Advertising

Newspapers suffered a 14% drop in revenue in the first half of 2008, continuing a downward trend starting in early 2006. The biggest contributor to the decline has been the rapid disappearance of advertising, down a whopping 35.2% for the first half of the year…and this is before the current financial crisis. All the external factors in the economy suggest that advertising spending will contract in the second half of the year at a rate higher than the first half of the year, and heritage media, and particularly newspapers will take a huge hit. Advertising doesn’t stop in a recession, but data shows that advertisers get smarter with their ad buys, and search advertising is the biggest beneficiary.

New media isn’t immune from a downturn in advertising, but the figures leading up to this point show that while the economy slowed, online advertising continued to growth, although at slower rates than previous years. In a deep recession, or even depression, the online ad spend may start to shrink, but it enters today far better positioned to take a hit than newspapers are. The classifieds market for newspapers contracted to $5 billion after a 35.2% hit, imagine them taking a 50% or larger hit in the second quarter; in the space of the next 12-18 months, the newspaper classifieds business may simply cease to exist.

Relevancy

As people turn to the latest news on the economic crisis, they aren’t turning to print newspapers. Here’s the front page of the Wall Street Journal today

When news of the bailout failing to pass broke, people turned online for the latest news. Certainly yes, many also turned to newspaper websites, but they didn’t rush out to get their latest news from the print edition. Print has long declined as a relevant source of breaking news, but this crisis proves it more so. The angle that newspapers provide thoughtful analysis isn’t a strong selling point in an age where substitutes are a mouse click or Google search away. Newspapers have lost their edge, and as the world continues to rapidly change, the concept of a print newspaper becomes more and more archaic, and the decline in circulation increases.

Opportunities for new media

Those that survive this economic crisis well into the future will be well run companies with low overheads, and new media best fits the bill. The massive superstructures of traditional newspapers aren’t cost effective, and it’s new media that can thrive in this environment. Newspapers though aren’t stupid, and the smart ones will survive by cutting costs and eventually moving to an online only presence, but as long as they’re still clinging to print, the longer new media has to thrive. Smart startups in the sector will be looking to offer newspaper substitution in an economic fashion, targeting verticals everywhere from local through to international, to build an audience now, and to be placed to pick up the refugees as the newspapers start to fall. Lets just hope that the socialism endemic in the financial crisis isn’t extended to old media, and Governments world wide don’t decide to start bailing out media companies as well

Conclusion

There’s no good news for newspapers at the moment, and the perfect storm we described earlier this month just intensified. Some newspapers will survive, at least online, but the deeper this crisis is, the quicker newspapers will fall. Those of us in new media just need to remain focused on running a tight ship to minimize any exposure online advertising may have as part of the broader downturn in the economy.

How the economic crisis will accelerate the death of newspapers is a post from: The Inquisitr

Broker dealers got the bulk of the visits, with four times the amount of hits they saw a day earlier.

The overall winner may come as a surprise: Yahoo Finance saw more U.S. traffic than any other stocks/shares site, Hitwise says, taking 24 percent of all the stock-related visits. That’s 167 percent more than it saw the day before.

By the way, the second highest stocks/shares traffic day Hitwise has measured also came this summer. It happened on July 17, when the Dow dropped below 11,000.

Online Stock Services Soar From Wall Street Woes is a post from: The Inquisitr

Across the country, Silicon Valley may seem far removed from the mess. The startups in Palo Alto go on, and on Sandhill Road, the VC’s are still turning up to work. Although we may not see the links to Wall Street on the surface, they are strong, and Silicon Valley is not immune to the crisis. Here’s what we can find on Silicon Valley’s exposure to Lehman Brothers

Lehman Brothers as an investor

Lehman Brothers may not immediately be top of your list as an investor in Web 2.0 companies, but the company is a major player in the Valley. Lehman Brothers Venture Partners has raised $1 billion for investment in technology, with its last round in October 2007 raising $365 million. A full list of their investments can be found here. Companies you may be familiar with include Comscore, Kayak, Searchme, Zappos and Kontera.

