Carpe Diem

Creative destruction: Newspaper ad revenue continued its precipitous free fall in 2013, and it’s probably not over yet


For the last several years, I’ve been regularly posting charts like the one above showing the history of US newspaper advertising revenue back to 1950, based on quarterly and annual data from the Newspaper Association of America. Those charts have been noteworthy for several reasons.

First, more than any of the hundreds of charts and graphs that I’ve created and posted on Carpe Diem over the last seven years, the newspaper ad revenue charts have received the most attention by far. Those charts have been featured on so many other blogs and websites that a recent Reuters article referred to my most recent version as the “much-reproduced chart.” I hope this is a testament to how powerful and compelling the graphical representation of data can be!

Second, it’s possible that the attention the ad revenue charts were generating on the Internet may have contributed to the decision by the Newspaper Association of America (NAA) last year to suddenly stop its long-standing practice of reporting quarterly advertising revenue data and switch to releasing only annual data. In a 2013 interview, NAA CEO Caroline Little was quoted as saying that she and the organization’s board decided it was “time to stop beating themselves up four times a year with the negative numbers.”

Without access to quarterly data, I’ll now only be able to update the charts and report newspaper ad revenue once a year when annual data are released in April by the NAA, which just released its ad revenue figures for 2013. The updated chart above shows annual data from 1950 to 2013 in inflation-adjusted (2013) dollars. The blue line represents total annual print newspaper advertising revenue (for the three categories national, retail, and classified), and appear in the chart as billions of constant 2013 dollars. Newspaper print advertising revenues of just $17.3 billion in 2013 fell to the lowest level of print advertising since the NAA started tracking industry data in 1950. In constant 2013 dollars, advertising revenues last year were $2.7 billion (and 13.5%) below the $20 billion spent in 1950, 62 years ago. Print advertising last year was almost $2 billion below the level of $19.2 billion in 2012, which was the first year that print advertising revenues fell below the 1950 level.

The decline in print newspaper advertising to a 63-year low is pretty amazing by itself, but the sharp decline in recent years is stunning. Newspaper print advertising revenues decreased more than 50% in just the last five years, from $37.6 billion in 2008 to only $17.3 billion last year; and by almost 70% over the last decade, from $56.9 billion in 2003.

Here’s another perspective: It took a half century for annual newspaper print ad revenue to gradually increase from $20 billion in 1950 (adjusted for inflation in 2013 dollars) to $65.8 billion in 2000, and then it took only 12 years to go from $65.8 billion in ad revenues back to less than $20 billion in 2012, before falling further to $17.3 billion last year.

Even when revenues from digital advertising and other categories described by the NAA as “niche publications, direct marketing and non-daily publication advertising” are added to print ad revenue (see red line in chart), the combined total revenues for print, digital and other advertising last year was still only $23.56 billion in 2013 dollars, which was the lowest amount of annual ad revenue since 1954, when $23.3 billion was spent on print advertising alone.

The introduction of digital advertising starting in 2003, and the introduction of “niche publications, direct marketing and non-daily publication advertising” in 2011, have helped to slightly increase total ad revenues (print + digital + other), and the red line in the chart shows the contribution of those other revenue sources. But those sources are relatively small in comparison to print advertising revenues, and haven’t stopped the continuing, overall decline in total ad revenues. For example, digital advertising increased only 1.5% last year, the niche/non-daily category fell by almost 6% and direct marketing increased only 2.4%. Print advertising fell last year by 8.6%, and overall total advertising revenue fell by 6.5%. Those new revenues sources are certainly helping to stop the revenue decline from being even steeper, but won’t likely ever be high enough to reverse the precipitous overall decline in ad revenues in the coming years.

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 IBISWorld report on “Dying Industries” identified newspaper publishing as one of ten industries that may be on the verge of extinction in the United States.

HT: Sprewell

31 thoughts on “Creative destruction: Newspaper ad revenue continued its precipitous free fall in 2013, and it’s probably not over yet

  1. I have a question :

    How is it that industries not known for being politically connected (taxis, restaurants, mid-level hotels) are able to get the government to block their technological disruption…

    ….Whereas newspapers (which are very politically powerful, and of huge value to lefty politicians), were not able to muster up a governmental resistance to their disruption?

