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April 29, 2010 / Toby Dayton

Goldman Sachs Downgrades Monster Citing “Newer, Cheaper Alternatives”

In attempting to emerge from one of my more protracted blog-writing slumps, I’m going to simply work through a list of posts, news items, clips, and blurbs that I’ve collected over the past few weeks and make a few comments. I realize it’s a bit lazy, but I seem to have let my blog writing discipline lapse a bit of late, and it will take some time to restore. In any event, here are some of the items that caught my attention recently:

• 2010 is expected to be another dismal year for daily newspapers, with further revenue declines and continued erosion of market share, reader attention, and hopes of a meaningful recovery in a rapidly changing media environment. JP Morgan, Magna, and ZenithOptiMedia are all predicting revenue declines ranging between 4-6%. The declines are smaller than recent years, but the industry remains in critical care, and the prognosis for recovery is not good.

• In fact, James Tyree, who led the buyout of the Chicago Sun-Times, predicts that newspapers have 5-10 years left before their print-centric model becomes completely extinct. I’d say that’s overly generous for all but the largest, most recognized, and most innovative/aggressive/creative dailies (and there aren’t many in those categories).

• Increasingly, it’s looking like the next industry heading down the path to extinction is the mega job board business that relies on the traditional pay-to-post model (or pay-and-pray as it’s unflatteringly but accurately referred to by employers). Goldman Sachs recently downgraded Monster and stated that the company is not only losing market share to social networking, but suffers from “Structural risk, as we believe that pricing for classified recruitment ads will never fully recover from the contractions brought on by the recent recession, as newer, cheaper alternatives proliferate.” Those newer, cheaper, and better alternatives include job search engines such as LinkUp that rely on a performance-based, pay-per-click pricing model.

• Sticking with the recruitment advertising industry, Zapoint has acquired Jobster. Over the years, the perennially flaky Jobster raised $55 million in venture funding and failed to establish any kind of viable or sustainable business model. I have no clue what Zapoint thinks they’re gaining from the acquisition, but I suppose there might be some value buried deep in there somewhere if the price was low enough (free?).