Yesterday, the Alley Insider published the chart at left as their “Chart of the Day”. The chart shows trends in the number of people employed by the Newspaper industry from 1947 – September 2009 as estimated by the Bureau of Labor Statistics. At first blush it seems ok, but the title (The End of Newspapers) begs for closer inspection.
The issue here, if you haven’t already spotted it, is that the y-axis starts at a non-zero value (200K). While it is acceptable, under certain conditions, to use a non-zero y-axis this isn’t one of them.
Using a non-zero y-axis on a trendline is typically used to expose patterns in the trend that otherwise would not be visible and the absolute value of any given point on the line is not that important. This trendline has a pronounced pattern so a truncated axis does not expose any new information. If you don’t intentionally look at the values on the y-axis then you might assume that where the trendline starts on the left is zero so the employment numbers for newspaper publishers are quickly approaching bottom. That is simply not true, so the chart is being used to lie to you.
Now, I’m not actually arguing that the newspaper business isn’t in trouble. Circulation is down, ad revenue is down, yada yada yada. Looking at the graph, we can see that the most recent months have the same employment levels as those of the early 1950s. But again, without some context, the number of people employed in the industry probably isn’t the best indicator of sector health.
So here’s how I’d look at this single measure of the Newspaper industry:
The two sets of graphs show monthly and annual employment estimates and for the Newspaper industry from 1947 to 2009. The first chart in the monthly or yearly block simply trends the number of employees from period to period across the entire set. The variable width of the line is also the number of employees and is used to re-enforce the relative weight of one period compared to another. The yellow band on the employment trend charts covers the minimum number of employees to the maximum – basically the vertical height covered by the Alley Insider chart. You can see that there is quite a bit of white space underneath the yellow band and thus the chart lie. Changing the start value of the y-axis doesn’t expose any new insight about the trend, exaggerates the line slope and makes it seem as though the employment numbers are bottoming out – which they are not.
The second chart in each block shows the percent (%) change period-over-period (M/M or Y/Y) in number of employees. In this case, the yellow band shows the normal variation (mean +/- 1.96 standard deviations). For the monthly chart, the gray line is the actual M/M values and the red line is the 6 month moving average. It’s interesting that when looking at the monthly M/M trend that the vast majority of points are within the normal variation. It’s not until November 2007 that we see a strong downward pressure in the M/M numbers. In the yearly chart, the yellow band is still normal variation as defined above and the gray line is the actual Y/Y values. In this case, the red line represents the 5 year moving average of Y/Y change.
Taking the ‘higher’ view of year-over-year employment numbers, we can see that the decline in Newspaper employment started in 1986 (24 years ago)! That is not to say that the rapid expansion of internet use this past decade hasn’t had an impact on the Newspaper industry, but if the sole basis for health of an industry is the number of employees it has, then the newspaper business has been in trouble for nearly a quarter of a century and there are larger forces at play than citizen journalism and Google et. al. “stealing” newspaper content.
So, what conclusions do the data support? Newspaper sector employment peaked (on an absolute basis) in 1990. On a percentage growth basis, employment peaked in the mid 80s and has been declining ever since. The rate of loss in employment has accelerated in the last 2-3 years. It’s unclear from the data, since it is a single measure, what is driving the changes described. It’s also unclear, despite the link-baiting headline given to the Alley Insider chart whether or not this is the end of the newspaper business. From an employment basis, the sector has contracted to early 1950 levels but we lack the proper context to understand what the implications of that contraction are.