Monday, February 27, 2006


Read These Because There'll Be a Test on This

Belgium newspaper tests e-paper: more details
Dow Jones has reorganized and now print and online are in the same division. This is a big deal. Remember, just a year ago, the online business had more profits than the print version did. It was a real turning point in the credibility of online publishing.

The Internet has stopped growing! I don't disagree with the general findings, as this level of penetration is relatively common for technologies (it's not so different than cell phone penetration, cable TV, etc.). What the article does not address how Internet use is changing with richer content, etc., etc., which was not its intent.
Site of researcher
Remember the $100 computer? Ask yourself after reading the articles: Would even a "free" computer get these non-users to jump on the 'net? Probably not. Not everyone adopts every technology, and it's silly to expect otherwise.
What will change is the way we use the Internet as new devices emerge (remember my comment that the Internet is in fourth grade? It has a long way to go, and we're just seeing a tiny bit of what it has to offer).
Just as a reminder, Microsoft Windows Vista will be released in July of this year. Its presence will change the attitude toward TabletPCs rather significantly (because they may actually work!), and will create a mini-surge in computer sales because the software will be more accomodative of various new media formats.

Don't worry... the Internet has plenty to grow. Just go to this page and you'll see how little the Internet has penetrated in Asia, Africa, Europe, Latin America. Hint: Europe is only a bit more than half of North America's penetration, so you can only imagine what it is elsewhere.

This article on newspapers calls the Internet's effect on the medium a lot of hype, pointing to the profitable coexistence of both hard copy and online versions for many papers. I know I've been stressing how the information consumer is the one in charge, and also the need for branding in content that rises above the medium in which it appears (the old Marshall McLuhan "the medium is the message" is now out of date in so many ways).

Speaking of online content, the Adobe website claims 200 million PDFs are available online. I did a Google search of the number of PDFs and it turned up 315 million documents online, and we know Google only covers public websites, not internal ones.

Consultant David Dodd explains value-added, the rise in importance of direct marketing, and how printers should get on the path of becoming "companies formerly known as printers."

Since all major business economic forecasts are wrong, they're worth reading to know what will not happen. The National Association of Business Economists has issued their composite forecast of 53 economists for 2006 and 2007.
In my mind, things will be slower than they claim as we will be moving sideways and slowing gradually. I don't know if we'll reach the 3.3% growth rate they expect, but what's a few decimal points between friends?

Saturday, February 25, 2006


Is It Just Me?

Last week, in our free newsletter PrintForecast Perspective (signup at, we linked to a report by Outsell, Inc. (their report is linked in this blog's 2/13/06 posting). We have never had so many click-throughs on an item in the short history of the newsletter.

That kind of information is free, and can be used to support print. Of course, it made me think of the Print Council, as well as numerous other efforts that claim to support print. This posting is not to "pick on" the Print Council, but it's to "pick on" the industry. It seems we're just powerless against the trends of new media, despite our rich history of supposedly changing the world, undermining authority, and spreading freedom for centuries. Yet, we seem stymied in the media marketplace.

I did a Google News Search on "print council" and found one release and one story. One story was from 2/2 about NewPage joining the council. The second story was about a totally different organization that supports photography in India. (In a regular Google search, a totally different print council always comes up first; this one is devoted to woodcuts).

I then went on the Print Council site In their existence, the Council has had 19 press releases.

Thankfully we have not found a way to waste $40 million in the way that the Magazine Publishers Association has

Magazines, just like all print, have to deliver the desired result of the communicator in a measurable way. A campaign that makes magazines look "trendy" does nothing to communicate the ability of magazines to deliver. The campaign is not unlike what one might find in Mad magazine or National Lampoon or even the April Fool's edition of

While the MPA and others can trot out lots of research to potential advertisers, the real research not research at all: it is the experience of competitive action of the marketplace. If the experience of advertisers is that something else is better, no matter what research you put in front of them, it will not be believed.

What would I do? I'd be on the phone with the Outsell, Inc. folks and be telling them that I was going to use their data in my next series of press releases. Their number is 650-342-6060, and they're in the San Francisco area. They might even be worth hiring, and I'd explore that as well.

