as Taylor Swift quietly hanging out with Travis Kelce before the rest of the internet and Swiftysphere knew, journalists complained about being asked to mass-produce stories picked up from other outlets.

“Now that the cat’s out of the bag, let me tell you something,” wrote laid-off staffer Eli Walsh on X. This company worked its news and audience reporters to the bone over the last eight months. I wrote 630+ stories in that time, most of them were just copying and pasting work that other reporters put time (into).”

He added: “I don’t know what’s next right now, but I’ll tell you one thing: I have no usable clips in eight months’ time because of this editorial strategy. Zero. Not one.”

Up to the end Finkelstein had remained buoyant about raising more money. He said he raised around $8 million at the end of 2023 and said he was raising another $10 million in January.

Finkelstein had also explored selling a $30 million majority share of The Messenger to a group of conservative investors. They included Omeed Malik, a financier who backed Tucker Carlson’s new media venture; Garrett Ventry, a Republican political operative; Ryan Coyne, the CEO of digital media company Starboard; and George Farmer, who sits on the board of Britain’s conservative news network, GB News, TheWrap previously reported.

It would never come to pass. In a message to staff on Wednesday, Finkelstein said: “The industry has faced extraordinary challenges this past year. The economic headwinds have left many media companies fighting for survival. Unfortunately, as a new company, we encountered even more significant challenges than others and could not survive those headwinds.”

The final hours

After a Jan. 3 Semafor story reporting the outlet’s board had weighed a shutdown over cash shortfalls, staffers were expecting the axe to fall soon. But they were still shocked with the abrupt way they learned the site was out of money: They were unceremoniously booted out of the company’s Slack app, many while still midstory.

“The last thing I saw in The Messenger’s Slack was a panicked colleague writing, ‘Wait, what about our insurance coverage, I have a surgery boo—’ and then we all got booted out,” Jordan Hoffman, a senior writer and critic said on X.

Like most of The Messenger’s staff, Hoffman found out about the shutdown from the New York Times, while another now-jobless writer first learned about it when TheWrap reached out for comment.

One editor who wanted to remain anonymous told TheWrap that he felt management strung along staffers until the very last minute.

“They kept us on the hook until we found out today from all the other publications, which was obviously a gut punch. You know it’s coming and to find out somewhere else, it deeply hurts,” the individual said. They added that as late as last week, they were expecting good news, based on management’s “business as usual” attitude.

“[Employees] were rightfully upset because they had told us last week that they were going to give us an official update,” this person said. “I thought that they were going to find the funding because they were very much like ‘keep up the good work.” Like ‘hint, hint, it’ll be okay.’”

“Impossible to overstate how cruel the leadership was in how this went down. We just kept hearing more dire s— from other outlets without a word from them. They kicked us all off slack today *before* sending an email confirming the news,” Dave Levitan, a climate and science reporter, wrote on Bluesky.

The West Coast editor agreed that The Messenger was overstaffed and that a lot of those staffers were overpaid. Among those laid off was Hallie Steiner, who actor Jon Cryer noted on X was his niece.

Another staffer said Messenger employees had already been planning a get-together for after the layoffs, “but we were planning it on [the company’s] Slack.”

Amid the pain, Hoffman joked about the probability of the site’s drama being mined by Hollywood. “I can’t wait for the Hulu series about The Messenger dot com,” he said. “You won’t believe some of the wacky s–t that went down there. I only hope they cast Zac Efron as me.”

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