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  • Lies, Damn Lies and…

    Posted by John Jay on October 28th, 2009 (All posts by )

    One of my academic advisors used to say that any argument without numbers is a religious one. And we all know how productive they are.

    Being a numbers jock and P-Chemist, that statement resonated with me. It still does.

    But then I went into business, and for a while my job involved the quantitative prediction of consumer behavior. Entering into the social sciences like that, where there is no ideological bias, just a financial incentive to get the model right, was good for me. It trained me to look at the instrument that was used to derive the numbers. To ask if the questioner was asking the right questions.

    So my brain perked up when I saw this article on the decline of newspapers:

    Big whoop. After several statistical triple back-flips, we now know that 96 percent of newspaper reading is done in the printed product. That’s like talking about modern transportation by pointing out that 96 percent of buggy drivers use buggy whips. Hello? We switched to cars 100 years ago.

    Writing on the Nieman Journalism Lab Web site, Martin Langveld made some valid statistical conclusions about newspaper readership. The problem is that he was asking the wrong questions. It isn’t about newspapers; it’s about news.

    Seriously? Dissecting the habits of what pitiful few print readers are left? There’s a journalist that stupid?

    Sadly, yes.

    That article makes a number of points that have been made on this site, including the strength of the papers ought to be in local coverage, and that we bloggers still get much of our news for commentary from traditional sources.

    But back to the numbers. Nothing makes Mark Loundy’s point better than these graphs.

    The comments under the graphs are also somewhat interesting. First, the tool who pointed to an editorial shift to the right (the right ?!?!?!?) as a cause for the decline of print, and then pointed out the LA Times hiring of token conservative Jonah Goldberg as a watershed got his logical posterior handed to him when another commenter pointed out that the date of Goldberg’s hiring corresponded with the only uptick in readership in over 2 decades. Since the numbers promptly slid down again, I can only assume that the new conservative readers attracted by Jonah soon tired of the rest of the paper, and figured that they could read the G-man online.

    Second, all the musing over why 2006 was such a significant year when the Internet had been around since the late ’90s was interesting. Huffington Post’s launch somewhere around 2005 was mentioned as a possible catalyst, but one site of marginal news utility does not accelerate a trend as large as the one shown in those graphs.

    Long-time readers of this site have been talking about what I call the dog-leg phenomenon for quite a while.

    The first things I thought of to drive the downturn were demographic and financial.

    As for demographics, if one counts the Boomers as those born after WWII, then 2006 marked the year that the advance wave turned 60. With early retirement, a big chunk of old fogies wedded to dead trees canceled their subscriptions to the big coastal papers and moved to Florida or Arizona. I’d like to see subscription numbers for retirement havens for the same time period to see if there is a slight uptick in subscriptions in those areas.

    Financially, I first heard of Craigslist around 2005 or so. Craiglist has done more to undermine the financial stability of newspapers than any other organ. Classified advertising was the backbone of the local paper’s revenue stream in the ’70s and ’80s, and a big part of even the bigger papers’ finances. That is pretty much gone, now.

    Any other thoughts as to why 2006 was the “knee” in the curve?

     

    14 Responses to “Lies, Damn Lies and…”

    1. Daran Says:

      Next to Craiglist, Monsterboard and other job sites. Add pressure from free newspapers like Metro (servicing commuters with a daily update) and the first waves of ebook readers. Interesting times.

    2. John Jay Says:

      Daran, speaking of Metro – when did the aircards that allow commuters to access the Net from trains take off? I see fewer and fewer paper newspapers on the train these days.

    3. Joseph Somsel Says:

      Problem is that news can only be owned for a finite period. In the days of print, that might be one or two days, max. Once you publish, the other media would pick up and replicate. Still, a day or two is something.

      Now, ownership is measured in minutes and that is under the physical production and distribution cycle for print media.

      As to your specific question, wasn’t there a big scandal about phoney circulation numbers about then? It was analogous to the pumped up oil reserve valuations that some oil companies published.

    4. Anonymous Says:

      “One of my academic advisors used to day that any argument without numbers is a religious one.”

      Hmmm. Have you read anything by Ronald Coase? His thought experiments are far more effective — and far more falsifiable — than most of the number-crunching exercises that serve to obscure economics.

    5. Shannon Love Says:

      When you see a sudden discontinuity such as a dogleg, that usually means that an amplifying feedback loop drives the phenomena. Such feedback loops can run for a long time looking nicely linear and then they pass a threshold and suddenly shoot for the sky. On a constant time plot this looks like a sudden discontinuity.

      The core value of traditional newspapers was their print production and distribution infrastructure. It took a lot people and equipment to print up hundreds of thousands of copies of newspapers every day and distribute those all over a region. Newspapers were the only means of disseminating large amounts of dense information (imagine the cost and tedium of reading hundreds of classified ads over TV or radio by comparison). The internet rendered that valuable infrastructure obsolete.

      I suspect the dogleg was created by the feedback loop of more and more people getting their information online which drove more people to get their information online and so on until it suddenly snowballed over a period of few months.

      However, I don’t think we can entirely dismiss the widespread bias in the media. With the rise of the internet, people began to see what the media left out. The Parliament of Clocks effect failed and the media fell off the pedestal it had created for itself.