  2. Prof. Perry,

    Index the revenue to Nominal GDP (rather than merely inflation), for an even starker chart…

    Revenue being the same as 1950 is much worse than it sounds, given that Real GDP grew 3.2%/year over that time (and thus Real GDP is 8x higher). The 2013 number, as a share of Nominal GDP (Real GDP + the already-included inflation), would be very, very much lower than the 1950 number…

  3. It’s interesting that internet tycoons have bought newspapers recently.

    Jeff Bezos purchased the WAPO and Aaron Kushner has purchased the Orange County Register.

    Mr. Kushner has quickly launched a competitor to the L.A. Times, in L.A. County, called the Los Angeles Register. The L.A. Register’s prime thrust is an emphasis on local L.A. County news.

    Good luck to these fellas in their contrarian bets.

  4. –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–

    Rubbish. What has been creatively destroyed is local retail business. Show us a graph of the decline of local retailers and newspaper advertising and see if you see a correlation.

    –one of ten industries that may be on the verge of extinction in the United States–

    Rubbish again. National and regional may be at risk, but local newspapers still have a purpose as the indispensable provider of local news people need to plan their future.

    What you will see is a change from advertising shouldering 75% of the cost of news back to a subscription model in use 150 years ago. Advertising was needed to support print and delivery. $2 a week is a cheap price for an easy-to-read formatted digital edition of necessary news.

    • swb-

      “Rubbish. What has been creatively destroyed is local retail business. Show us a graph of the decline of local retailers and newspaper advertising and see if you see a correlation.”

      are you trying to claim that local retailers have seen anyhting like this dramatic a drop? that is simply untrue.

      “Rubbish again. National and regional may be at risk, but local newspapers still have a purpose as the indispensable provider of local news people need to plan their future. ”

      this is simply not true. local papers have been under more, not less, pressure and have been going out of business wholesale. people do not pay for them at nearly a rate to cover massive advertising losses. towns have websites now.

      they were also the most dependent on classified ads, and those are not coming back.

      overall, circulation revenue is not even half of this dramatically lower ad revenue.

      the notion that people are going to pay more to get news late in a less useful format and that local papers are valuable to any but the smallest advertisers is simply wrong.

      perhaps before making claims of “rubbish” you should acquaint yourself with the facts. you appear to have them quite wrong.

      • morganovich, I assure you that I am an authoritative source. Retail businesses have closed in our market, closing matching the decline of advertising. My market is a small market, where local newspapers have a solid future between digital and print.

        I suspect most of the critics of newspapers can’t differentiate between opinion, information, and news and think the NYTimes and CNN are reputable.

        Ask yourself where in school kids learn what news is? Ask yourself where they learn to defend themselves against words? You are rearranging deckchairs on the Titannic.

      • Actually, the press scrutinized Whitewater and Bill Clinton’s sex life—even his sex life!—in minute detail, as I recall. Thanks to GOP investigator Ken Starr and the press, we learned that Clinton inserted a cigar holder into the vagina of Monica Lewinsky. On Whitewater, I guess Clinton was clean.

        I cannot recall the press paying such close attention to any President before or since, with the possible exception of Richard Nixon.

        I did not notice a lack of press coverage when Senator Pelosi, along with avowed Socialist Bernie Sanders of Vermont, and Obama, tried to gut a bill that will marginally cut VA benefits.

        The GOP held firm, and benefits were marginally cut.

        One small step to less federal spending.

        • Well as usual the bent boy gets it wrong: “Actually, the press scrutinized Whitewater and Bill Clinton’s sex life—even his sex life!—in minute detail, as I recall“…


          From the BBC dated Jan. ’98: Scandalous scoop breaks online

          For it was in the wilds of cyberspace – not the morning newspaper – that the story of Bill Clinton’s alleged affair with a young White House intern, Monica Lewinsky, first unfolded.

          “Newsweek Kills Story on White House Intern: 23-Year-Old, Sex Relationship with President” screamed a Saturday-night headline on the infamous Internet tip sheet, the Drudge Report.

