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Newspaper Industry Ad Revenue at 1965 Levels (Dinosaur Media DeathWatch™)
Columbia Journalism Review ^ | August 19, 2009 | Ryan Chittum

Posted on 08/19/2009 4:21:46 PM PDT by abb

Inflation-adjusted numbers show papers are even worse off than you think

Martin Peers had a smart Heard on the Street in yesterday’s Wall Street Journal on the critical question of how much of the recent plunge in media companies’ fortunes has been a cyclical decline versus a secular one.

It’s obviously some of both, but the mix will decide what the next five years look like for magazines and newspapers, the critical providers of original reporting in the country. Alas, I’ve crunched some numbers on the industry and they’re beyond ugly.

First, some definitions. A cyclical decline is one due to the inevitable ups and downs of the broad economy. Most businesses get hurt in the recession part of a cycle but do well in the expansionary part and their fortunes more or less move up or down with the economy at large.

But structural changes in the economy or a specific industry can result in secular changes for a business. Think for instance, the classified-ads business of newspapers, which has been walloped by eBay and craigslist (with a final indignity provided by the cyclical collapse of the housing bubble). Most of those revenues aren’t coming back. That’s a secular decline.

Overall daily newspaper-industry ad revenue just flat-out crashed last year, plunging 16.7 percent to $37.8 billion from $45.4 billion in 2007, which itself was a bad year with ads down 7.9 percent from $49.3 billion in 2006.

It gets worse. So far 2009 has been more dismal than 2008. Alan Mutter predicted in January that newspaper revenue would tumble 17.3 percent this year to $31.6 billion, or just below 1993 levels. If anything, his numbers may be optimistic. Several major newspaper companies have reported declines of about 30 percent so far this year.

But even that $31.6 billion understates just how awful the numbers are. Remember $31.6 billion in 1993 bought a whole heckuva lot more than $31.6 billion does today—49 percent more to be exact.

So I went back through the Newspaper Association of America’s data on newspaper-industry revenue, which goes back to 1950, to see what year we’re actually even with now. It’s ugly: You have to go back to 1965 to find a year with revenue lower in 2009 dollars than what this year is projected to be. That year, the industry took in $4.42 billion, which works out to $30.22 billion in current dollars. The industry can only hope this year hits 1966 levels, which work out to $32.4 billion in real dollars. (A caveat: there are fewer papers now than there were in 1965 and production is more efficient.)

Here’s a chart I cobbled together that illustrates the disparity between nominal and real (inflation-adjusted) numbers. Note: the 2009 number is Mutter’s $31.6 billion estimate. Click the chart for a bigger image:

What stands out immediately to me looking at real dollars (which are all that really matter), is that the peak of the last recovery, in 2004, with $55 billion, never got close to the peak of the previous recovery, 2000—when real ad revenues hit $60.9 billion. To make matters worse, the 2002-2004 recovery never reached the peak of two recoveries ago, in 1988, when real ad dollars hit $56.8 billion. Recall, this year ads are projected at just $31.6 billion—if they’re lucky—a 44 percent decline from twenty-one years ago.

That folks, is secular decline, and the vast majority of those dollars are not coming back.

You’ll see, as well, if you trace a line across the chart, that the last time ad revenues were lower than the estimated 2009 total was forty-four years ago (they tied it in the recession of 1970), when they were $30.1 billion.

This is the state of the business today. One recent study by Borrell Associates (see chart below) predicts that newspaper ads have hit bottom and will edge up in the next few years. That would be great, but nobody can predict a bottom in any market, especially one with as many unknowns as the newspaper industry—and in an economy as uncertain as this one.

Newspapers need a rip-roaring recovery to recover a small portion of the ground they’ve lost, and I doubt they’re going to get it. Barring that, they have to staunch circulation declines to try to manage the longer-term decline of the print business, which, after all still has 42.8 million readers paying for the newspaper every day. Certainly, the devastated economy has been a significant factor in pushing down newspaper ads far below what the secular changes would have alone, but it’s clear the secular changes have been dominant.

