• by Erik Sass  @eriksass1, March 14, 2006

Revenue for online news portals is soaring, while print, TV, and radio ad revenue drops, according to a new report from Columbia University's Graduate School of Journalism. The report, "State of the News Media 2006," records a steady shift of advertising revenue from "old" outlets to online portals--with the exception of cable news, where revenues are still growing.

Echoing gloomy analyses from Merrill Lynch and Blackfriars' Communications on the state of the newspaper industry, the Columbia University report notes that newspaper revenue rose by 1 to 2 percent, but largely because of a 30 percent increase in revenue from ads on newspapers' online portals. Without this income, newspaper revenue would have been flat. And the future will likely be gloomier, according to "State of the News," as online sites like Craigslist--and the newspapers' own online portals--eat into revenue from print newspapers' classified ad sections.

Indeed, the cost disparity between free online editions and paid print subscriptions will likely drive more and more readers to online portals, followed by ad revenue. Although online advertising is growing rapidly, this development still spells bad news for newspapers' bottom line according to Merrill Lynch analyst Lauren Rich Fine, who notes that newspapers only earn 20 to 30 cents in ad revenue for each online reader, versus a dollar for print.

And "State of the News" says the 20 to 30 percent annual growth rate in online ad revenue is unsustainable in the long run.