Then I'd be working to explain how the complexity of communicating to fragmented audiences requires diversity in media, and that by using print, you can get a 2+2=6 synergystic effect rather than just using print alone. The fact that the previous sentence is in the shape that it is means that I should not be the copywriter for that campaign.

The Print Council site lists three major industry events which they will be attending: 1) April's Postal Forum, 2) May's Web Offset Conference, and 3) MediaDays, the event managed by the public relations firm for the Council. They will not be at the next ad:tech in April in San Francisco, the event that, when it was in New York, labeled our industry with the broadbrush "offline media" monicker.

Print is part of the interactive marketing business, a prime mover of consumers to action on the Internet. Yet we sit back, and don't get into the thick of it. This is a trench war.

How many printers are general or associate members of the Interactive Advertising Bureau?
General members
Associate members
Look at the lists... I couldn't find any. How many print customers can you find there? The list is overflowing with publishers and agencies.

Does the Print Council or other organization advertise in the IAB's superb SmartBrief daily newsletter?
Here's the link in case anyone is interested
And by the way, it's really worth signing up for.

Do you know that Communication Arts magazine's web site gets more traffic than numerous other printing industry web sites? We're not there either. This mainstay magazine goes to the key designers and design influencers. Graphic Design USA serves a similar market; we're not there either.

In the meantime, small business is growing significantly, with 70,000 net new businesses every month. Who has a better chance of getting their communications business? Staples or Office Depot in-store print shop? or "Joe's Litho"? There are tremendous opportunities here, industry-wide, not just for Vistaprint, but for everyone. Vistaprint, by the way, is showing up in Office Depot customer e-mail promotions. They know what's up.

It's not that the Print Council should have the same strategic plan as a printer, nor should it be telling printers how to market themselves. Nonetheless, they do operate in the same marketplace and planning for the Council and planning for a print business would have the same strategic assumptions. Those assumptions are:
People print things to store information so that it can be read by someone else at another time other than the place and time of its creation. Markets are fragmented because consumers and businesspeople have responded to a new range of choices in front of them, and they like them. There are so many choices, it looks like the market has fragmented, but it has not. We're marketers, so we should look at it from the target audience's perspective, not from the content creator's perspective. Fragmentation is the word of the marketer looking out at the market; that's not marketing.

The information ecosystem has become filled with choices. Consumers look at it as a candy store, filled with all kinds of choices, and they can pick and choose what they want and when they want it. Marketers are not used to not being in control of when and where they can place their message. Instead, communicators have to chase consumer tastes and preferences in ways they have never had to before.

Marketers have their own candy store. How do they choose among all of the media when their allowance is about the same as it was the year before, or less? What is print's compelling case? Can we even articulate why someone would even need a brochure anymore? They need them; but can we even give a reason that has some facts behind it? The basics seem to escape us.

What is it that we should say, as an industry, to all communicators, not just big companies, but even the small ones, those microbusinesses that are growing so significantly? Are we to think that just because we have small businesses fill in templates and that we print the jobs for them that they're getting what they really need?

The case is not for print alone. The case is for integrated campaigns. Who can manage integrated campaigns? Currently, it is ad agencies or their surrogates, or a company's own advertising executive. When printers used to describe themselves as "full service" they used to mean that they had prepress and post-press capabilities. We can.

For the first time, printers have to understand media to be successful. That's not to say that printers who just print can't be successful. But their success will be limited by how many customers they can hold onto or how many carcasses of defunct competitors they can pick over. Printers who want to grow will have to conduct business quite differently.

In the late 1990s, I was struck by how Internet-savvy designers, agencies, and others in content creation had become in a very short time. They didn't embrace the Internet; when you embrace something, it means that you can still let it go. They internalized it, they didn't embrace it. The contrast with printers at that time was staggering. It's still staggering today. Most printers have no understanding of the Internet or other non-electronic media themselves. Embracing something means you are still separate from it. Even the smallest printer can integrate themselves into the new media business.

This is the audience that the industry must engage: a new media-savvy content creator who wants to be communicated with in the formats they find interesting, and shown something that piques their child-like curiosity about media and their hard business inquisitiveness of whether or not it works for their clients. Whether it's a simple brochure or a multi-million ad campaign, they're looking for something new yet predictable. Does our industry understand their needs or are we still handing them an equipment list and asking for a chance to bid next time?