Lehman Brothers Venture Partners is not included in the Lehman Brothers bankruptcy filing, however as part of Lehman Brothers Investment Management, it’s currently on the market. There’s no reason to think that it won’t sell, however one of the biggest investors in the fund is Lehman Brothers itself

Investors in Lehman Brothers Venture Capitals’ funds include Lehman Brothers, Lehman Brothers’ employees, and institutional and individual third-party investors.

Naturally the ties to other areas of Lehman Brothers is strong as well

As an integrated component of the overall Lehman Brothers platform, Lehman Brothers Venture Partners can call on the extensive global resources of Lehman Brothers to assist in evaluating and enhancing the value of portfolio companies. At the same time, the integrity of the investment and portfolio decision process is reinforced by dedicated investment professionals and the substantial capital commitments made by Lehman Brothers and its employees.

The fund may go on, but with the relationships in place it has to take a hit on several fronts, and you’d presume that it will slow or cease new investments until the mess is sorted out.

Secondary financial hit: one less partner for existing firms

Most of the deals I could dig up for Lehman Brothers Venture Partners where not stand alone investments, but done alongside other Valley firms. Here’s a few in the mix via QBase

Kontera
07/2006 Series A 7M Lehman Brothers, Sequoia Capital
08/2007 Series B 10.3M Carmel Ventures, Lehman Brothers, Sequoia Capital

Power Reviews
09/2007 Series B 15M Draper Richards, Lehman Brothers, Menlo Ventures

SearchMe
10/2007 Series D 15M Lehman Brothers, DAG Ventures, Sequoia Capital
05/2008 Series E 12.6M Lachlan Murdoch, Randy Adams, Thomas Banahan, Sequoia Capital, DAG Ventures, Deepfork Capital, Lehman Brothers Venture Partners, Mark Kvamme

I’m not saying that these deals wouldn’t have happened without Lehman Brothers, but an investor with a $1 billion fund does make a nice partner, and any short term or long term absence will be missed.

Lehman Brothers as advisers

I’m unable to find a complete list of tech/ web 2.0 deals Lehman Brothers were involved in, but their name regularly pops up as advisers on big deals. Lehman Brothers managed to the sale of Photobucket and 24/7 Real Media and were advisers to Yahoo on the Microsoft/ Yahoo deal.

There is always alternatives in the market, but with the turmoil at the top among the firms left, Lehman Brothers leaves a hole that may see the costs of advice increasing.

see also Black Monday and its effect on tech.

Silicon Valley’s exposure to Lehman Brothers is a post from: The Inquisitr

CNN’s Jon Fortt talked to analysts who predict relatively stable ground for tech companies in the coming months. The reason? Many of them, notably IBM and HP, have overseas customers that should continue spending and offset any reduced income related to the stock market.

(HP, in an unrelated turn, announced yesterday that it was cutting almost 25,000 jobs as part of its Electronic Data Systems acquisition.)

The analysts say the true danger will come if the effects of the collapse reach Asia. That could start a chain reaction ending with a decrease in spending from the overseas customers who are currently keeping things moving. If that happens, the analysts suspect, we may start seeing trouble in the fourth quarter for some of America’s biggest tech giants.

Some more interesting tech/financial coverage from around the Web today:

• The effects we could soon see in Hollywood
• Why casinos are now struggling
• Best Buy suffers a serious profit drop
• Why Australia’s worried about Wall Street
• A sampling of Black Monday opinions and predictions from around the Internet
• Predicting your own portfolio risk

Black Monday And Its Effect On Tech is a post from: The Inquisitr

This clip from CNN covering the collapse of Lehman Brothers shows that despite the doom and gloom on Wall Street, some people can still have a laugh.

