The analysis is part of a broader study on news and political sites by Lauren Rich Fine, director of research for ContentNext Media--which also found that traditional properties still dominate online news, with the exception of a few breakthroughs like The Huffington Post and Slate.

Still, smaller sites can provide a decent living. "While being bigger helps attract larger advertisers, small works just fine," states the report. "Talking Points Memo is generating a good living for its founders and operating with a small staff. Daily Me has relatively low thresholds it needs to reach to achieve breakeven."

For traditional online news operations subsidized by their print or broadcast sides, questions remain about how original content will be funded over the long term. Sites such as those of the Times, CNN and MSNBC have taken steps to expand their offerings by aggregating other news sources and adding blogs and other social media features.

The report cites specific efforts in that vein such as Times Topics, where online readers can find stories related to a particular subject, and the more recent Times Extra, which provides links to outside sources below stories appearing on the front page of NYTimes.com.

Even as the Times expands online to help offset shrinking ad revenue in its core business, it has a long way to go to close the gap between online and print revenues. The ContentNext analysis estimates the Times would have to boost its monthly page views to 1.3 billion (up from 173 million now) at a CPM of $25 to equal the projected $300 million in offline revenue the Times will report for the fourth quarter. The study assumed a print CPM of $58.

To do that, it would have to catch up to top new sites such as msnbc.com, CNN.com and Yahoo News, which have roughly double the audience of the NYTimes.com's 20 million monthly visitors. Traffic to MSNBC's and CNN's sites was also growing faster in the last year--at 37% and 27%, respectively--than the NYTimes.com's 16%.

The Times' Internet ad revenues in the third quarter increased 6.7% to $85.1 million, accounting for 12.4% of overall sales. But the digital gains were not enough to compensate for an overall 14.4% ad revenue drop during the quarter.

Achieving scale is critical for NYTimes.com and other news sites. "Based on our research, the conversation gets interesting at 200 million page views plus a month, but even more so towards 800 million," writes analyst Fine. "This last point further underscores...why local papers will have trouble offsetting traditional media declines with online successes."

That doesn't mean the new cadre of independent news and political sites are doomed to failure. "The challenge for the smaller news and political sites is to garner enough traffic and or have a discernable enough brand (i.e., targeted demographics) to make the sites a must buy," according to Fine.

The study cites The Huffington Post as one of the emerging political sites that has established a distinctive brand and now generates more than 200 million monthly page views and commands CPMs of $8 to $12-- roughly the middle of the 25 cents to $17 range for news sites.

At those rates, and with 46 employees, ContentNext estimates the site is closing in on profitability and annual revenue of $24 million. Eyebrows were raised last month when The Huffington Post raised $25 million in venture capital at a reported valuation of $100 million.

One big question is whether HuffingtonPost.com and other political sites can maintain audience growth in the aftermath of the election. For the week ending Nov. 16, unique visitors to HuffingtonPost.com had already dropped to 1.3 million from 1.9 million the week before, according to comScore.

Even so, "It is certainly a site worth watching as it is trying to be broad based news with a point of view and is creating the foundation for something scalable," wrote Fine.

Given the risks surrounding financial returns from online content, ContentNext estimates there have only been 14 investments and 7 acquisitions involving Web news properties in the last 18 months, totaling just under $800 million.

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