Newspaper ad revenue got pounded again in Q3: Down 7.4% percent year on year. Analyst Henry Blodgett (yes, bubble veterans, he's still out there) pulls together the data to show it's not that bad, it's worse. Taking a time series of top line data back to the 90s, just at the start of the bubble, and then adjusting for inflation gives a horrendous picture:
Even without the inflation hit, that makes the modest industry recovery after the twin hit of the bubble bust and 9/11 look like a last gasp, before plummeting out of the sky. That kind of accelerating slope is every VC's dream - if it were in the other direction. If you've never seen the 'reverse S curve' when a former innovation is abandoned by the population, you're looking at one here.
Blodgett sums up cause and effect:
...newspapers did a brilliant job of ramping their sales smoothly throughout the 1990s by boosting ad rates at will. Those remarkably consistent and predictable sales gains were derailed by the arrival of Internet and other disruptive, new technologies that give readers and advertisers unprecedented media alternatives. Seemingly dumbfounded by the arrival of serious competition for their audiences and advertising revenues, newspapers have been struggling for more than a decade, with meager success, to regain their relevance and economic vitality.
Having grown up in a General Motors family during the 60's and early 70's, this sounds familiar. Arrogance on the part of both management and labor, a belief the customers have no alternative but to keep paying increasing costs and accept the (low) quality on offer, followed by the arrival of competition to feast on the disgruntled customer base. But at least GM had this: Everyone kept driving, the market didn't vanish. But it's no longer clear that the major metro broadsheet fills a need for anyone but its incumbent interests.
Update: Editor and Publisher has more details and they don't make things look prettier. The 7.4% cited above is inclusive of newspapers' online ad revenue. Take that out and the drop in print only was 9% year-on-year. Online ads grew 21.1% YOY, but their growth to $773 million was swamped out by the losses in print, which was at $10.1 billion in Q3. I'm hardly the first to observe that the outcome is likely to be a much smaller 'newspaper' segment post the transition to the Internet.
All ad revenue categories suffered losses, but it's the classifieds that are just getting pounded. The overall category declined 17% YOY, with autos down 17.7%, recruiting 19.7% and downturn-plagued real estate off a stunning 24.4%. eBay, craigslist, and all the automotive sites doing serious damage, and there's no apparent way to reverse the trend. Disaggregation is a done deal.