When you line up all the layoffs,
April 16, 2001 2:45 PM   Subscribe

When you line up all the layoffs, it actually looks pretty bad. I suspect the news industry knows recession = increased news consumption & ad sales and are going for it, regardless of how "bad" our current economic climate may be. Will the dot com downturn lead to losses everywhere or will it be concentrated solely in the tech sector?
posted by mathowie (19 comments total)
 
Does a recession lead to increased ad sales? I thought it was the opposite. Or does it lead to increased ad sales in newspapers, which is cheaper than TV?
posted by Doug at 2:55 PM on April 16, 2001


Recession is not good for the news industry. In fact, the news business is the canary in the coal mine of economics, one of the first industries to show revenue declines when things start to turn sour. It's because help wanted classifieds dry up before anything else, and classifieds are one of the biggest profit centers for newspapers. General advertising isn't far behind.

Just today, the New York Times Company announced a 26% drop in first-quarter earnings.
posted by aaron at 3:01 PM on April 16, 2001



People spend more money on news media in a recession? This Time magazine article from 1995 suggests otherwise.

But I think it's unavoidable that the problems in the tech sector will affect the rest of the economy. I've already seen several articles suggesting that a diverse group of industries from office furniture to coffee retailers to television networks are already (or will soon be) hurting.

It just makes sense. Corporations are going out of business, the surviving businesses are tightening their belts, and the former and current employees of the tech companies are saving their money, just in case. I know I wouldn't go buy a new car right now. I would guess there are many people like me, driven out of fear or necessity to start saving.
posted by waxpancake at 3:07 PM on April 16, 2001


Recessions may not be good for ad revenues, but they are good for writers and editors looking for stories. Bad news is always more compelling than good news (and ratings on TV). The interesting question is what tips, and when is tipped, the balance between things going well and things not going well in terms of the economy; when will our current downturn be a "recession"; and when will things looking brighter (or not looking still more dim) become a recovery. I think a lot of it is arbitrary and/or very relative. For example, the economy is still WAY better than it was in 1997, and yet people feel otherwise.
posted by ParisParamus at 3:15 PM on April 16, 2001


What's most interesting about a recession is the interesting and innovative ways companies will start using the Internet to save money. Note that this is a completely different way of thinking about the Internet when comparing it to many of the business plans and revenue models of failed dot-coms which tried to create a business on top of nothing more than hype, advertising revenues, and the salesmanship of their executive teams.

The companies to watch in the post-bubble market are those that promise to save other companies money by offering products and services that take advantage of the capabilities and connectivity of the Internet. This is especially true for everyone if the economy does head into a downward spiral or a recession.
posted by camworld at 3:39 PM on April 16, 2001


Exactly cam, that's a very good point. I and I'm sure many others in my line of work have seen this reflected in the type of projects we are getting from new clients. Companies have seen how information networks, both internal and external, can streamline their business process, thus reducing costs. They have also realized the benefits of corporate intranets as a way of making it easier for employees to do everyday things (such as submitting timesheets or travel vouchers) leaving them more time to focus on their "job". I'm seeing much more internal development like intranets then I have ever seen before.
posted by brian at 4:10 PM on April 16, 2001


Yeah, gotta disagree with you on your detective work there, Matt. Because of the economic downturn, ad sales are way, way down, and profit warnings from media companies are coming out more frequently than the Sunday funnies. And people caring about the news more in a recession? I doubt that. Newspapers follow the opposite of the ol' liquor store analogy: When the times are good, nobody reads newspapers. When times are bad, nobody reads newspapers.

And, no, it's not just the dot-coms. In fact, I'd say Old Economy layoffs have been much worse, probably in quantity -- though I don't have a citation handy -- but in quality, as well. A twentysomething losing his sysadmin job at a start-up is going to land on his feet. A 50-year-old line worker isn't.
posted by luke at 4:52 PM on April 16, 2001


Yeah, gotta disagree with you on your detective work there, Matt. Because of the economic downturn, ad sales are way, way down...

I basically did no detective work, I just remember being glued to news feeds, newspapers, and tv news in the early 90's when there was a recession (I was also going through college and desperately hoping I'd have a job when I got out). It was just a hunch that when there's gloomy news, people are drawn to them, deer-in-the-headlights style.
posted by mathowie at 5:12 PM on April 16, 2001


Well, just to trip up this particular tautology, I don't recall a distinct lack of coverage during the peak times of the Long Boom. In fact it got quite a bit of attention.
posted by dhartung at 5:56 PM on April 16, 2001


recession = increased news consumption & ad sales

Not really, Matt: as Polly Sprenger's great obit for the Industry Standard Europe makes clear, print media bloats in boom, and shrinks in recession. A firm goes bust, the ad bills don't get paid, the ad agency goes down and the paper closes. And the bad news is written by the staffers elsewhere.

