Print ad revenues: Even a rock doesn't fall this fast

Derek Thompson, a senior editor at The Atlantic, cuts to the chase in his lede:

Call it creative if you want, but this is what economic destruction looks like. Print newspaper ads have fallen by two-thirds from $60 billion in the late-1990s to $20 billion in 2011.

“This” is a graph in a post by Mark Perry, a professor of economics and finance at the University of Michigan.


The decline in print ad revenues is precipitous. Perry, on his top-notch blog “Carpe Diem,” notes:

Here’s another perspective: It took 50 years to go from about $20 billion in annual newspaper ad revenue in 1950 (adjusted for inflation) to $63.5 billion in 2000, and then only 11 years to go from $63.5 billion back to about $20 billion in 2011.

Surely such a stunning decline would shake industry leaders into prompt action collectively and individually. That, however, is not always the case. In one anecdotal case, nothing is imminent.

Here’s Thompson’s analysis. Sound familiar?

So the reason newspapers are in trouble isn’t that they aren’t making lots of money — they still are; advertising is a huge, huge business, as any app developer will try to tell you — but that their business models and payroll depend on so much more money. The U.S. newspaper industry was built to support $50 billion to $60 billion in total advertising with the kind of staffs that a $50 billion industry can abide. The layoffs, buyouts, and bankruptcies you hear about are the result of this massive correction in the face of falling revenue. The Internet took out print’s knees in the last decade — not all print*, but a lot.

Don’t just blame the bloggers. For decades, newspapers relied on a simple cross-subsidy to pay for their coverage. You can’t make much money advertising against A1 stories like bombings in Afghanistan and school shootings and deficit reduction. Those stories are the door through which readers walk to find stories that can take the ads: the car section, the style section, the travel section, and the classifieds. But ad dollars started flowing to websites that gave people their car, style, travel, or classifieds directly. So did the readers. And down went print.

What’s troublesome to me is the contrast between the newspaper industry’s long-held attitude toward readers — We will tell them what we think they need to know — and what newspapers actually do these days to retain readers, and thus advertisers — We will tell readers what they say they want to know. The switch isn’t working. Neither are the Band-Aids on a tired business model.

The industry writ large has not successfully re-invented its relationship with readers — especially online readers. Consider the language customarily used by newspaper executives in discussing how to bolster online advertising revenue:

We want to monetize our website with a paywall.

Paywall. Pay wall. That’s not the language of invitation; it’s the language of obstruction. How does that language lead to a mutually fruitful relationship between a business and a consumer?

The nation badly needs a successful industry whose product is a significant quantity of quality journalism. The evidence provided by Thompson and Perry argues we don’t have one anymore.

All of us who treasure credible sources of information are worse off in obtaining what we need to make sound political and consumer decisions.

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