The Deflating Newspaper Bubble: Most Major U.S. Daily Newspapers Could Be Dead Within Five Years

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The Newspaper Association of America (NAA) recently released data on newspaper advertising revenue for the first quarter of 2012, and the steep decline continues (see chart above).  Total print advertising in U.S. newspapers dropped to $4.36 billion from January to March, which was 8.2% below the same period last year, and fell to the lowest level of advertising revenue since the third quarter of 1982.  Adjusted for inflation, the advertising expenditures in the first quarter reached the lowest level since the NAA started tracking quarterly advertising expenditures in America's newspapers back in 1971.  Compared to the peak of $18.26 billion (in 2012 dollars) in 2000, advertising revenues have fallen by more than 75%, and appear to be on a sharp downward trajectory.

Jack Shafer calls this steep decline in ad revenue the "popping of the newspaper bubble" in a Reuters editorial on Friday, and he makes a pretty dire prediction:

"Unlike the tech bubble, the newspaper bubble won’t come back because it can’t. Many of the businesses that once supported newspapers with ads don’t exist on the same level anymore (such as competing department stores and grocery stores) or have found better places to put their ad dollars (the Web, television and Craigslist) or have discovered that they don’t need to spend ad dollars anymore to sell their goods and services (Craigslist again).

The expired bubble won’t take all newspapers down with it immediately. One theory (pdf) gaining currency is that because the current generation of print newspaper readers isn’t being replaced, major U.S. print dailies will be dead in five years with only small-town newspapers and the national dailies surviving."