In Depth

Column: Size Doesn't Matter. Growth Does.

Digital revenues might be a rounding error today, but they’ll be bottom line items in a few years.

And that’s why we need to remember that size doesn’t always matter. But growth does.

Let’s take the newspaper business as an example.

The Los Angeles Times, Wall Street Journal and Orlando Sentinel give out sheaves of pink slips. The New Jersey Star Ledger says it must cut 200 jobs or sell. Scripps, Belo and Lee Enterprises all see second-quarter declines in online revenue—the one area that is supposed to be growing for newspapers.

We can’t forget that newspapers still generate more ad dollars than the Internet, but growth versus shrinkage should be at the top of everyone’s mind.

“Everyone keeps looking at Internet because Internet advertising has been growing dramatically, 20% to 30% each year since 2003,” said Kevin Klowden, managing economist at the Milken Institute during a session at the NATPE LA TV Festival last week. “All everyone talks about is Internet advertising and it’s on the same level [dollar wise] as radio advertising and behind print and magazine, despite everyone talking about print dying.”

Mr. Klowden’s comments initially seemed to suggest that because total dollars are more for print advertising, then layoffs and declining revenue and shrinking paper size don’t mean squat. So I followed up with him via e-mail and asked him to clarify his points.

“The reason for raising the issue of print dollars is not because print advertising is healthy—it’s not—particularly for newspapers and certain magazines,” he wrote. “The point was to show that as much as Internet advertising has been growing rapidly, it has not yet supplanted print media in total revenues, even with the declines print media has been facing. The real issue facing many magazines and newspapers is that many of them find themselves competing for a stagnating or shrinking share of the ad market as well as online alternatives. Print media definitely has challenges to face, but they are clearly still a major force in the ad industry.”

That is true. Print advertising is still a force today. And I get that we don’t want to trade analog dollars for digital pennies. But just because traditional TV ad dollars, and newspaper ad money too, might dwarf digital dollars today, and tomorrow and the next year, that doesn’t mean the traditional media business is OK, as Mr. Klowden also noted in his follow-up note to me.

So let’s all remember that digital is still the future, even if it’s only pennies today.