Classifieds' swoon in face of other categories' rise is a troubling sign.

Scanning the chart of 1998 newspaper advertising expenditures (as prepared by the Newspaper Association of America), the eye easily falls to the cell in the lower right-hand corner: The bottom line for last year was $43.9 billion, which represents overall growth of more than six percent, which followed two years of pretty dramatic growth. But there are a couple of other cells that might be cause for concern. The numbers for classified advertising expenditures in the third and fourth quarters are "only" about half the growth shown in the first and second quarters. As reported by Senior Editor Pete Wetmore inside, NAA Chief John Sturm attributes this "erosion" to a drop in employment advertising and speculates that perhaps those ads are now going to the World-Wide Web. If Sturm's speculation is accurate, this may be the beginning of the end. Classified advertising has always been the secret weapon of newspaper publishing -- a minimum of effort produced the maximum profits. By cutting a page into nine-column agate lines, a newspaper could charge triple or quadruple the rate for an open page. And where this is most dramatically illustrated is in employment advertising. If you are from a smaller daily, you might not understand the impact, so get yourself a copy of a metro daily -- especially from a tech area such as Boston or San Jose, where unemployment is low -- and see what some recruiters do in newspapers. It's staggering. Some newspapers are already feeling the impact of the migration of classifieds from print to on-line. I was chatting with an executive from a major metropolitan daily recently at an industry conference who confided that the newspaper's recruitment advertising had dropped precipitously in the first few weeks of 1999. You can imagine that he did not have on his happy face when he said that. Then he asked a plaintive question: "How are we going to recoup that revenue?" I couldn't give him an answer. Also inside, you'll find an article about how newspaper "territories" are changing through relationships fostered by the Internet. The writer of the piece, Jay Small, is a first-time NewsInc. contributor, but he has provided some insightful reporting in recent months for our sibling publication, The Cole Papers. Small has a diverse background. A newspaper editor and designer, he was one of the few print executives to fathom the implications of the Internet when he became the new media point man for Indianapolis Newspapers in 1995. A year later he was named general manager and held that job until earlier this year, when he left the newspaper business to become a consultant with VIA International of Minneapolis (he established and heads up VIA's Indianapolis offices). I always believed that the web sites of the Indianapolis Newspapers pioneered a number of on-line newspaper innovations and I have been assured by others that Small was a key decision-maker in those innovations. We have persuaded Small to become a correspondent on both NewsInc. and The Cole Papers, a role he'll perform in conjunction with his consulting. And a mea culpa concerning our last issue, March 1. In it we printed a good piece about the Interactive Newspapers conference that was written in a sprightly manner -- on deadline, no less. I neglected to take a little space here to introduce the writer, though, and many have wondered: Who is Susan Cook? A former reporter who worked on newspapers in her native New Zealand, Cook came to the United States to get a graduate degree in journalism and ended up staying. After working for three years in Gannett's new media operations, Cook has relocated to a remote part of North Carolina to start a free-lance writing career. We anticipate seeing a lot from Cook in the future. -- David M. Cole