• by Mark Naples , September 2, 2005

Maybe it's the single largest natural disaster in our nation's history. Whatever the case, Hurricane Katrina's aftermath has laid waste the lives of millions and simply taken the lives of perhaps thousands more.

By now, on this Thursday evening, what we're left with is the knowledge that the calamity in Louisiana and Mississippi is of truly Biblical proportions, and the news we consumers AND many regional journalists have come to depend on arrives not by any other means than by bits and bytes online.

So, is it any surprise that, as eMarketer reported last week, digital newspapers have been seeing their revenue figures grow so quickly? In this year of major, global catastrophes and a war that makes so little sense, where else should we go for coverage and insight rather than media brands we trust?

I hate to be so seemingly opportunistic in terms of sourcing this column. But, the question whenever there is a national story like this for anyone in the media industry has to be: Where did you read about it? In the past year the answer has become an online newspaper.

In case you missed it, last week's eMarketer report focused on revenue growth in online newspapers and revealed that these properties are posting consistently strong  indeed, somewhat astonishing  financial results. Even the online operations of traditional newspapers, which struggled for so long, have become big earners.

As eMarketer reported, part of this resurgence can be chalked up to cyclical factors and factors having nothing to do with digital media per se. A healthier economy has fueled strong gains in employment and real estate advertising through this past spring.

Perhaps dragged kicking and screaming, many publishers of the digital versions of major newspapers learned how to leverage online classified sites through partnerships. Have you noticed how thin the back sections of your local newspaper have become over the past two or three years? I guess these digital publishers finally have, since classified ads comprise the majority of online ad revenues at most companies.

I should apologize to my friends at these properties for the digs. For many, the adjustments that have enabled them to earn more have been akin to turning ships in a channel. Many of the companies and individuals they have to answer to remain decidedly old-guard. To achieve these gains, many have implemented multiple strategies -- strategies designed to make their properties become more significant during times like these.

eMarketer reported that Internet users are increasing their consumption of online content, and in particular, online news. Data presented in their report clearly shows that U.S. consumers are flocking to online news sources and in particular the online arms of offline publications. This growth is occurring despite the fact that growth in overall Internet usage is slowing down or flat.

If you went to Yahoo! News first this week via your home page, as millions did, you probably then went to other branded media sources for more depth, such as the NY Times Digital, or the New Orleans Times-Picayune. Increasingly, local newspapers update their online editions frequently. And they also enable video far more readily, leading to eMarketer's second reported factor.

The second is broadband uptake. It may be counterintuitive that broadband consumers would increase their use of relatively "light" content such as online news, but this is clearly the case. It has to do with an increasing ability for users to access video and other visual news through these sources. How many of you looked at video and images of New Orleans this week? How many did so through an online newspaper?

The third factor cited by eMarketer is advertisers' belated shift to online channels. It has been evident for some time that advertising spending does not accurately reflect actual usage of different media. The percentage of time that people spend online dwarfs the percentage of advertising dollars devoted to the online channel. Therefore, eMarketer asserted, it makes sense that as the biggest advertisers are cautiously shifting their budgets online, they will seek a "safer" environment; one with trusted, known parent companies and predictable content.

I disagree with that assertion, seeing as the three portals that barely existed 15 years ago passed the $1 billion revenue mark long ago. Nevertheless, as digital newspapers continue to grow their revenue and begin to learn how to make money through performance-based programs, we may regard 2005 as the year publishers affirmed themselves online.

Can online newspapers continue their growth? With their revenue gains for the first half of this year exceeding that of our industry as a whole, it would seem so. With more of them beginning to learn how to make money through the right kind of performance-based partnerships (i.e. local IYP and online classifieds) I doubt we'll see red ink from this sub-sector any time soon.