Chart of the Day, Newspaper Ad Revenue Edition
Care of The Atlantic's Derek Thompson, graphical representation of what happens when technology-enabled consumers can escape monopolies:
As I wrote last year,
With each passing year, the golden era of modern newspapers—roughly the four decades from 1960 to 2000—is coming to resemble the kingdom of Hungary during the dual-monarchy's salad days of 1867-1914. What once looked like a permanent empire is now revealed as an ahistorical lucky streak undermined by overreach and the desire among captive citizens to be free.
But that late '80s dip makes me want to revise the time band. It's a flip guess, but I'd bet that the pre-Internet contraction reflected the 1980s rise in desktop publishing (an underappreciated yet crucial development that gave birth to the newsletter industry and all kinds of niche publishing), plus the post-Fairness Doctrine explosion of AM talk radio and cable news. Which, combined with the mostly forgotten recession under George H.W. Bush, forced newspapers to think competitively for the first time since the wave of consolidation during the Mad Men era.
The result was a new wave of professionalization and profit-maximizing on the business side of the Chinese Wall, which (along with an improving economy, and improving cities) produced that last-gap '90s boom. When the Internet offered consumers a better place to get their classifieds and information, and the newspaper companies mostly failed to adapt their fattened operations to the new, rapidly-changing environment, thus began the vicious cycle of cutbacks and customer-squeezing. That's my best guess, anyway.
Thompson makes a good point here:
You sometimes hear it said that newspapers are dead. Now, $20 billion is the kind of "dead" most people would trade their lives for. You never hear anybody say "bars and nightclubs are dead!" when in fact that industry's current revenue amounts to an identical $20 billion.
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 structural transformation of the newspaper business has produced any number of just terrible public policy ideas; I talk about some of them here. And read Nick Gillespie and I on a similar story: "Learning From Kodak's Demise."
