• by Wendy Davis , Staff Writer @wendyndavis, April 4, 2006

Can the struggling newspaper industry bounce back online? Maybe, but it won't be easy, at least according to a new report by Outsell.

Consider that Web ads currently don't bring in as much revenue as print ads, according to executives interviewed by Outsell for the report. "Some high-end analysis has offered that a print ad loses two-thirds of its value as it transitions to online," states the report. "Other recent estimates say publishers will need 50-100 online users for every print reader to stay revenue-even."

Outsell figures a metro newspaper that sells half a million copies and draws 5 million to 10 million unique visitors still will derive more than 90 percent of overall revenues from print. Why does online account for so little revenue? Outsell proposes several theories, including that print pricing took advantage of "near-monopoly pricing power"; different audience metrics and models; and new competitive disruptions.

Another challenge, states the report, is that print papers focus on local news and advertisers, but online audiences often extend beyond the metropolitan area. "It's the online news trade's dirty little secret," states the report. "While local publishers like to claim they know their communities best and are the ultimate local news and ad providers, their Internet site use patterns are often far less locally oriented than their papers."

Meanwhile, newspapers can take comfort that at least more Web users are visiting them online, according to new data by the Newspapers Association of America. One in three Web users now visits a newspaper Web site each month; unique visitors to Web sites soared 21 percent last year and page views increased by 43 percent, according to the NAA's report.

But newspapers' ad sales forces apparently will have to work to translate the gain in online audience into meaningful revenue.

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