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Bummer of a Business Model, Redux
I ran over this fascinating graph this morning, from a presentation put together by Hal Varian, Google's Chief Economist.
Newspaper ad revenues is that long blue line at the top that has been falling continually for the last 60 years.
The observation that strikes me is not The Internet is killing Newspapers!
The question that strikes me is What was killing Newspapers for the four decades before the Internet came along? For that matter, why wasn't the newspaper business doing something about it?
The answer to that next-to-last question, by the way, is that advertisers have shifted their spending from newspapers to television continually for the last half century, as people have stopped being readers and started being viewers instead.
Newspaper ad revenues is that long blue line at the top that has been falling continually for the last 60 years.
The observation that strikes me is not The Internet is killing Newspapers!
The question that strikes me is What was killing Newspapers for the four decades before the Internet came along? For that matter, why wasn't the newspaper business doing something about it?
The answer to that next-to-last question, by the way, is that advertisers have shifted their spending from newspapers to television continually for the last half century, as people have stopped being readers and started being viewers instead.
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There's some strangeness to the data - radio pre-1979 numbers look made up to me - constant 20%, really? but the one I would love to see explained is the drop in TV ad spending in 1971. What the heck happened there?
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That makes no sense, because what this chart shows isn't absolute ad spending, it's % spent on the various categories. In other words, for any given year, all the data points should add up to 100.
So if TV's share dropped in 1971, what other categories go the corresponding increase? It looks like maybe "direct mail" and a slight reversal in "newspapers", but are the bumps there enough to soak up the drop in TV's share?
And even if you accept that there was such a sudden drop in TV's share of advertising budgets in 1971, it still begs the question of _why_ there was such a drop? If it was related to the oil shock, how so? For example, were auto makers and dealers doing lots of advertising, which all dried up after the oil shock?
I suspect a different cause for the 1971 drop: the banning of cigarette advertising on television, which took effect on January 2, 1971 (http://en.wikipedia.org/wiki/Tobacco_advertising#United_States). Quite simply, the tobacco industry took their ad dollars elsewhere. According to http://www.tvparty.com/vaultcomcig.html :
I'm still dubious of the radio numbers, just as one of your other commenters pointed out, which makes me somewhat suspicious of the whole exercise...
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Whups, you're spot on, I was making the same comparing relative numbers to absolute numbers cognitive error that
I'm still dubious of the radio numbers, just as one of your other commenters pointed out, which makes me somewhat suspicious of the whole exercise...
Well, it's possible Hal got his math wrong somewhere, but you're welcome to crunch the original census numbers as you see fit - http://www.census.gov/compendia/statab/2010/tables/10s1243.xls (http://www.census.gov/compendia/statab/2010/tables/10s1243.xls)
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...okay, maybe my second thought, right after "Argh, I can't tell what's going on here, which is which line - gah!"
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Thanks.
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So the statement the fraction of the US population who watch television is higher than have ever read newspapers is either simply false, or has only very recently become true. (The latter could be the case if a statistically significant number of US households received several different newspapers every day during the period prior to radio / television. We believe that a large number of households did, but that that would change the effective numbers to something like 70% of US households receive at least one newspaper, and television only relatively recently exceeded 70% viewership)
The statement more people in the US watch TV than have ever read newspapers, however, is true. I think it's vacuously true, though, because it's only true because of the growth in the US population over the last century. It's also misleading, because it implies the prior, false, statement, about the faction of the population who reads newspapers.
The core demographic fact is that after the Great Depression, as the population grew, the number of newspaper readers pretty much stayed constant. Which means that the industry has been in a more than half-century decline in popularity with the public.
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I suspect: Competing out their opponents and consolidating markets. Which may also explain the drop in newspaper ad spending since papers were dropping in number (of papers) while broadcasters were increasing in number (of outlets/stations), probably well before the drop in reader numbers.
Also, note some were themselves buying or starting up broadcasters.
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