We need to use new media to our advantage, not to embrace it, but to internalize it, and use it better than anyone ever expected, and to bring the discipline of print to raise new media standards. We must take dead aim at the weaknesses of new media and offer print solutions that make the new media more effective. Are we creative enough to do this? We may think that small businesses are unsophisticated. They're the gadget and Internet users; they use e-mail, but don't know how to use it for their business. They have web sites, but have no clue how to make them effective. They buy some printing, but have no sense of how to leverage it. They have no sense of communications strategy, no feel of how to make media tactics work together, and how to implement them. Unfortunately, neither do we.

My back of the envelope forecast for 2006 is that the industry will lose $4 to $5 billion in shipments. Since 2000, we have lost more than $20 billion in annual sales on an inflation-adjusted basis. I hope I am wrong. How much do we have to lose to stimulate a compelling strategic action? The marketplace is ruthless in punishing businesses that have no economic purpose, and friendly to those that do. I'd rather be in the latter category.

Friday, February 24, 2006


Do The Math

I read this line this morning: “every one percentage-point reduction in GDP growth cuts printing industry revenues by more than $1 billion.”

Since 1994, print has averaged -0.5% decline. GDP has averaged +3.3%. The faster GDP grows the more we lose in volume. So perhaps we should actually be rooting for GDP to go down so that fewer people have the ability to invest in print-avoiding technologies like broadband, networking, wi-fi, and who knows what else.

Hmmm... there is no statistical relationship.... the r-squared is 2.2%. I think that's a lot less than the 75% we look for in a decent forecasting model.

I live by rules of thumb; when you handle statistics all of the time and are pressed for instant answers quite often, you have to. But I try to revisit them as often as possible.

We know that the link to GDP has been lost in the mid-1990s. It still is. There are numerous other trends that are more important. As far as a slowing GDP and print? Print is a discretionary expense for the most part, and where it is not, there are more e-alternatives and they are growing in acceptance. Do we really think that a decline or rise in GDP really matters in the new media world?

But let's say that the spirit of the statement is true. If we take the fourth quarter printing shipments, we lost -$2.5 billion in inflation-adjusted shipments compared to 2004 in that quarter alone when the preliminary estimate of real GDP was +1.1%. If we therefore lost 2.2% GDP points compared to the average, that's on an annual basis not $1 billion in shipments, but about $5 billion per GDP point, or 5x more that the rule of thumb would indicate. The statement, aside from not having strong statistical support, is actually optimistic.

Wednesday, February 22, 2006


Son of the Ghost of the Son of the Ghost of Required Reading

Jack Trout reminds us that advertising is about selling, not entertaining

New XM radios will let you go from hearing an ad to ordering what you just heard about... cool!

How newspapers are surviving by being in print and on the web, and the dire stories aren't true (they are, but that's decide the point)

On-line shopping creating more satisfaction than traditional retailing: "Poor customer service at retail stores is driving shoppers onto the Web, where a new study shows they get greater satisfaction by clicking than by walking."

Disney kills its hard copy catalog. Dumb move, but since the research said it was okay, they're doing it. I've been doing research for 25+ years: it's good at telling you what people's good intentions are, but you still have to watch behavior. They'll be back to print eventually just to support the web catalog.

NYTimes explains how the Internet has changed the role of small business. There are more than 70,000 net new businesses every month, under the radar, enhanced by the new communications infrastructures. Very few companies play to this market, which has made businesses like Staples very successful, and poorly imitated. The Times article talks about how search marketing has changed small business. Small businesses may never grow to use print the way that mid-size businesses do.