(There's also the self-generating thing, where dot-coms took subs to all the dot-com magazines as a tax write-off. I'd like to know if the Standard is sending out refund cheques right now.)

But cam's right: this isn't necessarily a bad thing. Isn't it better to have an industry based upon business plans and profit forecasts than one where you court the VCs by stuffing your office space with flat-screens and Aerons?

Over the past few years, people and businesses have been doing the equivalent of maxing out their credit cards knowing that they can make the minimum payment each month until the big money comes along. Now it's time to clear the slate each month.

And while the US is in a downturn, why not fire all the fucking greeters at Gap?
posted by holgate at 6:10 PM on April 16, 2001


And, no, it's not just the dot-coms. In fact, I'd say Old Economy layoffs have been much worse, probably in quantity -- though I don't have a citation handy -- but in quality, as well. A twentysomething losing his sysadmin job at a start-up is going to land on his feet. A 50-year-old line worker isn't.

Here's a cite, from Lester Thurow in USA TODAY last month. He says after age 55, if you're laid off, your working days are over, unless you "luck into" one of those cheesy senior-citizen McDonald's gigs. Nobody will hire you, period. And those under 55 but still middle-aged will more likely get a lesser replacement job, in terms of prestige and salary. Only the youngest have any real hope of being able to fully recover from layoffs. (Thurow also points out a number of other things that make his article required reading.)

I'm beginning to think that maybe there ought to be a law that says if you're over a certain age and have put in a certain amount of years (essentially devoted your life) to a single company, they cannot lay you off. As long as age discrimination remains so rampant in this world, I don't see any other alternative that would save these people from being thrown away.

The sad thing is - and now it's my turn to say I misplaced the cite, though I only read it a couple days ago - studies show that companies which institute layoffs usually take many years to recover from them in terms of earnings and keeping up with their competition. In other words, the people being laid off are usually not dead weight; the mass culls are done only because it looks good in the short term to the shareholders.
posted by aaron at 8:51 PM on April 16, 2001



There's also the self-generating thing, where dot-coms took subs to all the dot-com magazines as a tax write-off. I'd like to know if the Standard is sending out refund cheques right now.

I dunno how it works on the other side of the pond, but here most of those Standard subscriptions are either partially or totally comped, as are the subs of all the other dotcom books. (Only one of them is 100% comp-free, and I can't remember which one, but it's not the Standard.) I get emails and junk mails imploring me to subscribe to the Standard at least once every two weeks. At first the offers were insane, like $90/yr. Then they was $50/yr. Then they were for $19/yr. I finally signed up when they offered me a 100% comp.

And while the US is in a downturn, why not fire all the fucking greeters at Gap?

That day is coming.
posted by aaron at 9:12 PM on April 16, 2001



The news business is the canary in the coal mine? Print media has been dying slowly since the 1960s and not much can help that.

Part of the problem with new media is that a lot of content sites were run by old media burnouts who didn't have a clue about the Internet.
posted by Falconen at 3:22 AM on April 17, 2001


aaron - thanks for informing me that the GAP on St.Mark's Place is closing. I was wondering how long it would take for the people at headquarters to notice that the whole GAP thing isn't the punk kids' style.
posted by dogmatic at 7:10 AM on April 17, 2001


Part of the problem with new media is that a lot of content sites were run by old media burnouts who didn't have a clue about the Internet.

Pseudo.com?
posted by ParisParamus at 7:20 AM on April 17, 2001


Why, thank you, aaron.

(And I don't get a comp to the Standard, even though I was/am on the bloody masthead. They 'can't do international comps', apparently. Gah.)

The age discrimination thing's an issue here, as well, though things have improved a little with the introduction of some European directives. Although it breaks my heart to see my 56-year-old father dicked around by incompetent 30something management while he tries to do the job he's done all his life.

Part of the problem with new media is that a lot of content sites were run by old media burnouts who didn't have a clue about the Internet.

Most of the problem is that no-one will pay for content that doesn't involve stock prices or bodily fluids.
posted by holgate at 12:52 PM on April 17, 2001


There are still punk kids on St. Marks Place? Somebody tell them the seventies are over.
posted by dhartung at 12:56 PM on April 17, 2001


Dan, those kids were born years after the seventies were over. Although I do recall being quite amused when I first moved to NYC, ended up in the East Village, and was living a block from the Gap.

And while the neo-punks never adopted the Gap, they sure had no problem with the Kmart over on Broadway. Which store, conveniently, sells green hair dye.

Now what the hell were we talking about?
posted by anildash at 1:48 PM on April 17, 2001


That whole Astor Place (Square? I can't recall.) area is where NYC meets the rest of America, and sort of loses. But that generally means that the rest of NYC wins, since the people who want to spend their time in the city in the Starbucks-Kmart-Barnes&Noble block really can't be saved.
posted by holgate at 2:38 PM on April 17, 2001


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