Global and U.S. advertising spending plunges in 2009

For anyone hoping to refinance publishing on the back of advertising, it may be the best of times to sell a new medium to advertisers, but it is the worst of times for advertising.

Nielsen reported this week that ad spending globally dropped 7.9 percent in the first quarter of 2009. U.S. ad budgets declined by a record 12.7 percent and growth in Chinese advertising, which has been consistently strong since the beginning of the economic meltdown, shrank to only 2.5 percent year-over-year.

All traditional media, from newspapers and magazines to TV and radio, showed marked declines. U.S. magazine revenue shrank by 22 percent; newspaper advertising revenue was down by 15.6 percent. Charts and more here.

The Economist hits Kindle store

EconomistDamn it, why didn’t I wait another month to renew? There is one magazine that I will not stop reading, even if it wasn’t in the Kindle, so I’d recently extended my paper subscription to The Economist. Now The Economist is available in the Kindle Store. Paul Biba at TeleRead reports the paper and e-version are priced the same, so it looks like I’m going to stick to paper for another two years.

Still and all, after Foreign Affairs went Kindle earlier this month, I have managed to migrate to digital versions of all the magazines I read, except this one. Oh well, timing was never my gift.

Noted News & Opinion, June 16, 2009

Global entertainment and media spending will reach $1.6 trillion in 2013, according to PricewaterhouseCoopers annual industry projections, AdWeek reports. The U.S. media industry will not match growth in the rest of the world, increasing only 1.2 percent annually, compared to the global rate of 2.7 percent, reaching $495 billion in 2013. Digital revenues are predicted to grow from 17 percent of the market today to 25 percent, for a total of $124 billion annually, four years from now. Bad news for magazines and newspapers, where revenues are expected to continue to head south.

Surprise, Jeff Bezos doesn’t like the Google-Author’s Guild settlement. But he won’t say why, according to CNET: “We have strong opinions about that issue which I’m not going to share,” Bezos is quoted as saying during the Wired Business Conference. “There are many forces of work looking at that and saying it doesn’t seem right that you should do something, kind of get a prize for violating a large series of copyrights.” The article also suggests that Bezos said Kindle sales now account for 35 percent of paper book sales, which I believe is a misinterpretation of what he said, as I discussed yesterday. What he appeared to say was that when a book is available in paper and on Kindle, 35 percent of the sales are in Kindle format.

Author Jeff Matthews suspects Google’s good for writers. He’s fond of Google Books as a research tool, as I am, then relates an interesting story about discovering why his grandfather won a medal in World War I through a book scanned by Google. It’s a touching story and is completely valid with regard to out-of-copyright books, but that kind of title isn’t what the Google-Author’s Guild covers. I have a different opinion, but I found Matthews’ story compelling.

S&S e-books venture is doomed. Author Anthony Policastro (Absence of Faith and Dark End of the Spectrum on Kindle), writing on his blog, argues that Simon & Schuster’s announced distribution deal with Scribd will fail because the pricing strategy is wrong. “Most people won’t even pay even $10 for an eBook,” Policastro writes. “The reason is that they do no perceive the value the same as the printed version.” I disagree, not because of the price point, but because the e-book as it is today is no improvement over reading a book and, in many ways, diminishes the reading experience. Someday, readers will pay more than the Jeff Bezos price ($9.99) for a book, because it will be a portal to new experiences through reading. But Policastro is right about S&S’s pricing strategy: If they want to succeed on Scribd they must compete on price, going below Amazon’s pricing.

Mitch’s Perspective: Today’s e-books have been positioned as less valuable than a mass market paperback. That needs to change, which means the features and services associated with the e-book have to change, for the better.

Amazon would be boycotted, if Science Fantasy publisher has a say. Antellus, a publishing company operated by its only author, Theresa M. Moore, has complained that Amazon is slow to respond to publishers experiencing problems with its DTP publishing platforms’ management of ASINs and and associated accounting systems. She also says Amazon should be faster in its deployment of a color Kindle. While the former may be a real problem, condemning Amazon for a “seller agreement, which allows Amazon to modify and/or sell books from its suppliers in whatever format it chooses at its own discretion,” which is key to providing book buyers archival access to titles without having to renegotiate rights each time it updates file formats, and failure to be the first to deliver a color reader diminishes the force of her arguments.

Businessweek’s More-for-your-money strategy

Businessweek is experimenting, trying  to make itself of more use to readers. Businessweek is trying a variation on something new, the idea of giving subscribers more for their money while continuing to provide content for free online. It’s a variation on an idea that Josh Young and I have been talking about for a while.

You have to feel for magazine publishers these days. With few exceptions, like The Economist and specialty interest publications, they are seeing declining subscriber numbers along with the decrease in ad revenue due to the recession.

Businessweek made a good start, offering subscribers earlier access to print articles online and some “user-generated” news and social features. This will tax the staff very little, unless they choose to dive into the Businessweek community site and really talk to readers about the news. The degree of investment in relationships with readers remains to be seen. But there are a couple simple things they could do right now that would be relatively easy and cheap, involving e-book technology:

  • Provide print subscribers a free PDF, Kindle or ePub version of the magazine when it goes to the printer, typically two days before the issue is released.
  • Build tracking into its site and collect readers’ discussions, bundling them up into quarterly e-books (in the reader’s preferred format) delivered by email to subscribers, so they get a memorialized record of their participation in the community. The really active users will love this—generate a fake Businessweek cover with their avatar’s picture to make a personal package of the e-book.
  • Finally, take at least one full page, if not more, and turn it over to the community. Make them the authors of opinions and articles that reach print—then there is a reason to pick up the print copy.