Earthlink and Google cooperating to make SanFran a wireless hotspot

Sunday, February 19, 2006


The Ghost of the Son of the Ghost of Required Reading

The New York-based advertising and marketing group, Y&R, has outlined 10 global trends which it says will transform marketing, communications, retailing and sales this century. They get pretty worn out toward the end, making it seem that they wanted 10 items no matter what, but these affirm all else we have been seeing in the communications marketplace, but now they're in a convenient list! Read the wold article to get proper context.
1) increasing search for security and direction
2) destruction of traditional communications and distribution models, driven by more media choices at home.
3) consumers are learning new ways to select the information they want.
4) growing need on the part of consumers for help to navigate their way through the information overload.
5) power brands created by consumers and not communicators.
6) creation of new purchasing patterns such as mobile commerce, which require neither cash nor retail outlets.
7) role of the retailer is being revolutionized as consumers are avoiding both media messages and retailers themselves.
8) creativity will be more critical than ever: The "360-degree" approach to marketing communications is over-- people will not talk about consistency anymore, but surprise.
9) a new brand dimension: brand energy, created by the invention, vision and dynamism of a business.
10) ideas are everything if the brand is to keep in front.

What will a Bernanke Fed be like? Perhaps the last Economic Report to the President, which he influenced (he recused himself from its preparation once he was nominated for the Federal Reserve) can be downloaded at
Barrons' columnist Gene Epstein writes about it
I watched Benanke's testimony and I can't anything except that the Fed is still likely to overtighten and that we should be cautious about that in our planning. About the yield curve being inverted, Bernanke's not worried, citing how different things are now, which is the same kind of logic that others who have pooh-poohed the yield curve have stated in the past. His sense is that a "global savings glut" is the cause of lower long term rates where offshore dollars seek safety. That does make some sense. In his testimony questioning, Sen. Schumer tried to rattle him by talking about the China monster, which Bernanke pushed aside. China is keeping its currency stable in relation to the dollar. Since they have no well-developed banking system, that's not a bad idea. What it does for Chinese consumers, however, is create inflation. Since their economy is growing so rapidly, I can't say that anyone really cares. By investing in any U.S. denomiated security, they are in effect protecting themselves against inflation at home. So the bottom line is that Bernanke thinks that demand for long-term securities is the reason for the inverted yield curve. In my mind, I don't care how it got that way, it's inverted and that's all that matters. People are penalized for investing in a long-term way, so they are encouraged to avoid risk keep cash in short-term duration instruments. When people become risk-averse, that slows down an economy. Could it be that he knows that the Fed can only influence short term rates and is powerless against the movements of long term rates? Sounds like he should jawbone the Treasury to issue lots of 30-year paper, if you ask me, increasing the supply and eventually getting us "uninverted."

The age of retirement should rise to 85 by 2050, to cope with longer life expectancy, a US scientist says. Tne most important issue about retirement is health, not some arbitrary age at which one extracts themselves from the workforce. The average age of death in 1900 was 47; by the end of the 20th century, 25 years had been added to that. And for statistical freaks who say that's because of infant mortality changing so dramatically, actuarial tables showing post-teenage length of life also increased dramatically... and there's more active and healthy longevity to come.

Annoying acronyms: Just when I was getting used to SME meaning "small and medium enterprises" now the same computer analysts are using SME to discuss e-learning. Beware: SME means "subject matter experts" to them. Can you be an SME in an SME? I suspect that I already am. Is there a support group I should belong to?

E-books are not catching on according to this AP story in USA Today (this may be one of the last stories about this... the next two years will be quite interesting as new readers and e-paper emerge into the marketplace). Being a resident of Rhode Island, it's funny that they would interview someone at Brown University, known of its supposedly "upper crust" student body. I wonder how e-books would fly at Community College of Rhode Island (CCRI) or Rhode Island College (RIC) with a significant lesser income audience, who would be far more price sensitive to the cost differential. It's early in the e-book game right now, and the e-book readers currently stink. The things that the article complains about are things that Acrobat already does or can do, or even Microsoft OneNote can help do.
Sony's soon-to-be released e-book reader

Why networks fear Yahoo! News (it's Jerry Garcia's fault, we find out)

As the industry is falling apart, Banta makes money; good for them! The distance between our best companies and our average ones is increasing.

This Buffalo, NY printer is finding fame and fortune is specialty work. Interesting story.

