Newspapers' Online Audience Still Booming

The overall news may be grim, but newspapers are still enjoying big jumps in online audience figures, according to the Newspaper Association of America, which released the first-quarter numbers from Nielsen//NetRatings on Monday.

The online measurement firm says more than 59 million people, representing 37.6% of active U.S. Internet users, visited newspaper Web sites during the first three months of 2007. That's a 5.3% jump over the first quarter of last year. March saw the largest number of unique visitors in history, at 59.5 million.

During this period, visitors to newspaper Web sites generated almost 3 billion page views per month, up from 2.7 billion in first-quarter 2006. This includes a record-breaking 3.1 billion page views in January. Overall, time spent at the sites is also going up, with visitors spending an average 45 minutes a month on newspaper Web sites--up 11.5% from first-quarter 2006.

Newspapers' online revenue continued to grow as well in the first quarter of 2007--but the percentage rate of growth is slowing on a year-over-year basis. The total online revenue base remains small, while declines in print revenue appear to be accelerating--and that's bad news, according to newspaper industry observer Ken Doctor, an analyst with Outsell, Inc.



"Online growth is slowing at the time the print revenue decline is deepening," Doctor notes. "Those revenues are declining fairly rapidly, and newspaper executives have been hoping the pace of online growth would pick up, rather than slow down." What does the future hold in this gloomy scenario? "As newspaper companies revamp their operations, they will emerge as significantly smaller companies," he predicts.

For example, although Tribune Co.'s interactive revenues rose 17% to $60 million in first-quarter 2007, this is a climb-down from 29% average annual growth in 2006, compared to 2005: 30% in the first quarter, 27% in the second quarter, 28% in the third quarter, and 31% in the fourth quarter. Meanwhile, the company's overall operating revenues slipped 4% to $1.2 billion, and operating profit was down 16% to $181 million.

In the first quarter of 2007, the New York Times Co. saw print ad revenue decline 3.4% as total profits fell 9.9% to $54.5 million. Executives were quick to note that Internet revenue rose 21.6%, but Doctor again emphasized the year-to-year slowdown from total annual growth of 39% in 2006, compared to 2005: 72.3% in the first quarter, 34.8% in the second quarter, 25.6% in the third quarter, and 35.3% in the fourth quarter.

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