« This is What A Virtual Oil Field Looks Like | Main | Follow-Up on a Free Book Experiment »

March 29, 2008



"They lost 200,000 readers in three years! Consumer Reports is dead."

How is that a second derivative? A second derivative would be "They lost 40,000 more readers than they lost last year!"


Chris Anderson


Yes, indeed. Typing too fast. Now fixed...


Hugo E. Martin

If you measure the impressive growth of the advertising shown in your picture from Gawker with the development of advertising spend, GDP per Capital and (or) price development since 1985, it would look - on best account - flat.

Btw., why so fatal Chris? "Milking the newspaper industry for cash on the way down ..." I think we need 'publisher' to service their existing and potential users better and make a living out of it ... and find their place.

Frederik Marain


The really interesting (alarming, telling, ...) graph is of course the one about declining readership (%), from, say, 1965 (> 80%) to today (around 50%?).
Eric Alterman has a very good, open-ended article ('The death and life of the American newspaper') on newspapers and/vs news-blogs.

Josh Bernoff

This is far more thoughtful than the doom and gloom piece in the New Yorker this week. As albert points out, it's the decline in readership that's the story, and that's been pretty steady.

Part of the "milking" of the newspapers is the laying off of newsroom staff. The New York Times and Wall Street Journal are still impressive, but other local newspapers aren't nearly what they once were in terms of reporting, and it shows in the product.

As an industry there may still be life in the old girl yet, but as a medium it's struggling. And this chart shows revenues, not profits. Profitability is a challenging question that magnifies changes at the margin.

Accelerating declines (of CD sales or classified ad revenue for example) may get exaggerated coverage but they are indeed signs of crisis if you believe they represent the beginning of a real and inexorable trend and not some momentary fluctuation.

'Course that's a third-derivative statement (!). Still . . .

Terry Heaton

I appreciate the optimism, Chris, but...

The problem for all publicly held companies is growth and stock value. What you don't see here is the cost of maintaining all that brown, and it's difficult to support the idea that you can manage your way to growth through expense reduction in the trenches of America's newspapers.

Moreover, the southward turn of the brown glob isn't going away, so regardless of how much money is in the space, there is little to be optimistic about.

It's a bit like being married to a nymphomaniac. Just when you've satisfied the craving, she demands more.


Just out of curiosity, are those numbers inflation adjusted?

Francis Hwang

Since the Y-axis is in dollars, it couldn't be sensibly inflation-adjusted, I don't think.

And, regardless of what a growth-obsessed stock market might say, there's no shame in holding a company that doesn't get revenue growth but still returns 10%, 12% on equity for 10 years. As Chris implies, this could spell a great opportunity for private equity, although most private equity firms are usually looking for bigger upside and bigger risk.

Makes me wonder if Berkshire Hathaway still owns any of the Washington Post ...

Tim Windsor

To answer a previous commenter, a quick-and-dirty normalizing for 2007 dollars...


...shows 2007 nearly at 1982 levels in constant dollars ($40 million in 1982, $42 million in 2007).

No one of these charts tells the whole story, but it's always a good idea to keep constant dollars in mind when discussing growth or loss of business.

Tim Windsor

Sorry, badly formed HTML in the URL above. This is better:


Hans Suter

stock price of NYT reflects that well: split adjusted in 1987 21 $, today little more than 18 $.

Jim Johnson

Of course, when you only look at the revenue side of the equation, you are missing something.

You also need to put up a chart showing newspaper expenses and see how the correlate.

It will be a slow, painful death... until the journalism industry makes the dramatic change.

david cushman

How long are you planning on living Chris? Newspapers will be all but dead in 20 years. Magazines will live on and on. If 'newspapers' transform themselves into a lean back activity then yes, they'll live on. But their role will have fundamentally changed. Magazines on newsprint if you want. As long as they don't think they can get away with doing news.

phil jones

It's the stock-market which makes people obsessed with second-order derivitives. Share price is based on future expectations ... so having a market in shares for a company makes that future (and trends towards it) significant for people *now*.

As so much money is made from the movement of shares, that's what people care about most.


Is not Yahoo! itself a 45 billion dollar business?


Why did you use the term "designed" instead of evolved in your description of fly eyes? Dr. Freud may have an explanation.


Are we sure those numbers are in real terms? Given inflation those trends might appear much flatter...

Malcolm Kass

Gotta agree with Jim Johnson on this one; it takes two to tango, revenues and costs. Also, there are other dimensions is all of this. First, is the revenue from price increases (probably) or selling more ads (circulation numbers are down, so doubtful). If it is from price increases, then is print really offering anything of more value to its customers or is the print industry simply siphoning off what's left of the difference between value provided and price. If yes, zoinks!

To evaluate performance, methinks to need to take into the context the greater ad industry, and newsprint, well, not so hot right now. This isn't to say that there aren’t products that are perfect for print, but that pool is decreasing.

Regarding the personification of calculus, I am more of a integral kinda of a guy. Exponent up, baby!