HP press release about Lavigne Printing in Worcester, MA. This printer has made a massive transformation.
HP release
Compay web site
WSJ story that mentions them

Wednesday, February 15, 2006


Son of the Ghost of Required Reading

Pew Internet Survey: more people surfing just for fun, significantly more than in 2004. That means only one thing: more time away from TV, more time to discover content that would otherwise have been printed. Am I the only one who understands this? Sometimes I wonder.
Press release:

Merrill Lynch report on newspapers "2005: A Year to Forget." Sure, I've had those myself, but I'm not a multibillion dollar industry. Their outlook isn't all that hot, either.

Classified ads: How newspapers can fight back
Newspapers aren't using all their assets to fend off online competition for classified-ad revenues.

Newspaper inserts are still a good market, and I think direct marketers will start using them in coming years (for some reason, I'm alone in that thought, too). This survey was funded by a newspaper insert printer, so you have to remember the source from a researcher's perspective, as one should always, but is not so inconsistent with other things that I have seen historically.

The USPS will have Dilbert as a spokesman. Not really, but this news of their latest direct mail ad campaign just put me at a loss for words. Dilbert cartoons will highlight USPS services and be sent as direct mail cards to businesses. Why does the postal service use mail to promote itself? Because for them, the postage is ... free!
I thought cyclist Lance Armstrong was under contract with them. Can't they just have him ride around the country and hand stuff out? :) Oh, that's right, they fired him (they withdrew sponsorship of the cycling team) because Priority Mail use went down during the period of their campaign. has some postal service news you don't really see elsewhere.

TNS Media Intelligence Forecasts 5.4 Percent Increase in U.S. Advertising Spending for 2006; Hispanic Network Television, the Internet and Cable Network Television Show Largest Growth

Verizon Chief Marketing Office reams into ad agency execs and their "antiquated media plans." Here's a quote from the article:
[Verizon spends] $1 billion a year for advertising on "overvalued, inefficient, rapidly eroding mass-market advertising platforms that continue to underdeliver," and that like many other major marketers, he is "not happy" with that situation.
La-dee-dah... Verizon is a horrible company to deal with as a consumer (we know from personal experience and the experiences of others)... perhaps they should spend $1 billion on improving customer service. Hiring people to answer the phones might be a good start. I switched to VOIP provider Vonage when Verizon could not get horrible noise out of our business lines. We use Skype a lot now, too. They'll never get us back.

Auto industry moving to use Internet advertising more heavily than before; they've been among the most aggressive magazine advertising groups... watch out!

Monday, February 13, 2006


Ghost of Required Reading

This is a must-read article from Advertising Age. It's about what was discussed at the recent Digital Lifestyle Day in Munich.
1. Because the native costs of crafting and distributing creative product are trending toward zero, anyone can be a creative.
2. Individuals control their media.
3. Whatever creativity is, its essence is more important in marketing and media now than ever.
4. Mobile social networking is the next big thing.
5. The “long tail” is making vast new forms of business possible.
6. The physical world still matters -- especially as a validator.

If you're not familiar with "long tail" you need to read this article from Wired.
The printing industry participates in the "long tail" with on-demand printing and stored documents, such as those that never allow a book to be truly "out of print." The company Lightning Source is a good example

Boston Globe had an article about the changing media mix. More interesting is the presentation that the story is built around.
Outsell, Inc. presentation can be accessed at:
Here's how print fared (it won't be growing like online is, but it is something that if I were running an association or something devoted to the survival of the industry I might actually want to use):
* Print trade magazines ranked #1 in branding effectiveness
* Direct mail ranked #2 in lead generation effectiveness and #3 in branding effectiveness.
* The highest ranked new media? E-mail marketing, ranked 4th in branding and lead generation.

The computer revolution started 60 years ago with ENIAC. It weighed 28 tons, and cost $487,000 in dollars.... then! The article has a great comparison of the computer and a current Intel chip.

Emerging markets have stockpiles of U.S. dollars for which they must find a use. That's right, the money has to be repatriated to have true value, which is the reason why all of the obsession of trade deficits is grossly silly.


Are We Part of the Solution or Perpetuating the "Print is Legacy Media" Stereotype?

Could there have been a more lackluster and 1950s-style response to the proposal by the SEC to allow companies to distribute and conduct business electronically, and not print all of those annoying proxies, reports, etc. that come to clutter my and others mail, in our supposed electronic age. This is an important issue, as 70% of American households hold some kind of equities, directly and indirectly, often referred to as "the investor class."

