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Paying for Print, Skipping the Ads

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Hope you did something fun during your holiday weekend. Me, I alphabetized a bunch of books and threw away a ton of magazines. Which got me wondering. Did my lost weekend indicate something significant about the differing fortunes of text-based media? Does it mean that books possess some special set of attributes that render them better able to survive in a digital age?

Well, maybe. But the data on this is actually a little confusing.

Here’s the Bureau of Economic Analysis's tally of consumer spending during the past 20 years on recreational books (as differentiated from educational books, aka textbooks), newspapers and periodicals, and audio recordings:

As you can see, the recording industry has had a tough decade-and-a-half, although things have been looking up a little lately. No big surprise there. Book sales have held up much better, going nowhere for a few years during the Great Recession but generally rising. Not a surprise to anybody in the book business, but perhaps news to others. Then there’s the strange case of newspapers and periodicals. They’re supposed to be in trouble. So what’s up with that huge increase in spending on them since about 2009?

Here’s your answer:

The main source of newspaper revenue in the U.S. -- advertisements -- began to fall in 2007 and took an especially big tumble in the recession year of 2009. As a result, publishers felt compelled to become much more serious about getting money directly from their readers via paywalls and other means. The Newspaper Association of America reported that circulation revenue, after falling eight straight years starting in 2004, began rising again in 2012. There’s less data available for magazines, but I would think a similar if perhaps less dramatic shift has been going on there.

I’m still surprised by the magnitude of the rise in spending on magazines and periodicals in the government statistics ($24 billion since the end of 2008, while the newspaper association reports only a few hundred million dollars in circulation revenue gains), and wonder if some of it will eventually be revised away. But the overall picture of a rise in consumer spending that is replacing some of the losses in advertising revenue seems right.

Books, on the other hand, never had any advertising revenue. They have also -- perhaps in part due to’s iron control of so much of the ebook infrastructure -- been able to avoid the rampant piracy that has plagued music. The result is an industry that seems to be weathering the transition to digital more or less intact. Revenue isn’t really rising, but costs are dropping as ebooks require less spending on production and distribution. From the most recent quarterly earnings release of CBS, which owns book publisher Simon & Schuster:

Publishing revenues for the first quarter of 2015 were $145 million compared with $153 million for the same prior-year period, reflecting lower print book sales. … Publishing operating income for the first quarter of 2015 of $12 million increased from $11 million in the first quarter of 2014 as the revenue decline was more than offset by lower selling and inventory costs.

That’s basically the story across the industry, as book publishing divisions have recently been bright spots (small ones, but still) for media companies such as News Corp. and Bertelsmann. On a visit to Bloomberg last week, John Fallon, chief executive of Pearson, which owns 47 percent of the biggest book publisher of them all, Penguin Random House (Bertelsmann owns the rest), said that even young readers still seemed interested in buying physical books. As an example he cited John Green’s “The Fault in Our Stars,” which has sold more than 10 million copies worldwide.

I found a copy of that book during my great weekend book-sorting adventure (there’s a 15-year-old in the apartment). Novels had been alphabetized by author back when we moved in 18 months ago, so it wasn’t hard to find a home for it. My problem was that I also have hundreds of economics, finance and business books that I like to consult when I’m writing, and I’d been having a terrible time finding them when I needed them. So I pulled all of them off the shelves, stacked them in piles by author’s last name, then reshelved. Now I can find my copy of, say, “Zipper: An Exploration in Novelty” by Robert Friedel in a jiffy.

This book is actually a good example because it isn't available as an ebook. There is a copy in, strangely, the Mathematics Library at Columbia University, which isn’t far from my apartment. But still, if I wake up some morning and feel compelled to write a column that involves the zipper industry or maybe just innovation in general, it will be really nice to have that book right there in the “F” section, just left of the collected works of Milton Friedman. At least, that’s what I tell myself. It’s also helpful that books are seen as an appropriate wall-covering.

None of this is true of magazines and newspapers. They look bad stacked all over the family room, and they don’t lend themselves to search and retrieval. Almost all of them now also come in online versions where articles are easy to search and retrieve. As a result, they go out the door much more quickly than they used to. If a magazine is more than two months (or weeks in case of a weekly) old, it’s gone, with maybe a quick look at the table of contents to see if there are any stories worth saving to Pocket for reading later on the subway. The New Yorker still gets special treatment, as we put it in piles to be read later. But since those piles almost never actually are read, they’re usually out the door within a couple of months too. Bon Appetit gets stacked on a shelf below the cookbooks for a year or so and then thrown out. Newspapers of course have an even shorter shelf life, although the Book Review and Wednesday food section of the New York Times sometimes get a reprieve of a week or two.

On the plus side, my family and I are still paying for magazines and newspapers -- as are lots of other people, apparently. We’re just ever less likely to see the ads in them.

  1. There was also a quick trip to the Jersey Shore, but we only stayed for three hours.

  2. These are nominal dollars -- that is, not adjusted for inflation or deflation. The reason I went with them is that by trying to correct for deflation as media products shift to cheaper digital versions, the BEA's adjusted numbers can show spending increases even where fewer dollars are being spent. The numbers in the chart are seasonally adjusted, though.

  3. I have yet to actually consult this book in my work. But it’s going to happen someday, I’m sure.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at

To contact the editor on this story:
James Greiff at