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19.9.16

Mode Media: What Happens Next? (Safe Guarding Your Business & Options Available For Bloggers)

Unless you've been living under a rock (or you're not a blogger, and therefore not really interested in the next 500 words) then you may have been shocked to learn the news regarding the abrupt closure of one of the UK's biggest digital media networks. Mode Media (previously Glam Media) formally shut its doors at the end of last week, with what appears to be no notice whatsoever; the many influencers under its control were aghast to see the topic trending across social media, with the news outlets being more informed than those actually in daily contact with the company. Last year they generated over $90 million in revenue, leading us to question how this could happen - and more importantly, what comes next? A quick google will tell you that the company was in dire straights, struggling with both investment and leadership that inevitably lead them to be in so much debt that there was no way forward; testimony from those employed by Mode paints a desperate picture, with the majority having no clue as to the situation until they were shown the door. In a nutshell, Mode Media have left thousands of bloggers without payment (in some cases dating back to March of this year) and hundreds more unemployed. Their abrupt end has caused shockwaves throughout the digital space, as influencers struggle to get to grips with what has happened and what they can do about it.


HOW DID THIS HAPPEN?
According to many of the UK based bloggers (Mode Media was a global company, so this impacts influencers on every continent,) briefs were still being discussed 48hrs before the company was forced into closure. Rumours quickly spread about bloggers being on shoots with brands and hotel bills being unpaid, leaving them stranded and out of pocket in more ways than one. Although some are owed a nominal and marginally irritating amount of money, others are claiming they're left with thousands of pounds worth of unpaid invoices that will undoubtedly have a long-term negative impact on their financial situation. Whichever way you look at it, it's not good. Mode Media tried to evolve into a forward-thinking digital media platform and successfully created campaigns for some of the world's biggest brands, but somewhere along the line it went wrong. Although right now we can only speculate as to the reasons, it's important to learn from the situation and implement some personal strategies to prevent being embroiled in anything similar in the future. Nobody saw this coming and it was practically impossible to protect against it, but it does raise questions as to how we can all manage our relationships and finances more closely and effectively.

LESSONS WILL BE LEARNED
Digital, influencer and management agencies are now a way of life. It's anticipated that 50% of the 'commercial' bloggers in existence are represented to some degree, whether that's by serving ads, booking campaigns or simply helping to negotiate deals. In many cases (rather understandably) bloggers don't fully understand what they're getting into, as this isn't their specific area of expertise; by their nature bloggers are creatives who just want to generate great content, rather than get bogged down in spreadsheets, negotiations and invoices. The reason these third parties have flourished is because influencers want to get on with their influencing, handing all of the other stuff over to someone else. However, it's vitally important that we all take responsibility for our own incomes and understand (to the best of our abilities) everything from payment terms to national insurance and student loan repayments, so it doesn't come back to bite us. Track everything on a spreadsheet; set your own payment terms; establish a contract; have a fee for late payment; make note of when to expect payment and chase when it's not made. Take back control, whether you have a relationship with a management agency or not.

NEXT STEPS & RECOUPING WHAT YOU'RE OWED
Unfortunately, like with any business, the inevitable bankruptcy will leave the majority of their creditors out of pocket. According to gov.uk: "The money raised by selling the assets or recovering monies owed to the individual or the company is divided between the creditors, in a strict order of priority after the cost of the bankruptcy or liquidation have been paid." Freelancers and contractors fall into an 'unsecured' creditor category, versus a 'secured' or 'preferential' creditor category which takes preference. Regrettably, that means influencers are likely to be last on the list and are likely to receive only a fraction of their due payments, if anything at all. There will have been official bodies put in place to manage any outstanding creditors and your earnings will be on file, but in some cases it can take months (and even years) for the payments to be managed and processed.

So if you're an influencer that's owed by Mode Media, what can you do? Firstly, make a note of all the elements you're owed and keep a record of any correspondence which proves you should have been expecting payment. Secondly, be patient. These processes can take an infinite amount of time to be resolved, so don't expect to receive a cheque in the post any time soon. It's possible to register your claim via the gov.uk website, but it's important to be realistic in your expectations; don't optimistically think getting yourself a lawyer and tweeting your disdain will see your claim have any more value than someone elses. Thirdly, be prepared to write-off the amount your owed on the relevant tax form as a way of indirectly claiming it back. You can include 'bad debt' if you're absolutely certain you won't be paid for it in the future, and this is deducted from the amount of income that is illegible for tax. I'm no accounting expert, so for more information I'd recommend you have a look online or read this article from HMRC.

MAKE A POSITIVE CHANGE
Now is not the time to point fingers or critique others; it's a time to stand together and attempt to make a positive change. The most shocking thing I've read about this entire situation is that many bloggers haven't been paid since March - that's six months without being compensated for work created. When did it become acceptable to wait that long for an invoice to clear? It can be hard to stand up and place demands on the table, but if you don't ask you certainly don't get. Make it clear to the brands you work with that you want to be paid quickly, efficiently and without having to chase down an accounts department; ask for 50% of the fee up front to minimise the risk; invest in an accountant or someone to manage your finances - there are lots of options available to help you run your site more effectively and ensure you get paid what you're owed. Don't be afraid of safeguarding yourself and asking the important questions, no matter how small or large your income. Nothing can fix the mess or take the sting out of losing money, but we can make a positive change for the future.

