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Facebook IPO latest evidence that traditional and social media are diverging

Two newspaper companies last week reported tepid financial results, while Facebook filed the legal paperwork for an initial public offering.

Facebook revealed plans to sell about $5 billion worth of stock.

The divergence of traditional and social media has never been more starkly illustrated than it was last week.

Two old-line newspaper companies — Gannett (the largest) and the New York Times (the most prestigious) — reported their quarterly financial results.

Meanwhile, Facebook — which didn’t even exist a decade ago — filed the legal paperwork for an initial public offering of stock in the spring.

Result: New beat old. Convincingly.

The Times reported that its print advertising was down about 8 percent from the previous year. The company’s market capitalization — the amount all its assets would bring if sold — is about $1.1 billion.

Gannett’s print advertising was down about 5 percent from the previous year. Gannett’s market cap now stands at about $3.5 billion.

Facebook revealed plans to sell about $5 billion worth of stock, but analysts said that when all is said and done, the value of Facebook will probably wind up being set by the market at somewhere between $75 billion and $100 billion.

(By the way — the McClatchy Co., former owner of the Star Tribune, is now valued at about $200 million. That’s the entire company — 30 daily newspapers and 44 non-dailies. Just five years ago, the Star Tribune alone brought $530 million when McClatchy sold it to an investor group.)

You might look on Facebook as a source of information and connection to your friends. And it is. But that’s not the business Facebook is in.

Facebook, like Google, is in the business of selling data to advertisers. And you’re a bit in their data stream. Every time you “like” a restaurant, or post a picture of your visit to a national park, or mention your grandchildren in Sioux Falls, Facebook adds those data points to its computer banks. Result: You’re probably going to see a tailored ad at some point from a kiddie restaurant near Badlands National Park.

Newspapers were never really in the news business — they were in the advertising business. The news was something they used to gather an audience that they could sell to advertisers.

Now there are faster, more precise, less expensive ways of gathering that audience.