Malcolm Kass

yes, I am a nerd.


The first derivative and second derivative people are a direct consequence on our unique form of capitalism (lately), where people expect to make money from stock price changes rather than sharing in the actual profits of the company.

I'm betting if stock sales or profit from stock sales were taxed at a higher rate than earnings from dividends, we would see a lot of people happy to have their company making a profit, and the companies would employ the right people to produce quality stuff, rather than hiring making things the cheapest way they can.


Der lang anhaltende Machtkampf um das Gebiet Tibet, wobei es meiner Ansicht nach um die einseitige Macht Chinas geht und auf der anderen Seite ein repressionsfreies und anerkanntes Nebenherleben (lt. dem Dalai Lama), spitzt sich angesichts der bevorstehenden Olympischen Spiele weiter zu.

Alex Tolley

Firstly, is the chart using constant $s or nominal? If inflation was just 2.8% over he last 25 years, this would mean that real revenues were flat - and we know inflation averaged more than that over this period.
Secondly, readership has been in long term decline, with that decline steepening of late.

Put those facts together and you realize that if the chart was using nominal dollars and was corrected to real dollars, it would look relatively flat, possibly declining, with a sharp decline in the present.

That would indicate real problems.

Other evidence is the spate of mergers that have reduced the number of independent papers. If the industry was doing well, this probably would not be happening.

Podkłady muzyczne

Good info! Thanks.


A question for Chris Anderson.

It would be great if you could go a bit more into detail about your notion of "strategic change".

And about that "form or antoher" of yours. It's where you wrote: "...The truth is that the newspaper business is still a huge industry and will be around in one form or another for the rest of my life".

In the (European) newspapers industry, where I work, this means more of the journalists working on the web, more content on many platform/channels. The paradox is... there isn't enough money down that way for the newspapers to survive.

I hope you have something more on this.

Vittorio Zambardino


The newspaper business cannot be evaluated solely on the above growth curve, any more than the music business can be evaluated only on a retail sales curve.

The costs of maintaining the infrastructure needed to support the newspaper business climbs with every canceled subscription, because to print a paper you need a massive number of bodies to manage the process. Even with digital workflow, printing a newspaper requires huge overhead.

We are experiencing what researchers call a Death Spiral in many atom-driven industries that are moving to bits/bytes. The best example of this is the postal service: As people increasingly move to email rather than snail mail, stamp income decreases. The postal service, to cover costs, raises the price of stamps, leading to an inevitable further decrease in usage. Eventually, there simply isn't enough money to pay for the infrastructure, and the entire model collapses. We see this every day in the stock market, when "successful" companies go under simply because they don't have cash flow.

How do you project the decline in newspaper revenues a year from now? Because the folks I know in that business feel as though there is no one left to cut from the payroll. At some point, you are not cutting fat, or muscle, but limbs and even organs. I see this happening VERY SOON in the newspaper business.

I am coming to believe that the Internet may not have an historical parallel. America's move from an agricultural to an industrial society happened over many decades; There are still tens of thousands of farmers operating in mostly the same manner they always have. With more people on the planet there is more need for food, even if the manufacturing process is increasingly leaning to corporate production.

But the Internet is making things not cheaper, but FREE. It is forcing an economy to adapt by completely reorienting the entire manner in which EVERYONE uses a service in a matter of months and maybe years. Many people don't realize that most of these dot-com success stories are still in the red, and the ones that aren't have staffs of under 50 people -- serving hundreds of thousands of customers (37 Signals is a good example).

All I suggest is, while I don't want to be alarmist, I think the true impact of the Internet -- where everything eventually becomes free -- has no parallel.


One more note on this. The newspaper business would have collapsed many years ago were it not for the weekend editions that sell inserts -- a service that has nothing whatsoever to do with the quality of the newspaper, but rather the monopoly that big city newspapers have on street address distribution.

If newspapers had to pay the postal service to deliver the paper, they wouldn't be able to ship their first newspaper, let alone the five pound bundles that are the Sunday paper. Newspapers should have stopped selling subscriptions long ago, in return for guaranteed distribution to every street address. There's far more money in direct mail than print ads.

This makes the newspaper business unique to most any other business. There is already almost no print advertising in newspapers.

In my town -- Nashville -- the second largest newspaper just announced it is only printing on Mondays and Fridays. Why? Because it is given away and not delivered to the home, which means they can't make money on inserts on the weekends.

And it was already free.


Why did you use the term "designed" instead of evolved in your description of fly eyes? Dr. Freud may have an explanation.

TW Andrews

Do we know whether or not data are inflation-adjusted?


i want to recive this important book



The comments to this entry are closed.


The Long Tail by Chris Anderson

Notes and sources for the book

FREE was available in all digital forms--ebook, web book, and audiobook--for free shortly after the hardcover was published on July 7th. The ebook and web book were free for a limited time and limited to certain geographic regions as determined by each national publisher; the unabridged MP3 audiobook (get zip file here) will remain free forever, available in all regions.

Order the hardcover now!