The PIA/GATF response to the SEC's proposed rule change is highlighted at ; it says that this would be destructive to the printing industry and its suppliers. The SEC document is at

Our industry sounds like a barrier to progress, protecting decidedly outmoded means of communications, when it actually needs a good swift kick in the behind. We're already being referred to as "offline media" and reference to us as "legacy media" has been common in recent years. I'd rather be putting out a story about how our companies are already on top of this issue. After all, EDGAR, the electronic reporting service of the SEC has been around for about 20 years. Why do I suspect that FedEx/Kinkos might already be salivating at the prospect of being an approved outlet for ondemand SEC documents? What's my recommendation?

The first rule of the new age for our industry should instead be to admit that electronic communications has significant and broader benefits that make it better than print in numerous, and growing, circumstances. I've written and spoken about this often for the last two years. I discuss this in my Print05 presentation, which are still available at no charge, online (MP3 and PDF of slides). Printers should be at the forefront of helping companies use the new media.

The second part of the response would have been something like:
PIA/GATF members have invested heavily in the latest, most innovative ondemand printing technologies that SEC-reporting companies and investment intermediaries can use in the many circumstances where hard copy is needed and preferred. We are working with the SEC and the Postal Service to ensure that any barriers to prompt acceptance, production, and delivery of financial documents are eliminated so that companies and shareholders can benefit from the speed of modern communications, the reduced costs that companies can re-invest in core operations, and the enhanced function of an informed investor marketplace. We want to be sure that PIA/GATF member companies have the latest information they need to participate in this critical aspect of shareholder rights and protections.
I might make the current PIA/GATF plea internally with the SEC, but the public would get a constant flow of information about our best, brightest companies, and how important ondemand technologies are and what great value they offer to shareholders and companies.

Evidence of the still growing reliance and consumer acceptance of the Internet is all around us. I'm wondering if our bad fourth quarter was the result of a new Internet surge. According to a recent Nielsen/NetRatings survey, December searches were 55% higher than those of 2004, at 5.1 billion searches. (Some days I think I was at least a quarter of those). Google was just under half of those searches. That's 17 searches for every person in the U.S., just in December. Needless to say, shopping was probably involved.

WSJ article about online printing businesses, mainly about Vistaprint. I still hate their constant e-mails about their "free*" printing, but I must admit when I recently changed my e-mail address it was very easy to go back to my old order, change my e-mail address, and put in a new order, which I received four days later. This time, the proofing feature actually worked. It's interesting that so many online printers had to die before one profitably emerged. It's not that Vistaprint has industry-leading profits, it's distinctly slightly above mediocre, but now their core business is set and they may have extended gross profits as they move up the economies of scale. I'd still prefer to put the order in online and pick it up at my local printer as I'm out doing errands, but I know that printer will never do it, and has no interest in doing it. His store sign doesn't say "Legacy Media Store" but it should. Vistaprint has separated itself from the rest of the industry because of its obvious Internet presence.

Thursday, February 09, 2006


Son of Required Reading

Time Inc.'s Plans for New Media

E-paper: Coming in 2007

E-mail marketing forecast to reach $1.1 billion by 2010

NY Times financial results pretty bad... except for online!

HarperCollins puts book on the web... for free... with ads... in an effort to drive print sales. The book is Go It Alone! The Secret to Building a Successful Business on Your Own, by Bruce Judson, can be found at the author’s Web site.
Author's site:

Convergence: can I get these for Christmas?

Wednesday, February 08, 2006


Today's Required Reading

Advertising Age had an excellent article on marketing strategy -- this is one of the best articles I have seen in years. I love the Ted Leavitt ("Marketing Myopia" is his famous article) line that shows the difference between sales and marketing so well, and can be used to explain the reason media is shifting just as well: "People don’t want to buy a quarter-inch drill. They want a quarter-inch hole."

Dow Jones online revenue increased $126 million, up a strong 33%. Their print results were painful.

