Blog Post

I’ve reported and charted the amazing free fall in newspaper advertising revenue on a regular basis over the last few years whenever the Newspaper Association of America released detailed quarterly revenue data (see most recent post here from April) following an industry tradition that goes back to the 1950s. Well, the advertising free fall that started in about 2003 has generated so much negative publicity when the quarterly statistics were released that the Newspaper Association of America has stopped reporting quarterly data this year, here’s one news report:

For years, the Newspaper Association of America released quarterly statistics showing declines in advertising revenue—leading to wave after wave of doom-and-gloom predictions for the industry. Now it’s trying a different approach in an effort to change the conversation. Everyone knows the newspaper industry hasn’t been having an easy go of it for a long time. Why go out of the way to repeatedly emphasize that point? The Newspaper Association of America found itself faced with that question—and after much internal debate, it decided to stop releasing quarterly statistics about the industry’s ad sales rates.

MP: Assuming that the industry trends established over the last three years continue, I’m estimating that total print newspaper advertising revenue will decline this year to just under $17 billion, which would be a $2.2 billion drop in revenues from last year, following declines of $2.2 billion in 2012, $2.9 billion in 2011 and and $2.6 billion in 2010, with all dollar amounts expressed in constant inflation-adjusted 2013 dollars (see chart above). At an estimated $17 billion, the amount of spending on newspaper print advertising this year will be more than $3 billion below the $20 billion spent in 1960, more than 50 years ago. When we add in the $3.5 billion in estimated spending this year for online advertising, the total advertising revenue this year should be around $20.5 billion, which would be just slightly higher than the $20 billion total spent back in 1950.

As I’ve pointed out before, the expected decline in print newspaper advertising this year to a 63-year low is pretty amazing by itself, but the sharp decline in recent years is pretty stunning. Newspaper print advertising revenues fell by almost 55% in just the last five years, from $37.6 billion in 2008 to an estimated $17 billion this year; and by 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 below $20 billion in 2012 ($19.2 billion), and now down to less than $17 billion this year (estimated).

Economic Lesson: The dramatic decline in newspaper ad revenues has to be one of the most significant Schumpeterian gales of creative destruction in the last decade. And it sure looks like the free fall in ad revenue isn’t even close to being over.