As for the Journal’s Peers, his larger point is that the collapse has been so shocking it has forced media companies to own up to the fact that ad-only strategies aren’t going to cut it for many of them:

For investors, the positive development of the recession is how much it has changed attitudes about the Internet’s potential as a business model. After several years of acting like lemmings, offering some of their best content free online, both TV and print media executives are rethinking. It is now clear that Google’s spectacular success at building a highly lucrative business from its heavy Internet traffic was something of a one-off. Amassing a big audience online doesn’t yet guarantee enough ad revenues to sustain a big business.

That’s right. The industry got just $3.1 billion from online ads last year, a number that is on pace to decline significantly in 2009. Even that 2008 number was only about 5 percent of the industry’s peak ad revenues in 2000. Again, I’ll note that circulation revenues are the only part of the pie growing right now.

Tough business, no?

ADDING: If you want to look at the precise numbers I used and calculated, here’s my Excel spreadsheet (converted from OpenOffice, so hopefully it will work on Excel).


TOPICS: Business/Economy; Culture/Society; Extended News; News/Current Events
KEYWORDS: advertising; ccrm; dbm; newspapers

1 posted on 08/19/2009 4:21:46 PM PDT by abb
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To: abb

OUCH!


2 posted on 08/19/2009 4:22:10 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: 04-Bravo; aimhigh; andyandval; Arizona Carolyn; backhoe; Bahbah; bert; bilhosty; Caipirabob; ...

ping


3 posted on 08/19/2009 4:22:36 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: abb

The 4th estate is a 5th column.


4 posted on 08/19/2009 4:25:11 PM PDT by Drango (A liberal's compassion is limited only by the size of someone else's wallet.)
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To: abb

At this rate it will be ads for five-and-dime stores and women’s underwear at JCPenny


5 posted on 08/19/2009 4:26:14 PM PDT by ak267
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To: ak267

I think they’re desperately clinging to life in hopes of a government cash transfusion (they’ll get taxpayers’ money out of their pockets one way or another-if we won’t buy it, they’ll tax us not to read it)


6 posted on 08/19/2009 4:28:23 PM PDT by mrsmel (Put the Gitmo terrorists near Capitol Hill.)
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To: abb
I wonder what it would look like if they took the Penny Shoppers, Car Traders and Apartment Locators out of the newspaper total. IRRC, they didn't become serious players before the 80's. Thus they are counted now, but weren't counted then.
7 posted on 08/19/2009 4:28:39 PM PDT by Zakeet (Don't tell Obama what comes after trillion)
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To: abb
magazines and newspapers, the critical providers of original reporting

Still delusional.

8 posted on 08/19/2009 4:30:06 PM PDT by NativeNewYorker (Freepin' Jew Boy)
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To: Zakeet
I wonder what it would look like if they took the Penny Shoppers, Car Traders and Apartment Locators out of the newspaper total.

Yes, a good point. On the other hand, back in 1965 there were many more newspapers out there - big cities often had several morning and afternoon papers.

9 posted on 08/19/2009 4:31:58 PM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: abb

Death spiral with only one way out: become what the founding fathers established- a real threat to government excess and corruption.


10 posted on 08/19/2009 4:34:57 PM PDT by NotSoModerate (Report dissenters to snitch@whitehouse.gov for a $4,500 tax credit)
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To: abb

With their attitudes and covering for Obamessiah, the TV MSM will continue to experience the same decline.