The #1 newspaper in Spain is... free! I had a sales trainer (Dave Rothfeld, Creative Sales + Management, whose advice helped me build TrendWatch in the 1990s) tell me that "if others are selling it, give it away, if others are giving it away, charge for it" as a way of seeing new opportunities in the marketplace. This Spanish newspaper did!

Think e-paper is a dream? It's closer than you think.

Internet use in Germany

Friday, February 03, 2006


December 2005 Printing Shipments... Worst of the Year

This is one of the toughest posts I have written, but the Internet age has devastated the most important quarter of the print business' year. December 2005 printing shipments were down -9.3%. The chart below shows the month-to-month changes and how the year started to deteriorate beginning in June. Month by month the fourth quarter just got worse. What does it mean? It looks like next year will be about $5billion less commercial printing next year.

Our PrintForecast clients will be getting detailed analysis of this shortly. If you haven't signed up for the free newsletter, the paid weekly update called Contrarian View, I strongly recommend it as I will be putting it all in detailed context in those venues. I'll be discussing it in next week's "Fridays with Dr. Joe" at the site.

Thursday, February 02, 2006


Business News and the Publishing Business

Good article in National Journal about the future of the publishing business, with a good kick in the behind about shutting up and getting to work.

And it's got one of the best, most cynical, opening paragraphs I have read in a long time:

Going out to walk the dog a few days ago, I grabbed one of those plastic newspaper-delivery sacks that make such a fine canine-cleanup tool, and had a sad thought: If newspapers ever disappear, I'll sure miss these bags.

Read it at (it's the 1/27/06 article-- get it soon-- the link is likely to expire within days).

An undercurrent of the article is how because the publishing business is bad, so must the rest of the economy must be bad, too.

Nothing illustrates this more than today's reporting about Q4 productivity. Can't people read past the third paragraph? The report is actually pretty impressive!

Q4 productivity in durable manufacturing was +8.2%! Compared to Q4-2005, business productivity was +2.2% and manufacturing productivity was +4.1%. Even compared to the supposedly super-strong "goldilocks" economy of 1996-2000 the report was good. At +2.7%, 2005 business productivity was just -0.1 below the average for all of those years. The average for business productivity for 2001-2006 has been 3.3%, which is +0.5 higher than 1996-2000.

Another thing that demonstrates "context-free" journalism is the reports of Exxon's profits. Exxon's profit margins put it in the bottom half of the Dow Jones average, well below many other famous companies. If I was an Exxon stockholder, I'd be pretty ticked at their mediocre performance. I looked up all of the margins of the other Dow 30 companies using

Microsoft 30.8%
Merck 26.2%
Intel 24.1%
Coca-Cola 21.3%
Pfizer 20.3%
Hewlett Packard 19.7%
Johnson & Johnson 17.3%
Citigroup 16.3%
3M 15.2%
General Electric 14.2%
Procter & Gamble 13.9%
IBM 13.2%
AT&T 12.8%
JP Morgan Chase 12.0%
American Express 11.7%
Altria 11.7%
McDonalds 11.6%
Exxon 10.7%
Caterpillar 8.6%
Verizon 8.6%
Boeing 8.0%
Home Depot 7.4%
Honeywell 7.0%
United Technologies 7.0%
AIG 6.7%
Disney 6.0%
Alcoa 4.4%
Wal-Mart 3.2%
DuPont 2.4%
General Motors -9.6%

What's really funny? A media darling like Pixar has profit percentages on sales of 59.8%! They're taking money from defenseless and impressionable little kids, forcing them to go to movies through manipulative advertising on Saturday morning television! Why, that makes them an evil company, just like McDonalds! Many of Pixar's products are sold by Wal-Mart, which Pixar must keep secret because we know Wal-Mart is a shady company, undermining American values. Adobe, responsible for the loss of thousands upon thousands of jobs in the printing and prepress industry, and union jobs at that, has a 30.6% profit margin on revenues. Yet, nary a word in the press about these "evil" capitalists.

This is all really silly. Profits are profits. They go up and the go down. Rates of profits change depending on market conditions. There is no such thing as an "obscene" profit, just like there is no such thing as a "good" or "beneficial" loss. Basic economics seems to be beyond the reach of many, even the business press.

Peter Drucker wrote about this more than 30 years ago

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