          “The Drudge Report has learned that reporter Michael Isikoff developed the story of his career, only to have it spiked by top Newsweek suits hours before publication,” the report said.

          • Good point, Juandos. The media had no choice but to cover it once the dam broke and the case for impeachment of a President was being made. The MSM covered it from a defensive position around Slick Willie.

  5. I’ve definitely been noticing the trend has accelerated recently. The Sunday NY Times used to be this big, thick thing. Now, especially in the past year or two, it’s dwindled down to nothing. Same with the Sunday Seattle paper.

    Weekday papers are getting pathetic too. One cannot look at the things without wondering how much longer they’ll last.

    • There are two notable exceptions (and possibly a few others) which are the Wall Street Journal and Barron’s. Both have an excellent on-line presence also.

      • agreed. the london financial times also seems to still do well and be quite good.

        these papers use paywalls for access to net content.

        there is still a market willing to pay for high end, distinct news with high reporter content. when most papers were firing, these guys hired all the best. it seems a viable strategy, at least for financial news.

        the appears have remained good, unlike, say, the sf chronicle which is now a complete joke and mostly just cribs stories off the AP wire.

        it’s a shame about the economist. that used to be a truly great weekly news magazine, but it is so full of preachy, editorializing pap now and has been dumbed down so far and become so weirdly ideological that is is practically the krugman of newspapers.

        i would love to see something take the place the economist used to fill.

        stratfor can be ok, but it lacks the breadth.

        • USA today, is still the largest newspaper in the USA. They may not be doing as well as they used to, but their niche seems to be doing well for them as well.

      • I know Barron’s is holding up well, but I’ve noticed the WSJ getting just a wee bit thinner lately. I, myself, rarely buy it anymore even though, as recently as a couple years ago, I used to buy it a few times per week. That said, it’s still holding up better than most papers.

  6. It’s interesting how there doesn’t seem to be a bottom anywhere close for the decline in print advertising. When the plunge slackened a bit in late 2009, I bet the newspapers were all hoping revenue would start holding up, but it’s been a steady decline again since then. They say ads were down 8-10% last year across all three print categories, national, retail, and classified, so nothing is doing well.

    What’s been surprising to me is that there are newspapers at all in 2014. Bloggers getting paid by micropayments should have killed off the newspapers long ago, but the techies have been too dumb to build that. Oh well, when it happens, it will deliver the death blow to the newspapers.

  7. From the Newspaper Association of America webpage about 2013 newspaper revenue:

    “Revenue from direct marketing rose 2.4%, to a projected figure of $1.4 billion. Advertising in niche publications and non-daily newspapers slid 5.8% to an estimated $1.45 billion. (The projections do not include revenue from weekly newspapers not owned by companies producing daily newspapers).”

    I think that last caveat is important. Here in the Dallas suburbs, we receive – free of subscription fees – several independent weekly newspapers. These tiny papers are chock full of local advertising – advertising which 15 or 20 years ago either did not exist or was included in weekly supplements of the large metropolitan daily newspapers.

    I do not believe print advertising is as dead as the chart suggests. I think a lot of it has moved to publications not counted by the Newspaper Association of America.

      • well, sort of.

        1. that sort of local “indie” advertising is incredibly cheap. it’s not that big a piece of revenues.

        2. that is precisely the space at which the new mobile advertising platforms, exchanges, and engines are aimed. rather than scattergunning a whole zipcode, they will push you ads based on what you are near and known individual preferences. that ad space is now directly in the cross-hairs of the next Schumptarian salvo.

        3. the place the local papers and the little indie papers really got hurt were classifieds. job listings, real estate, stuff for sale, apartments for rent etc used to be the real bread and butter. those were the ads that really paid and they are never going back to print.

  8. Print faces the almost insurmountable disadvantage of having a variable cost to accepting more advertising (the cost of paper). The marginal cost of accepting an ad in digital media is virtually zero.