Two boys decide that Lehman Brothers report needs some tongue is a post from: The Inquisitr

At first I thought that he was talking about Black Monday, but it turns out that Shia LaBeouf was recounting his summer car crash. After a flipped-over truck and a serious hand injury (plus more surgery to come), he’s finally spoken out about the accident. Shia told PEOPLE that it was “eye-opening” and terrifying,” saying:

“The car hit me at 70 m.p.h. It was one of the biggest things that’s happened to me, for sure, in my life. I’m grateful to be here.”

Shia has yet to be formally charged, but it looks like this experience hasn’t been far from his mind. That’s good, and even better since he’s talking about it while things are still up in the air.

Image: WireImage

Shia LeBeouf Calls Crash “Eye Opening” is a post from: The Inquisitr

No financial turmoil for these two. . . Brad Pitt and Angelina Jolie have donated $2 million to fund a new Ethiopian health clinic. Their new project is slated to help children with HIV/AIDS and will be run by the Global Health Committee. Impressed? This isn’t their first project of the sort, with a Cambodian clinic named Maddox Chivan Children’s Center already running thanks to their hefty donations.

Usmagazine.com reports:

“Our goal is to transfer the success we have had in Cambodia to Ethiopia where people are needlessly dying of tuberculosis, a curable disease, and HIV/AIDS, a treatable disease, Jolie said in a statement.

“The fact that poor people continue to die in our world today of TB, a curable disease, because of lack of access to drugs and care is unacceptable,” Pitt added.

They really deserved that Sixth Most Generous Celebrity honor from Parade mag.

Image: WireImage

Black Monday Doesn’t Scare Brangelina Squad is a post from: The Inquisitr

RiskGrades lets you input your investments and then gives you a risk level for each one. Where it gets particularly interesting, though, is in the site’s simulations. You can put your entire portfolio up against anything from the Black Monday market drop of 1987 to the market effect following 9/11 to see how your current setup would fare against those kinds of events. You can also build your own custom set of circumstances to test it against. It’s all free of charge to do.

The tool is no future-reader by any means, but it may prove useful to some degree in your decision-making process. The grading service, by the way, originally came from J.P. Morgan’s internal risk advisory group. It has since spun off into its own independent operation.

• More Black Monday resources

Black Monday: Predicting Your Portfolio Risk is a post from: The Inquisitr

The Fed, never one to sit back and not try and save the market from itself, has announced an offer where banks will be able swap their unsaleable mortgage backed securities for Treasury bonds, but as we write this post, whether that will be enough to prevent the biggest black Monday of all time is yet to be seen.

Nouriel Roubini, quoted in Crikey, says

“What we are facing now is the beginning of the unravelling and collapse of the entire shadow financial system…The step by step, ad hoc and non-holistic approach of Fed and Treasury to crisis management has been a failure so far as plugging and filling one hole at the time is useless when the entire system of levies is collapsing in the perfect financial storm of the century.”

My FSRA License expired a few years ago, so under Australian law I can no longer provide financial advice, but others are saying: you should be afraid.

Whether the market takes the blow and handles the news, or whether it takes a massive dive, you can track/ watch Black Monday live online.

Stock prices

Google Finance now offers live market prices from major stock exchanges as does Yahoo Finance. Both include coverage of the European markets, which may be the first indicators of how big the hit will be following the Lehman Brothers news. The main stock exchanges directly: NYSE, NASDAQ, AMEX.

Blogs

Silicon Alley Insider is one of the better bets among the tech blogs, Henry Blodget is a former trader, and understands the market. AOL’s BloggingStocks will have lots of coverage, and at worst case, hit The Inquisitr logo on this post (or the link), we’ll also be covering some of it as well, particularly any tech angles.

Live video

Livestation once again offers the best live video coverage of all sites. Along with their partner sites, you can also watch Bloomberg live as well, which will offer you non-stop coverage.

Station websites will also offer coverage. CNN is always a good bet.

Other

Look to Twitter and FriendFeed for information, users of both will be providing filtered links of the things you need to know. Reddit will as always offer a unique take. Google News is another outlet you can use. For the blogging reaction, try Technorati.

(img credit)

Track/ watch Black Monday live online is a post from: The Inquisitr