11 posted on 08/19/2009 4:36:32 PM PDT by F15Eagle (1 John 5:4-5, 4:15, John 11:25, 14:6, 1 Tim 2:5, John 3:17-18, John 20:31, 1 John 5:13, John 6:69)
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To: abb

I like to read the local newspaper Sun Sentinel online. But the idea of having to go out early in the morning a fetch a paper copy of it is now repugnant to me. Practically none of my neighbors gets a paper copy anymore, except one neighbor who is in his late 60s. A paper newspaper seems so quaint . . and what a hassle to dump in the trash with all of those ads on Sunday

All in all, am delighted with the loss of the traditional newspapers. These papers thought they were well-loved, when in reality they were only tolerated because they had a monopolistic stranglehold on local news.


12 posted on 08/19/2009 4:37:43 PM PDT by steven33442
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To: steven33442

Yes, but newspapers also serve a purpose: to line the bottom of the garbage for leaks and liquid crap.


13 posted on 08/19/2009 4:48:15 PM PDT by max americana (i)
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To: abb

Image and video hosting by TinyPic
Excellent.

14 posted on 08/19/2009 5:15:51 PM PDT by Recovering_Democrat
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To: abb

A 1965 fine whine.


15 posted on 08/19/2009 5:28:08 PM PDT by razorback-bert (We used to call them astronomical numbers. Now we should call them economical numbers.)
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To: abb

Here in Dallas I totally stopped buying any paper at all. Even if they mention me, I ain’t paying for it. The Sunday paper at $2?? No way... someone recently told me its $3 now...???

Why on Earth would I pay $3 for yesterdays news when I have internet??


16 posted on 08/19/2009 5:28:12 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: steven33442

Now if someone started a real conservaive paper...


17 posted on 08/19/2009 5:29:47 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: abb

All this tired discussion on whether the media decline is cyclical or secular is complete BS. These articles are missing the biggest factor; that is, how media companies such as the New York Times, MSNBC, and CNN are betting their businesses on particular ideologies and, in doing so, alienate at least 50% of the available market, given the current political polarization of the country. That means their financial fortunes fluctuate with the swinging political pendulum - and we know that is about to swing back to the right in time for the 2012 election.


18 posted on 08/19/2009 5:33:42 PM PDT by balls
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To: GeronL
Now if someone started a real conservaive paper...

The Washington Times is a real conservative paper.

So how are they doing? As of last April, circulation was up:

The Washington Times' total average paid daily circulation defied the industry trend, increasing more than 3 percent during the past six months from 80,998 (April through September 2008) to 83,511 (October 2008 through March 2009). Sunday circulation increased from 37,816 to 43,889 over the same period.

"We're cooking," said Frank Grow, vice president of strategic development and circulation for The Washington Times. "I attribute our growth in circulation to an improvement in our product and tighter marketing in our demographic area, and we expect this trend to continue."

I don't know how the Times is doing financially. Higher circulation might not mean higher revenues.

19 posted on 08/19/2009 6:43:01 PM PDT by TChad
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To: TChad

For around $39 a year you can get their e-edition I guess through email. Or is that the Wash Examiner?

Wouldn’t it be fascinating if the Wash Times tried to create an e-edition that appealed to FReepers?


20 posted on 08/19/2009 6:57:23 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: GeronL
Wouldn’t it be fascinating if the Wash Times tried to create an e-edition that appealed to FReepers?

They could produce e-editions customized for particular audiences, heavy on news in user-selected categories. That could work very well. I would also like to see a short edition that would format correctly for laser printout on 8.5x14 paper. I already spend too much time looking at computer monitors, I want to hold my newspaper in my hands. For the moment I can still do that, but in the future? A 20 page user-printable edition with news and other features from the categories I selected would be about right, maybe 30 pages on the weekends.

Or is that the Wash Examiner?

The Washington Examiner has certainly signed on a lot of great columnists. Unfortunately I can't buy it here, but I can usually buy the Washington Times. Both papers have e-editions.