  9. An interesting related question is where do people now get their ‘news’ ? Or what is it that passes for news or content . The sports pages are available instantly on line – no more waiting for the afternoon paper for the West Coast scores .All the recipes and gardening tips and ,better ones at that ,are available on line or in specialty pubs , so no more Home Section. What’s left ?? Reprinted wire service stuff that only adds the required NYT / Wa Po spin. But one knew that the night before when one checked Drudge or Yahoo , depending on where the reader goes for their confirmation bias . And that is the regrettable thing about the demise of honest journalism , such as it once was or might have been . Once we were all entitled to our own opinions but not our own facts . Now we get the facts that support our opinions , and only those facts which support our opinion . Has not the NYT even changed its masthead : All the Facts that Fit “

    • One word, blogs. I go to my team’s page at SB nation regularly to keep up with them. I check econ, libertarian, sports, and various tech blogs daily. Throw in some podcasts and online video channels that I check regularly and that rounds out my media consumption. I have not had a newspaper or TV subscription in a decade, have not missed them. I still download some TV shows online, but I haven’t read a newspaper, print or online, regularly in many years.

      I pay nothing for any of these services, unless you count time spent on ads, which I usually skip. These sites are largely run by enthusiasts, or the contributors are sometimes paid but the sites barely make any money from online ads. Once someone builds a micropayments system, I’m sure they’ll start making money and I’ll be happy to contribute. Until then, it’s all destruction, which is fine if they’re too dumb to put in micropayments, I guess.

  10. Yes, some newspapers are in real trouble, partly because idiotic organizations like the NAA think that advertising is the only revenue that should be counted. The innovative newspapers have developed multiple revenue streams, and long ago moved beyond “advertisers” to providing services to “business customers.” They design websites, plan and execute email and text-based marketing campaigns, manage events, and many other things. None of these revenues is captured under the “advertising” heading. Is there a silver bullet? No. But, as someone who spent three years researching, training and consulting on new business models for newspapers, I can say that there are paths forward, but most newspaper leadership, true to the Innovator’s Dilemma research, are not able to follow them. We tried hard to show the newspaper industry how to disrupt itself, but it wasn’t interested.

  11. mediawatcher, several points:

    1) It’s not technology that bleeds newspapers. 150 years ago newspapers depended on subscriptions as the primary source of revenue. Between 1875-1925, 75% of the population moved from agriculture to retail/mfg to bring dollars into households. Between 1975-2025 there is an equivalent migration out of retail, depleting advertising, and requiring a new model/greater efficiency for news media.

    2) Most publishers think of the Internet as a publishing tool rather than an aggregating tool engaging the community to bring in content and using skilled journalists efficiently as community content wranglers.

    3) Local newspapers can expand their subscription base, charge a low rate ($2/week) for editing and convenience, turn other departments from cost centers into profit centers to create/sell the remaining advertising to all media, and turn a profit.

    4) The major issue is that schools, busy teaching other things well, overlook that news is not just information, so entertainment passes for news. No one can succeed reading just the “Daily Me”. With Adam Smith’s division of labor, it makes sense to hire someone cost-efficiently to help you put information in context, improving your mental map of reality, so you can plan your future better.

    It ain’t rocket surgery; it’s just not considered.

  12. In the UK local newspapers are delivered home free of charge, and some bigger regional newspapers in metro areas are given away for free, the most noticeable being the venerable London’s Evening Standard, which saw off this way 2 or 3 competitors that were using the same model.

    Those people arguing that local printed newspapers have a future I think are overly optimistic, all the functions of local newspapers are amply covered now by some form or another of digital media, from news proper covered by blogs and community websites or local authorities themselves, to advertisement of local tradespeople, village fairs, even religious events (in mostly agnostic-atheistic UK) and the like.

    Oh, and where I live they stopped delivering the local newspapers 2 or 3 years ago. People aren’t reading them even if delivered home free of charge.

    I know the UK situation is different, but it should be of interest to US people given the similarities between both countries (although locality may be understood entirely differently given the relative sizes of the countries).

  13. Tzzctaei,
    1) That local news must be published does not mean it must be printed.
    2) That local news is spread over the internet does not mean it is centrally-aggregated, thorough, or reliable. A pound a week ($2) is a small price for convenience and trust.
    3) Newspapers are failing in the UK because much of what they deliver is opinion and entertainment rather than news. Remember, news is what you need to know to plan your better future.

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