You probably have noticed the decline in the quality of newspapers. Actually, it is not just a decline, it is a true collapse: news are not verified, legends are published as fact, important issues are neglected in favor of gossip and let's say nothing about the way some crucial problems such as climate change are neglected and mispresented. There is a reason: as you see in the figure above, newspapers have rapidly lost a large fraction of their revenues in the form of advertising. In short, newspapers are a living example of what I called the "Seneca Effect", which states that "ruin is rapid." (Image by Mark J. Perry from the American Enterprise Institute.)
By now, you may think that I am becoming a bit fixated with this idea of the "Seneca Cliff", but the image above is so impressive that I just had to show it here. In previous posts, I described how decline could be much faster than growth (the "Seneca Effect" - see the graph on the left) in several historical cases involving the exploitation of natural resources. In these cases, the rapid collapse is the result of the attempt of operators to keep production constant or increasing, and hence overexploiting the resource.
The case of newspaper advertising looks similar. The decline of newspaper quality during the past few years has been startling and it can be explained by the graph at the beginning of this post. Advertising revenues for newspapers collapsed badly, "Seneca-style," starting with the early 2000s. This collapse took place while total advertising revenues actually increased; so, the data have to be interpreted as the result of the diffusion of the Internet. Apparently, Web advertising on social media and other channels provided better performance/cost ratios than newspaper related advertising and it is there that the advertising money went. And, without the money that came from advertising, it is no surprise that the quality of newspapers collapsed as well.
So, we have here a good illustration of the ubiquity of Seneca's observation that "the way to ruin is rapid", but also a different case than that of the exploitation of natural resources as - say - shale oil (which is, by the way, starting to show a very nice "Seneca Cliff"). Nevertheless, all human economic activities have to do with the exploitation of resources of some kind. In this case, the resource being exploited is the capital available for advertising.
We can see the effect of the competition between Social Media and Newspaper advertising as a classic case of the "Gause's law of competitive exclusion", well known in biology. It says that when two species compete for the same resources, one will usually go extinct. This is what's happening with the two "species" which are Newspapers and Social Media - the first is probably going to be extinct soon.
Below, I'll show you a simple model on how we can simulate the competition of two species for the same resource. But, intuitively, we do expect that the collapse of the less efficient species should be abrupt. We can imagine that the old species (say, foxes) had found some kind of homeostatic equilibrium with its source of food (say, rabbits) and then, suddenly, the new species appears (say, wolves) which catches rabbits much faster and more efficiently. It is disastrous for the foxes, which go extinct quickly.
This is not just theory, think of what happened when the Europeans arrived in the Americas with their firearms. It was a disaster for the local people - less efficient than the Europeans in the art of war. Not a nice story to tell but, unfortunately, this seems to be the way the world works.
A simple model of Gause's law applied to advertising.
by Ugo Bardi
Here is the model's representation made using the Vensim software:
The model is built using simple assumptions which make it similar to the well known "Lotka-Volterra" (LV) model. It starts from an "advertising capital" (rabbits in the LV model), which is consumed by capital specifically dedicated to internet advertising (foxes in the LV model), assuming also that growth is quadratically damped, as it is often done in the LV model. There are two species in competition, Web and Newspaper advertising ("foxes" and "wolves") of which one starts with much lower numbers but with a higher efficiency of capital consumption. This second species appears as a "pulse" at about one third of the simulation. The result is that the first species (Newspaper advertising) reaches homeostasis, but collapses rapidly when the second species (Web advertising) enters into play. Here are the results of the investments on newspaper advertising
This is just a stab of a model, put together in an hour or so. Don't take it for more than that, but I think it does capture something of the system being modeled. For details write to me at ugo.bardi(zingything)unifi.it. I can also send to you the complete model.