21 posted on 08/19/2009 7:50:17 PM PDT by TChad
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To: TChad

They already have a machine that prints on plain paper and staples them together that puts out 20 page papers for around a buck at some colleges and stuff... or just being tested... let me see if I can google it... there was also a machine that prints books on demand


22 posted on 08/19/2009 9:32:00 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: TChad

http://www.aardvarknet.info/access/number67/othernews.cfm?othernews=09

here is a book version I found


23 posted on 08/19/2009 9:43:37 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: TChad
Probably cost a few bucks in those days
24 posted on 08/19/2009 9:46:01 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: GeronL

http://www.flickr.com/photos/thorpus/1860099398/


25 posted on 08/19/2009 9:46:48 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: GeronL
Thanks for the posts. In trying to learn more about your newspaper vending machine that prints 250 papers, I found this:

http://www.pressdisplay.com/pressdisplay/viewer.aspx

26 posted on 08/19/2009 10:00:01 PM PDT by TChad
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To: GeronL
I may sign up for pressdisplay, after I wade through their Terms of Use and Privacy Policy. Still, what I really want is a downloadable pre-formatted little printable paper, perhaps in PDF format, something I can print myself. My laser printer can easily handle the load. I have a heavy duty stapler, and I can find cheap paper. I would like for the printout to look good, and I don't want to waste time formatting it myself.

Better than looking at a Kindle. At least I would like the choice.

27 posted on 08/19/2009 10:31:42 PM PDT by TChad
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To: TChad

Those kiosk things were around that did that but I don’t know if their still in business. Did you see the flikr image of the kiosk I posted a link to?

It does exactly what you are asking but its dollars per copy from that source.

Maybe we should think about software.

What if we could get a program that could download news. opinion and stuff you’re interested in and print it for you before you wake up?

for example:
Things from the Wash Times, NY Post, UK Telegaph, maybe your favorite blogs and put them together and print them each morning. I think a desktop machine that could do that as well as be your regular printer/copier/fax would sell like hotcakes.

I don’t think I’d want to pay to see a newspaper online. I foten check out the front pages, which is free there though


28 posted on 08/19/2009 10:44:34 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: TChad

Here is a Jet Aviation service that does it for their customers.

http://www.jetaviation.com/index.php/latestnews/618

The technology to do this at home exists, somebody just has to be able to get it to market and make it happen.


29 posted on 08/19/2009 10:51:23 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: GeronL
Did you see the flikr image of the kiosk I posted a link to?

Yes, and it would be better than nothing, but probably fairly expensive.

Maybe we should think about software.

Of course you are right, this is all about software. The subscriber checks boxes next to keywords describing which types of news he wants to receive, or enters his own keywords. All news content is scanned and perhaps tagged with keywords. The software then chooses the content that best matches the subscriber's priorities, selects an amount of content that can be printed in the desired printout space, formats the content attractively in a PDF file, and emails or otherwise makes the PDF available to the subscriber.

I think a desktop machine that could do that as well as be your regular printer/copier/fax would sell like hotcakes.

I suppose this could work with a specialized large format printer. I was thinking more of using existing printers, but if many people started printing their own papers, they would demand specialized printers.

I suspect that most users might actually prefer to use Kindles or something similar, to save on printing costs. However if the news can be specially packaged and formatted for a Kindle, it can also be packaged and formatted for a printer.

This has been interesting, but I have to call it a night.

30 posted on 08/19/2009 11:43:47 PM PDT by TChad
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To: TChad

Yes, I bet someone who is smart could do that too. does a Kindle have a USB port? wait its wireless, lol!

I was also thinking its probably possible on existing printers too. The one sitting next to me has fax/copy capabilities


31 posted on 08/19/2009 11:53:10 PM PDT by GeronL (Pro-Freedom Fiction Writers Unite! - http://libertyfic.proboards.com)
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To: NativeNewYorker
magazines and newspapers, the critical providers of original reporting

Still delusional.

Well they're repeating original Democrat talking points, that's almost the same as original reporting.

32 posted on 08/20/2009 12:18:45 AM PDT by RJL
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