      I also suspect that most newspapers simply don’t deliver much valuable information. How useful to anyone is the political reporting of the NYTimes? When was the last time they broke a big story first? As Jon Stewart pointed out, it was “two kids from High School Musical 3 with their grandmother’s Chinchilla coat” that broke the Acorn story, not the Times or another media giant. They really don’t provide useful information and that is why their attempts to charge for online content have failed. I mean, how much will you pay to see a story that is largely politicians trading barbs at each other’s expense?

      The Wall Street journal prospers behind a paywall because it does produce unique and very detailed business information and that business people will pay good money to read. The information is detailed and dense meaning that excerpts on blogs and other places don’t really capture all the important elements of the stories.

    6. John Jay Says:

      Shannon, I was waiting for someone to notice that the WSJ was the exception.

    7. sol vason Says:

      “That’s like talking about modern transportation by pointing out that 96 percent of buggy drivers use buggy whips.”

      Current research shows that 96% of buggy whip users have never driven a buggy.

    8. Xennady Says:

      Craigslist may have done much to undermine the financial stability of newspapers.

      But that’s a telling indication that people who’d been paying for the paper for the news left them a long time previously.

      I know I did.

    9. Michael Kennedy Says:

      I was a subscriber to the LA Times for 40 years. Their product was deteriorating badly before Craigslist hit them. At one time, they published regional editions, such as the one for Orange County. Unfortunately for their employees, they never seemed to get the local stories right and the OC Register would always eat their lunch on local stories. What local stories they did print were usually colored by their political bias, not popular in Orange County. For example, I served on the planning commission for the small city where I have lived for 35 years. We were having an invasion of the usual nexus of real estate developers and “public interest” law firms who were trying to force the city to change zoning laws and build more apartments. Of course, the apartments are subsidized and are built in small clusters like instant slums. The Times did a story on how the rich white suburbs of Orange County didn’t want “affordable housing.” The Register did a story about the developers and how they fund the “public interest” law firms. Guess which one was more interesting and pertinent to the current events. The Times story was a rehash of stuff they’ve been writing for decades.

      A couple of years later, the Times ended their OC edition. It became a “Section” then disappeared altogether.

      Unfortunately, the Register, which has been good on local stories, started using the NY Times service for national and international stories and that did not go well with the readers. Then Craigslist and the local online classifieds arrived.

    10. Marty Says:

      Agree with Xennady—if the decline in circulation is because of Craigslist, that means the newspapers were just glorified “Weekly Shoppers”. Even IF the $$ from ads supported some decent editorial functions, in an economic sense the value to the customer was the ads.

      WSJ is indeed the key data point and the answer—a publication has to provide value people are willing to pay for, and get it to them at a cost less than teh revenue stream. WSJ appears to be doing that at teh national or international scale, as, at the other end of the spectrum, are many suburban weeklies that focus on local news not available elsewhere, and local advertising.

      The problem is in the middle–city and metro papers which offer very little news value and now can’t compete for ad revenues, either. It’s not clear that there IS an answer for many of them, but if not, boo hoo—not the first time an industry or business model was made obsolete by technological and/or societal change.

    11. david foster Says:

      One function a newspaper can serve is as an entry point to a group someone desires to affiliate with for status purposes. There are certainly still many circles of people in which *not* knowing what was in the NYT would be looked at askance.

      So NYT will probably survive longer than many other papers…but even here, age matters, and I doubt that many people who have grown up with the Internet..say, those now under 25 or so..will ever take the paper as seriously as their elders.

    12. geoffgo Says:

      Gutenberg never envisioned the chainsaw.

      So in 1990, living directly across the street in Roslyn, VA and having as my Trival Pursuits partner the Financial Editor of USAToday, I got priviledged access to high-level Gannet management. At that time, they were a successful national paper with regionally printed editions, trying to go local.

      My 2-hour presentation was about the dramatic changes the network effect – (it wasn’t called the Intenet yet) – would wreck on the news business; eg, total devastation of classified ad revenue. I explained that as the network became ubiquitous and its speed inexorably increased, so would its reach and information currency (value) in full-motion color, an exact copy of which would cost virtually nothing. Bad for the print format – margin squeeze with no competitive response possible, etc.

      I proposed my company to outfit them to own what would become craigslist, rent.com and eBay et al. My Mac demo showed how it would work for someone moving from WDC to Boulder, CO – needing a mover to get there; to rent an apartment or buy a house BEFORE they got there; hotel/motel reservations for the interim stay; scheduled telephone-electric-gas-garbage service hook-ups, etc. Integrated email from USAtoday and lashed-up 800-voice mail for their classified advertisers (sorry, this apt is already rented), etc, etc. Even credit/debit transaction processing.

      They didn’t believe the ecommerce potential illustrated on the final slide; which as it turns out, I had sorely understated by at least 10MM-fold….and besides digital classifieds wasn’t their mission. Oh well, hindsight.

    13. David Foster Says:

      The Gannett story is interesting but not surprising. Companies which are leaders at one stage of a technology are rarely leaders–often, not even survivors–at the next stage. See my review of Christensen & Raynor’s book, a work which does a good job of dealing with this topic.

    14. geoffgo Says:

      Thanks David,

      Just got here. IIRC, Christiansen also wrote The Innovator’s Dilemma.