Newspapers Aren't Dying, Advertising Models Are

by francine Hardaway on December 9, 2008

Advertising has always been a cyclical and tenuous business. The venerable department store magnate John Wanamaker, whom no one even remembers any longer, once said "I know half my advertising is wasted; I just don't know which half."   In a downturn, advertising is always the first thing to go, and that's why Madison Avenue is so competitive and littered with TYpe-A corpses. What's different about this downturn is that so many businesses are now based on advertising as a business model, as though it would never go away. Even Google. They can't ALL continue to exist.

Like job opportunities in a downturn, advertising never goes away entirely, but it does shrink. If you're a business with advertising as a business model, the only
thing you can do now is lower your rates, cut your burn, wait, and try to predict when
pent-up consumer demand, driven by demographics, will cause it to come
back.If you are an advertiser, you spend your scarce dollars where you think they will give you the best return.

And that's what's happening to newspapers. You can talk all you want about how news is shifting online, how young people don't read, how bureaus are shutting down, how great reporting is dying. The fact of the matter is, it has never been about news. It has always been about advertising. Where will people tolerate advertising? Where will they hear it or look at it? It's a constant battle between the consumer's distaste for interruption and the need to sell products.

As urban areas grew and literacy grew with them, advertisers figured out that there was an aggregation here that they could use to announce and sell products.

Well, now there's a new kind of aggregation and a new kind of literacy, and it is taking place online. Good reporting will eventually happen online, because people are aggregating there. The first newspapers weren't very good either–they were  sensationalist–like, say, The Drudge Report.

People are freaking out because the NY Times is dying. Well, the building and the print versiion may be dying, but I read the Times much more often than I used to. I just read it online, as I read everything else. I spend a great deal of my day reading. I just do it in a different format.

It's useless to bemoan the death of newspapers. More fruitful would be for reporters to go where the people are, the people who care about news. Some really good reporters and writers have already done that: Kara Swisher, and Merrill Goozner, are two that come to mind. I read them avidly for the same kind of news and analysis I used to find in their print work.

We're all fond of calling our new ventures "disruptive" here in the Bay Area. Well, what happens when something really IS disruptive? This. The death of the newspaper. A whole lot of layoffs. It is not always fun and not always "cool." But we don't have gas lamps or horse-and-buggies anymore either.

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{ 2 comments… read them below or add one }

Len Gutman December 9, 2008 at 3:38 pm

Good insight Francine, it may very well be an advertising model that is dying. But somebody has to write the copy whether it’s in print or online. Until someone figures out a business model for journalists to get paid we’re going to suffer from lack of good coverage, online or elsewhere. December 15, 2008 at 9:04 am

Well stated, Francine. I think that the key insight here is that newspapers are dying, but NEWS is alive and well. Communities of people have always, and will always, want information about what is going on in their community whether it’s geographic, professional, interest driven, or whatever they feel their attachments towards. Advertising towards these communities will continue to exist, but I predict a shift towards service driven business models that help connect these communities.

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