Newspaper Ad Revenue Fell Off Quite A Cliff: Now On Par With 1950 Revenue
from the adjust-for-inflation... dept
It's no secret that the newspaper industry has been in quite a decline lately. But a graphic put together by econ professor Mark Perry really highlights the massive size of that decline. It shows newspaper advertising revenue adjusted for inflation from 1950 to 2012 (with 2012 being estimated), and also includes a second line adding in online newspaper ad revenue. The situation is pretty clear:
It's another one of those huge Schumpeterian gales of creative destruction.Jay Rosen helpfully points out that the peak was the same year that blogging software came on the scene. Though, I'm doubtful that's the "cause" here. You could probably make a stronger argument that the introduction of Craigslist, which really came on the scene in San Francisco in the late 90s before spreading elsewhere in 2000, contributed to this, as did tons of other online services.
But, here's the thing: for years we keep hearing about how the "decline" of the newspaper industry is supposedly happening because they put their papers online for free. But this chart certainly suggests a very different story. As we've said for a while, the real problem wasn't "free" but the newspapers failure to innovate. Going free online, if anything, should have increased ad revenue, not decreased it, since it would have increased inventory (though potentially decreased the prices).
We've pointed out for many years that the "real" business of newspapers was never "news," but collecting together a community and then selling their attention. The problem that newspapers came up against wasn't that they were suddenly giving out content online for free, but that there were very, very quickly millions of other "communities" that people could join online, such that the community of folks reading the newspaper started to go down, and with it, the attention went away. Thus, advertising in a newspaper became a lot less valuable. In fact, it became even more pronounced because, at best, newspaper advertising was targeted around (a) the general location where the newspaper was published and (b) perhaps the section of the newspaper in which the ad was placed. But, again, the internet changed the equation there, where you could start to target the attention of various communities based on a variety of other factors, some of which were seen to be much more lucrative than a crapshoot towards "all people in this city."
Making matters even worse, as various online communities focused on providing more "community" oriented features and content, newspapers seemed to go in the other direction. In part, this was because they kept insisting they were in the business of providing news, not in the business of aggregating a community's attention. So they took the somewhat elitist view that the community didn't matter much -- often to the point of acting in almost insulting ways towards the community. Things like paywalls, overly intrusive advertising, limited community functionality and the like just made newspapers less and less relevant. And when you're less and less relevant to a community, their attention goes elsewhere... and with it, advertising revenue.
And, in fact, it does not appear that the money that used to be spent on newspaper ads went away. While there are a number of different sources that seek to calculate total ad revenue over time, here's a chart showing overall US ad revenue from 1919 up to 2007, in which you see that it has a pretty consistent upward trend (admittedly, this is not corrected for inflation). That same chart also shows advertising as a percentage of GDP... and that has been pretty consistently stuck between 2.0% and 2.5% since the early 1980s. Various other metrics seem to show something similar. US advertising, as a whole, continued to generally expand over the past decade and a half while newspaper advertising collapsed. Looking over some more data, it looks like the big winners since 1998 were, of course, the internet, direct mail, cable TV and "out of home" advertising. Also "miscellaneous."
In other words, the newspapers suddenly faced a lot more competition for ad dollars, and they did nothing to convince the market to stick with them. So, the market went elsewhere.
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Filed Under: ad revenue, business models, creative destruction, journalism
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People have learned they can get the news and it not be a day old when they get it on-line. No print costs for paper, ink, and delivery. So what is left for newspapers to put out cause paying to see ads aren't what I care about.
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Print advertising dropped significantly in all media, not just newspapers. It isn't a newspaper specific thing. You just have to look at how many magazines have either shut down or been made skinny as a result of the print ads disappearing.
Also, does that "ad revenue" include classified? That is one areas newspapers have been pushed out by the online world, with plenty of sites willing to do for free what they were charging for. Most of those players outside of CL and a couple of others come and go, as it is a difficult business model to make work. But newspapers just don't have the classified business they once had.
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Why do you think he mentioned craigslist.?
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Print media still gets plenty of eyeballs. It gets plenty of visiblity, and gets plenty of attention. Yet, ad rates keep dropping, the number of advertisers keeps going down... there is something wrong there!
Well, most people would say "it went online". They would be right, but not exactly as you think. It didn't go to great websites or anything like that, it's gone to one big sink hole: Google.
2011 Q1 Google netted around 2.5 billion, on sales just short of 10 billion - or net 10 billion for the year running rate, or about 40 billion of ad sales. Go look at the graph Mike put up, and there is about (shockingly) 40 billion of ad sales missing.
DING!
It's not perfect, clearly other online properties get ad dollars, and Google get small businesses that might never had used a newspaper ad. But the end result is there. The real shame of it all, the real problem is that Google is a company that is stockpiling money and not putting it back in the market. Newspapers use to take in 60 billion, and probably pay out 58 billion. Google holds 25% or more of the results as pure profit. That is money that is effectively pulled out of the economy.
So beyond what has happened to newspapers, you could also say that Google has been pretty bad for the economy overall. Sort of like what Wal-mart tends to do in the short run at least to local businesses.
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So yeah, a REALLY big mattress.
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Can you remind me of the Apple ad network again?
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Outside of search, Google doesn't do as well as they should considering their large audience. They make most of their money off of small to medium sites running their ads.
As for Mike, he lives as Howard Stern does. Half the people visit because they think he is god, the other half come because they think he's a clown.
