Will newspapers outlive Facebook?

Those who are not in the newspaper business and love to play around with their mobile gadgets consistently misunderstand the overall media business. Those who spend all their extra time online assume that the newspaper industry is dying.

What they don’t understand is that the vast majority of the advertising money in this country still goes to print products, not websites. Practically no one, other than the monster-sized Google, has figured out a way to make good money off of Internet advertising. The advertisers (such as General Motors) don’t like it and aren’t convinced that it’s effective.

As a result, ads on a typical website are dirt cheap. Even Facebook can’t seem to figure out a way to cash in.

Take a look at this chart and then read the explanation below. The writing is by Derek Thompson, a business writer for The Atlantic (print and online), who is commenting on Facebook’s IPO claims of great riches in the near future.

(Source: KPCB)

Here's Thompson's "takeaway" from these numbers:

“… But in one key measure of attention economics, it (Facebook) doesn't dominate at all. The metric is "average revenue per user", or ARPU. That tells you how much money you're making from a typical customer. LinkedIn makes $7. Facebook makes $5. For unfair comparison's sake, Comcast makes $1,740.

“Now, ARPU is a flawed statistic, because not all users are equal. Some media companies have subscribers. Others are all free and ad-supported. Google makes most of its money from searches rather than display advertising on a website with a log-in and original content. But the point is: Look at the Internet companies (in the chart), and look at the newspapers, and tell me who's dying.

“Remember Takeaway #2: Advertisers still love print. Facebook's challenge is the Web's challenge. Can you convince marketing firms that an eyeball on a screen is worth an eyeball on paper? Until they do, Facebook's online ad strategy might wind up expanding the supply of an already-cheap commodity. That's not a $100 billion plan.”

You can read more here and get a look at another interesting graph.