Newspapers' Online Revenue Growth Slows

Online advertising revenue at newspaper Web sites totaled $638 million last quarter, marking a 23% increase from last year--but a drop of almost 5% from the second quarter's $667 million, according to an analysis of last quarter's revenue by the Newspaper Association of America.

Print revenue continued to plummet, falling to around $11.1 billion last quarter--marking a 2.6% drop from third-quarter 2005. Even with the boost from the Web, total newspaper revenue came to just $11.8 billion--a 1.5% drop. Classified ads led losing categories for print with a 3% decline compared to third-quarter 2005, ending at $4.1 billion.

While online revenue grew 23%, that marked a slowdown from the first half of the year, when growth averaged 30% (35% in the first quarter, 33.2% in the second). Individual papers seem to reflect a similar trend. The Washington Post, for example, posted a 34% increase in online revenue in the first quarter of 2006 compared to 2005, followed by a 36% increase in the second quarter and a 24% increase in the third quarter. In total dollar terms, quarterly revenues were $22.8 million, $25.3 million, and $24.5 million, respectively.

Meanwhile, one of the nation's largest newspaper chains, Gannett, has seen the rate of online growth at its domestic community newspapers slow dramatically: first-quarter revenue was up 35% over the same period in 2005, while the second quarter showed 27% growth, and the third quarter just 21%.

As print ad sales have waned, newspapers increasingly are striking ad alliances with online companies. Earlier this month, Google said it was poised to start selling ads in 50 major newspapers. Yahoo also recently struck a deal to allow newspapers' help wanted advertisers to post classifieds on HotJobs, while HotJobs will power the newspapers' online career sections.

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