Thursday, February 01, 2007


In Creative Destruction, the Media Reports only the Destruction, Especially About Itself

As a reminder that you have to look at the data and the methodology to interpret what's really going on, last week's press reports that were headlined “Planned Media Job Cuts Up 88% in 2006” was one of the best we have seen lately. More importantly, it's a lesson that when markets change through the forces of creative destruction, only one side of the story seems to get reported, and that's especially the case when the reporters see death, destruction, plagues, and layoffs all around them.

Challenger, Gray & Christmas, the company that compiled these data, is not responsible for the context of how it eventually gets reported. CG&C is a famous outplacement firm that handles searches for the world’s biggest companies, and its top executives. Years ago, they started to track announced corporate layoffs. That is, any time a major company would report downsizing activities, it would track them and issue a press release. It brings them great publicity, and they use it very well, supplying talking heads for all kinds of news broadcasts. In this case, there were “17,809 job cuts, up sizably from the 9,453 cuts announced the prior year, according to the job outplacement tracking firm.” The press automatically went into sky-is-falling mode.

Let's look at the real data, compared to last year:
Even more interesting is self-employment and microbusinesses in publishing. In 2001, there were 68,000 of these entities. By 2004, the number had increased to 80,000, according to the Commerce Department. We suspect that the number in 2006 was in the range of 88,000.

Blame technology, desktop publishing, the Internet, aging of the workforce, or whatever. This is the creative force in “creative destruction” and it's never reported in the media at all. Markets are a constant give-and-take of growing and declining trends and businesses. When growth occurs in small businesses, or in the “new economy,” no one seems to notice, though the figures are just fascinating.

Self-employment and microbusinesses trends in other content-creation businesses is booming. Between 2001 and 2004 there were 16,000 more self-employed and microbusinesses in advertising, and 29,000 more in design services. Of course, some of these people might be considered unintentional entrepreneurs, but if this kind of employment is rising at the same time payroll employment in these industries is also rising. This is a sign that for most of these workers, being self-employmed or in a microbusiness is now the manner to which they have become accustomed.

More astounding is that when we compare this kind of employment to the total number of employees, self-employment in publishing was 7% of the publishing workforce in 2001. By 2004 it was 9%. In 2006 we estimate it was 10%. By 2010, we expect it to be 12%.

In graphic design, the percentages are even more eye-opening. Employment in microbusinesses or self-employment began to outnumber payroll employees in that industry starting in 2000. In 2004, there were 40% more designers in freelance mode than there were in payroll mode. We expect that this number will continue to grow.

In the end, it seems like lots of these jobless publishing folks are finding jobs in their own publishing industry, and often a different corner of it. One company’s layoff is someone else’s new hire. Remember, these employees can also exit the workforce, change industries, but usually end up working for a smaller and more nimble company in the same or related industry. Many of them, it seems, become self-employed.
This is a longer term trend that started in the 1990s; it's not new at all. People who follow “big media” or live in that environment have to come to terms with the creative part of creative destruction, and realize that it's the bad news that is no longer newsworthy. The revolution has started without them.

Planned Media Job Cuts Up 88% in 2006
creative destruction (in the first paragraph)

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