theunderstatement by MICHAEL DEGUSTA

The newspaper ad business isn’t looking any healthier than the recorded music business. Nor is it looking any less delusional.

Today, the Newspaper Association of America released ad statistics for 2010 along with a bizarrely cheery message from its president John F. Sturm, but the numbers paint an ugly picture.

Update: It seems the NAA has removed Sturm’s press release & all references to it in an attempt to send it down the memory hole. Here’s the best alternative link I could find. Now back to the chart…

Total ad revenue per capita is down 63% from its all time high in 1988, but the real crunch has been just the past 3 years: since 2007 inflation adjusted per capita ad revenue has plummeted 47%. Even looking at the raw dollars, ad revenue has dropped 43% in that period. This follows a long period of relative stability. Between 1988 and 2000, per capita ad revenue was down only 8%. After a dip in 2001 it remained stable through 2006, down just 4%. Then came annual decreases of 11%, 19%, 29%, and, this year, 8%. By comparison, since data keeping began in 1950 only the crash years of 1991 & 2001 had suffered declines of more than 6%.

As in the music business, digital revenue is failing to make up for the loss of traditional revenue. Ominously, online revenue is largely flat, basically unchanged from 5 years ago and still below its 2007 peak. Of course, that’s fantastic compared to the virtual disappearance of classified ad revenue.

Sounding every bit as delusional as the year end comments from the Australian Recording Industry Association, Sturm and the NAA somehow see all of this as “signs of a continued turnaround” and “a continually improving advertising environment for newspapers.”

Variation on a theme

I think per capita revenue is a good indicator of a consumer industry’s overall health in the marketplace, but any way you look at it the past few years have been rough. Raw revenues are down 43% from just 2007, 46% when adjusted for inflation. Here is the chart adjusted only for inflation, going all the way back to 1960. Half a century ago revenues were basically the same as today, despite the country being just over half the size.

Notes

  • Population data is from http://www.census.gov/popest/.
  • Inflation data is the CPI-U “All Items Less Food and Energy” from http://data.bls.gov/cgi-bin/surveymost?cu.
  • I use 2011 dollars (January 2011, the latest available) because I feel present day dollars provide a better visceral understanding of the sums involved than using some other arbitrary date.
Notes:
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