Newspapers: Quickly Becoming Irrelevant

The Newspaper Association of America just released its most recent advertising statistics showing a precipitous decline in 2009. Industry wide print advertising revenue in 2009 fell by 28.6% from the prior year to just $24.8 billion, a level last seen in 1985. Don't think that the revenue model is shifting to on-line advertising. It isn't. Total advertising revenues including on-line were just $2.7 billion higher and fell 27.2%, almost as sharply as print only revenues.

Clearly some of this decline is due to the tough advertising market in a recessionary economy, but magazine ad revenue dropped a comparatively small 11.2% while network and national cable TV was down only 6.6%.

Even when the advertising market improves newspapers will never see a return to their glory days. A January 2010 poll commissioned by the AARP shows that 33% of adults read a print paper less than they did five years ago and 80% would not be willing to pay for an online newspaper if it were unavailable in print.  Perhaps worst of all, young people seemingly have little use for a newspaper based on findings from The Kaiser Family Foundation's study: M², Media in the Lives of 8 to 18 year Olds. The study reports that young people spend an average of just three minutes a day with a print newspaper, and only 23% are readers, down from 42% in 1999. Kids aren't reading the paper on-line either, spending on average just 2 minutes a day. Instead kids spend their media time watching television. listening to music, using the computer and playing video games. Apparently we are not raising a new generation of future newspaper readers.

If you are interested in the future of newspapers, as I am, head over to the Nieman Journalism Lab at Harvard University which is focused on "how quality journalism can survive and thrive in the Internet age" and they provide excellent coverage on this topic.

You'll Be Moving to The Country

Joel Kotkin, a Presidential Fellow and director of the Urban Futures Program at Chapman University, has an article on his excellent NewGeography site which examines the question: Where and how will Americans live in 2050. It's a fascinating look into the future and I'd highly recommend it.

Among Kotkin's key predictions are:

• An increase in the US population of 100 million people
• Scores of new communities will be built
• Suburbs will continue to grow and thrive
• Cities in the South and Southwest will be new "aspirational" destinations
• A resurgence of the American heartland, enabled in part by the Internet

He touches briefly on some of the technology, transportation and construction business implications of  these changes, but the future promises to provide huge opportunities and risks. How will you prepare your business for the future?

Asparagus as a Metaphor for Industrial Decline

California Asparagus Commission © 2010 

Spring heralds the arrival of delicious, tender asparagus on the menu. This year also marks the continuing decline of the US asparagus crop.

According to the California Asparagus Commission executive director Cherie Watte Angulo, as quoted in the Los Angles Times, California has only 11,500 acres of asparagus under cultivation, down from 40,900 acres in 2000. Twenty years ago California held 62% of the US market share, but that is down to just 10% today. Asparagus is a particularly labor intensive crop that does not lend itself to automated harvesting, sorting and packing so Mexico and Peru, with their comparatively low labor costs, have come to dominate the US market.

To put this in perspective, lets look at the well known decline of textiles and apparel in the US. Over the past 20 years employment in the US textile and apparel manufacturing industries has declined at a 7% and 8% compound annual rate, respectively, according to data from the US Department of Labor.  The market share  for US grown asparagus actually declined more rapidly at a 9% annual rate over the same period. I know looking at changes in employment and market share is a bit of an apples to oranges (pardon the pun) comparison, but it is a reasonable proxy to frame the magnitude of the asparagus decline.

In a future post I will look at additional agricultural sectors to see if asparagus represents an isolated case or is part of a larger trend. As to why we should care where our food comes from, I can think of no better source than Michael Pollan, the acclaimed author of The Omnivore's Dilemma which examined the social, ethical, and environmental impact of food.

A Bank Is Just A Bank?

GG4EFSVPQ6KK Every week I look at the list of the banks seized by the FDIC and wonder if the institutions on the list have any shared attributes. Based on an admittedly non-scientific review of the four banks seized last week, it turns out that they may. Mismanagement.

Looking at The Park Avenue and LibertyPointe Banks in New York City, Old Southern Bank in Orlando Florida and Statewide Bank in Covington Louisiana reveals what appears to be significant business lapses. Some issues, like the looting of TARP funds by the former president of the Park Avenue bank were not uncovered until after the bank's seizure. But many other problems were evident long before the FDIC stepped in.

Take the case of Old Southern Bank: in September of 2009, barely three years after its founding, the Federal Reserve Office of Financial Regulation issued a cease and desist order to the Bank's management citing credit and oversight issues and ordering the institution to "maintain effective control over, and supervision of, the Bank’s major operations and activities, including but not limited to, management, credit risk management, concentrations of credit, capital, and earnings." This isn't an unusual citation for a failing bank, however, the bitter public infighting between the Bank's CEO and a board member raises lots of questions. While the deteriorating Florida real estate market contributed to the flood of red ink inundating Old Southern, it seems like bad loans weren't the only problem for just the second bank in the region to fail since the great depression.

OldePointe, the first bank to fail in New York City since 1999 (The Park Avenue Bank became the second, just one day later), collapsed under the weight of bad real estate loans. This came after the five year old bank was charged by the FDIC last July for engaging in "unsafe and unsound" lending practices. Are these poor banking practices related to the Bank's chairman the alleged shoddy real estate development efforts? Perhaps.

A customer walking out of a former Park Avenue Bank branch the day after it was sold by the FDIC to Valley National Bank said, "We thought, a bank is a bank," expressing surprise at the change. What do you think?