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http://advertising.apple.com
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> They would be right, but not exactly as you think.
> It didn't go to great websites or anything like that,
> it's gone to one big sink hole: Google.
That is because Google came up with the greatest advertising platform ever. Advertisers love it. Especially small businesses. People looking for, or interested in your special brand of footwear see the ads for your product. Google doesn't waste your ad budget or other people's time by showing other people ads for your product if they are not interested in it.
Small businesses can set their advertising budget, and Google won't exceed it.
> The real shame of it all, the real problem is that
> Google is a company that is stockpiling money and
> not putting it back in the market.
Yes what a crying shame it is that Google came up with the most innovative and effective advertising platform ever and businesses are using it. Someone needs to pass a law that requires the world go back to less efficient, less effective and more annoying advertising.
Oh, boo hoo hoo, waaaaaaaaaaah! (wipes tear) It's all just so sad!
> So beyond what has happened to newspapers,
> you could also say that Google has been pretty
> bad for the economy overall.
So beyond what has happened to the horse and buggy industry,
you could also say that Automobiles have been pretty
bad for the economy overall.
(pony express --> telegraph)
(telegraph --> telephone)
(land line telephone --> cell phone)
(railroads --> trucking)
(radio, home recordable cassette tapes, VCRs, mp3 players, streaming, eBooks, the internet . . .)
Waaaaaaaaah!
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I miss them
Although I have to admit they did have their uses...masking off an area before painting, wrapping stuff up, swatting flies, and the one I really miss, is whopping the kids and dogs a good one with a rolled up newspaper.
Now I had to buy plastic for my painting projects and a fly swatter. Then the kids moved out...though I can still hit the dogs with my ereader, it's just not the same.
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Re: I miss them
I was visiting my son and daughter-in-law last night when I
asked if I could borrow a newspaper.
"This is the 21st century, old man," he said. "We don't
waste money on newspapers. Here, you can borrow my iPad."
I can tell you, that friggin' fly never knew what hit it ...
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Re: I miss them
Nobody reads them. They're there for my dog's poop.
I don't even wait till they're a day old.
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Newspapers actually hit a wall.
One thing they've also done that damaged them is how poorly most of them handle commenting, which is the key to building a community. Everybody wants to get your email address/ID to sell. Not a bad idea, but when you visit eight or nine different news sites in a day, across maybe two or three states in different time zones and each one wants the same information typed in to comment, over and over, it gets old in a hurry. Poor implementations of OpenID aren't a big help with this, nor any other "capture the user" schemes.
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Newspapers always claim that they are in the news business, but most forget that they are also in the writing and publishing business. What aspiring student/amateur writer would not want to see their work published in the local paper?
If 99% of the local paper is devoted to talking to the community, then devoting 5% to listening to the community isn't, I don't think, a lot to ask of your local paper.
This would give me a reason to buy the daily paper, April through October, and vote in November my mailing in my tear-out ballot.
Seriously, I can't justify, nor afford, spending a dollar everyday for a crossword puzzle or a Cryptoquote.
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The media has really gotten away with a lot of lies and nonsense over the years thanks to an unconstitutional govt. established media monopoly (it effectively restricts free speech) and, thanks to insanely long copy protection lengths, it's hard for us to document their past lies and distribute it for future generations to see and learn from. The only reason the media isn't so bad anymore is because of the Internets influence on it.
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All the News that's Fit to Print
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Once you get by concentration of ownership, if you can, you'll find that most investigative reporting tends to avoid challenging the power structure which is what Woodward and Bernstein did. Though, to be honest, print still covers more deeply than TV does. And more than most blogs do.
As others have mentioned newpapers have been in cost cutting mode long before craigslist or blogs appeared so that their ownership could pay off the debts established building huge chains of papers. And the easiest way to do that? Lay off your most seasoned and experienced staff and hire people on the cheap. Pay AP not your own staff. Hire stringers. Specialize in "he said, she said" stories and pretend that's objective and penetrating journalism. And if there's no blood for the "if it bleeds, it leads" truism, find a way to create some.
And as you said, reprint, almost verbatim, corporate and government press releases without investigation or even a hint of rewrite to them.
As for craigslist or Kijji, the most recent response to that around these parts has been to put the classifieds behind a paywall!
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http://advertising.apple.com
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For those interested here's the article (in Portuguese):
http://terramagazine.terra.com.br/silviomeira/blog/2012/09/17/schumpeter-a-destruio-cr iativa-e-o-fim-dos-jornais/
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In other words, they're doing as little as possible to have an online presence.
Then they try to sucker you into buying their "digital edition", which is nothing more than an exact reproduction of their print version.
I'm amazed they've stayed in business this long.
The only good thing I can say about the local newspaper is that the local TV station websites are worse.
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Nobody likes a liar!
They did it to themselves and I have no sympathy for them.
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Every Liar is a Theif
Remember these saying
EVERY LIAR IS ALSO A THEIF!!!!!!
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The tendency to parrot whatever the government lie du jour is hasn't helped matters. Especially after 9/11/01, which still stinks to high Heaven. Try telling the unvarnished truth once in a while and possibly even taking a slightly progressive or at least humanistic point of view. It's not all about money and the 1%.
When newspapers lie perpetually, people figure out they're being lied to. Mass media exists to shape public opinion. Mass media ought to provide information and allow people to make up their own minds.
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Why The Decline
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