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Sunday, May 03, 2015

Newspaper ads down 75%

Remember what you made in 2000? Well, give me three-quarters of that money and live on the rest. That's the situation the nation's newspapers are in. While advertising grows by leaps and bounds, the newspaper industry has seen not only its market share crumble, but its actual revenues drop by more than 75% in the last 15 years.

Measured in constant 2014 dollars, newspaper advertising dropped from $67 billion in 2000 to $16.4 billion in 2014. There was a slight add-on of online advertising -- $3.5 billion in 2014 -- as newspaper management makes a half-hearted attempt to join the 21st century, an attempt that only underscores the impotency of newspaper managers as that $3.5 billion online is a small part of the $52 billion being spent on U.S. online advertising.  Overall, newspapers collected just under $20 billion of the $180 billion spent on advertising last year in the United States.

Here is some news for newspaper: Putting up paywalls is like charging the actual cost of a home delivered newspaper. The big money is in advertising. The last time I looked, Google had no paywall and a market cap of $371 billion -- or more than all the newspapers put together.

But hey, your techs know better than Larry Page and Sergey Brin, right?

(Pauses to let the newspaper managers Google those names.)

From Mark J. Perry, professor of economics and finance at the University of Michigan's Flint campus, and American Enterprise Institute fellow: "Economic Lesson: The dramatic decline in newspaper ad revenues since 2000 has to be one of the most significant and profound Schumpeterian gales of creative destruction in the last decade, maybe in a generation. And it’s not even close to being over. A 2011 IBIS World report on 'Dying Industries' identified newspaper publishing as one of ten industries that may be on the verge of extinction in the United States."

After a career that spanned 40 years in newspapers, I would say it is not the incessant liberalism of the newspaper reporters and managers, but rather the incestuous management of these enterprises. Widows of publishers make the worst executives. These are family dynasties ruled by rich white people whose worldview is positively 18th century patriarchal. They disdain "white privilege" with a lack of self-awareness that even Miley Cyrus could see.

That Mark J. Perry sees this collapse as a confirmation of the economic viewpoint of Joseph Schumpeter, Karl Marx and Friedrich Engels is hilariously delicious. Of course, the third- and fourth-generation executives running these corporations are fans of Marx and company, not realizing that they are the very people Marx and Engels would impale on a pike.

What Marx and Engels failed to do the capitalists Larry Page and Sergey Brin have accomplished.

Moral of the story? Don't send the kids to Tufts, and get some new blood in there. Best publisher I ever grew up dirt poor in Mingo County and joined the Air Force to escape.