Digital news aggregator SmartNews has laid off more than 100 workers at its offices in the United States and China, and plans to reduce headcount at its Japan headquarters, according to a report published this week.
Technology website TechCrunch was the first to report the layoffs, which will impact about 40 percent of employees at SmartNews, a news app that bills itself as a reliable, non-partisan place for information.
The majority of the layoffs appeared to originate on the engineering and development side, though a handful of editorial employees were also impacted, according to social media postings made by affected workers and reviewed by The Desk on Thursday.
A handful of independent contractors were also informed that their work was no longer needed, according to a person familiar with the matter, who asked not to be identified because they are still employed by SmartNews and were not authorized to speak with reporters.
The layoffs were preceded by the abrupt closing SmartNews’ offices in San Francisco, Palo Alto and New York City for two days, a move that some employees felt was unusual until they learned that a handful of positions were being eliminated.
SmartNews primarily generates revenue by placing advertising around content that it obtains from third parties. For years, the company licensed content from established news brands as part of an attempt to offer a non-partisan news aggregation service that put facts first, billing itself as an alternative to partisan news sources that prioritized rhetoric over reliable information.
In recent years, SmartNews has shifted its focus toward offering more local news content, promoting itself as a destination where users can learn about breaking news and other matters of interest that occurs in their own backyards. Last year, the company rolled out a program called SmartView First that invited independent publishers and bloggers to distribute content through the platform.
Unlike its prior content acquisition strategy, SmartNews said publishers who distributed content through SmartView First wouldn’t be paid a licensing fee, nor would they be cut in on revenue generating from advertising that surrounded their content on SmartNews’ platform. Instead, SmartView First publishers were told they’d be compensated with exposure to a sizable audience of readers, and they could leverage that exposure by displaying one ad at the bottom of their stories within the SmartNews app.
During the global health pandemic, smart news aggregation products like SmartNews saw a steady increase in users. Currently, the SmartNews app reaches more than 30 million active users in the territories it supports, with one-third of those readers originating in the United States.
But its audience has dropped steadily in recent months, with around 10 to 20 percent of readers leaving the app, according to a source who spoke with TechCrunch. The decline comes at a time when media brands big and small are dealing with a significant pullback in ad spending due to long-term economic uncertainty, which has impacted revenue for publishers that rely primarily on ads to bring in the money.
“Unfortunately, we are not immune to the current economic conditions that have negatively affected so many businesses,” a spokesperson for SmartNews said in a statement this week. “In order to maintain the health of our company and to ensure future growth, we decided to conduct a reorganization that has impacted many of our incredible employees.”
Correction: An earlier version of this story erroneously named the content acquisition program launched by SmartNews as “SmartNews First.” The program operated by SmartNews is called SmartView First. In an e-mail, a SmartNews official denied the program existed.