DIVERSIFY YOUR BUSINESS
If you're worried about what may happen in the future or concerned about protecting your income moving forward, there are a few steps you can take to diversify your business and explore other methods of commercialising your site. My primary suggestion is always to forge direct relationships with brands and, wherever possible, negotiate with them without a middle man; everyone is capable of managing their own commercial interests, so have confidence in your own abilities. If you can, don't ever stick with one exclusive agency who have complete control over your income - instead, work with two or three agencies that each have a point of difference or unique strength. Explore alternatives to traditional ad units by investing time in affiliate platforms or working alongside brands which will offer up commission; why not team up with other bloggers and help to manage eachothers deals, giving a fresh perspective to something you may have agreed to without a second thought? It's easy to get angry and frustrated at the situation many find themselves faced with, but it's important to draw a line under it and move on more positively in the coming months. In a nutshell, use this as an opportunity to spread the risk.

I thoroughly feel for everyone impacted by this horrendous business blunder (understatement of the year?) - the employees, the investors, but most importantly the influencers who have been burned and are unlikely to recoup even a fraction of what they're owed. Working for yourself is always a risky business, but equally any company can unexpectedly find themselves shutting up shop with little to no notice. Nobody really saw this coming, even if there were warning signs, so we can only make the best of a bad situation by learning from it and safe guarding against the future. My best wishes go out to anyone affected by this in whichever capacity, but be safe in the knowledge that the digital industry evolves so fast and reacts so quickly that there's always something bigger and better around the corner.

Have you been affected by the closure of Mode Media? Do you have any advice, as a fellow blogger or financial expert, that you can pass on? 

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12 comments

  1. Really interested to see what will happen next with blogging, this is a really surprising occurrence that's got me thinking about my blog again. I've been with Mode/Glam for about 4 years and never made a big amount of money from them but it was covering the cost of running my website and when I was lucky some spending money for fun things. I can't imagine what impact this will make on the many other bloggers I know who will have been making more than that, Glam/Mode probably played a big part in a lot of professional bloggers being able to take that step to full time blogger. This is going to have to make people change what they do, question why they're doing it and take the opportunity to make some exciting changes for themselves whether they stick with blogging or not.

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    1. Absolutely. I can accredit Mode/Glam with the ability to make some money and start taking blogging seriously - how many won't get that opportunity now? I feel for those losing out, but equally I'm interested to see what will happen now and how the industry will recover. I'd not thought about whether people would reflect on their motives, but it does make total sense.

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  2. You make some very valid points and useful suggestions. I have been travelling and only just discovered that they had gone bankrupt but I am owed a considerable amount. I did try to negotiate faster payment right at the start as I was worried that they could go bust without paying me (weird premonition!) but they refused to negotiate and said that I had accepted the original terms. These were in fact hidden in tiny print on their online platform that was extremely complicated to navigate and they themselves did everything via email rather than via this platform. I agree that it's far better to work directly with brands as they are not the only blogger agency that has folded recently. I know of at least one other that has left many bloggers out of pocket.

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    1. The small print gets us every time. I think as influencers we need to feel more comfortable standing up and saying when something isn't suitable for us - only then will change happen. I hope you can recoup some of what you're owed, but also move on from it positively.

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  3. I'd heard about this but thank you for explaining it in more detail. I feel bad for everyone affected by this. It's awful how long some of the overdue payments date back to, it's completley unacceptable.

    alicered.co.uk

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  4. I had been writing content for the Mode site, so I am owed two months' money, though in comparison to some I have got off lightly. I've had clients go bust before, so I did research Mode before I agreed to work for them. They looked like a successful company, but as we can see now that was all smoke and mirrors. It's very difficult to protect yourself from situations like this. I do hope that this heralds a move towards faster payment systems. In general, I find that blogging work pays much faster than other forms of freelance writing - I've had sponsored posts paid half an hour after the post has gone live, for example. The problem is that some companies set terms in a very 'old media' kind of way and take forever to pay. Hopefully now writers will feel that they can refuse terms that disadvantage them so much.

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    1. Sorry to hear you've lost out Joanne. It was definitely all smoke and mirrors - there's no way anyone could have really predicted this. But I agree, it's about time we asked for change and refused ridiculous payment terms from some of these companies. I find it unacceptable that some take endless months and chasing to pay, when we work within short guidelines and do our upmost to get the work done from our side.

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  5. I particularly agree that this is a time for all bloggers to stand together. I've read some really rubbish comments on Twitter, people exposing how much they're owed, bloggers turning on each other...what have we come to? I've never worked with them or any agency for that matter, so I may not know much about the subject but for me, working directly with the brand sounds miles better.
    Pam xo/ Pam Scalfi♥

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    1. Unfortunately at times like this people get very sensitive and emotions are heightened. I kept seeing comments about 'nasty tweets' but couldn't see any I thought weren't just normal conversation, which reinforces the idea that when it affects us we're extra defensive. I hope now we can collectively come together and learn from this all.

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  6. Wow! I hope all goes well.
    www.yvesofstyle.com

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  7. I was affected, and I'm kicking myself for not saving records of what I was owed. I just checked my financial statement and recorded what I had been paid. By the time I found out about Mode closing down, I was already locked out of my account. I'm usually smarter than that, but now I have no evidence that I was owed money. I guess this is a learning experience.
    Kisses,
    Sarah
    EverydayStarlet

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  8. You've made some good points here that I can take on board too. I think for me, I'm going to try and cut out the middle man and work with brands directly as much as I can! I'm still learning so much about blogging that I had no idea how much of a big deal Mode was. I feel sorry for everyone who hasn't been paid...and yes, six months is a very long time to let people get away with not paying them. What on earth happened there?!

    Yasmin Qureshi Photography

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