Summary of article “COVID and Cascading Collapses”

Here is the link of the article: https://www.ben-evans.com/benedictevans/2020/5/4/covid-and-cascading-collapses

The first chart in the article provides the data regarding the US print advertising revenue separately for newspapers and magazines. It reveals how the revenue was just going up till the crisis of 2008/09 after which the budgets never returned and have been continuously falling.

Globally too, the production of newspapers started decreasing from 2009 and has halved since the peak.

The Will- E- Coyote effect:

When I-phone entered the market, there was an existential threat to the market players like RIM, Palm, Microsoft and Nokia. Blackberry unit sales kept on rising till four years after the launch of I-Phone. It rose to 6 times.

The Blackberry collapse was more complicated because of the fact that it happened in two phases, the first being the downturn in high end consumer business which was hit by I phone. The middle and low-end business was hit by Android.

Phased collapse in the camera business:

 The point and shoot cameras replaced the interchangeable lens cameras in the 1970s. By 1999, digital became good enough to make point and shoot cameras but by 2010, smartphone cameras led to the collapse of all the other types of cameras.

Potential threat in the retail business:

Retail is one business which, after the penetration of internet, is left behind as a bundle of fixed assets which are now being unbundled with the entry barriers turning meaningless.

The internet has made those fixed costs unsustainable with consumer behavior pattern adding to the misery.

Ecommerce as a percentage of retail has been going up.

The workforce engaged in the retail sector as a percentage of total labor force is nearly 10% who will be affected.

The US has probably over stored i.e. there is far more retail space per capita than other markets.

T.V.:

TV ads haven’t found a substitute in internet as yet. However, the subscriptions have been down thereby reducing the viewing. However, the budgets are constant thereby increasing CPMs.

To conclude, the US advertising spending has been decreasing as a whole and as a percentage of GDP in the print media.