Devoted to online marketing, viral marketing, and web marketing

The online growth of newspapers has barely got going, and it looks like it's already starting to falter as growth rates are slowing down strongly over last year. Bad news since the industry is dependent upon the Internet to remain viable businesses.

A number of publishers reported first-quarter ad revenue growth slowing, with the New York Times dropping a lot from last year. The Times reported 22 percent online revenue growth this quarter, in comparison with 72 percent last year. They had estimated a 30 percent increase this year.

"My sense is this is a real red flag for the industry," said Ken Doctor, a media analyst for Outsell Inc. "Rapid online growth appears to be dimming. That's a big problem."

The majority of this comes from the continuing slowdown in classified sales, with the slowing housing market, automotive and some regional economic conditions.

While it shouldn't come as a surprise that ad sales couldn't grow for long at a 30 percent clip, the slowdown does seem to have come sooner than a lot of people expected.

Concerning the growth of the Times, Deutsche Bank analyst Paul Ginocchio wrote, "Annual print declines of 5 percent could be offset by online revenue growth of 20 percent if the current revenue base was at least 20 percent interactive. But [the Times] has only a 10 percent online exposure in 2007, and with 22 percent online growth, revenue growth won't stabilize until 2010."

I think there are far too many variables in the online space for anything being counted on. People are being given all sorts of ways of consuming media, and haven't made definite decisions overall on which way they're going to go. Even the social networking sites are just getting going on offering advertising, and there are no set rules as the industry is still in the state of experimentation and seeing what will work.

Another unmentioned reason for the slowdown is the growing competition from online classified sites that have cut in to the revenue of the newspapers; both in print and online. There is no way that the industry will ever be what it was even from a couple of years ago. Very few will generate the revenue they used to, and many may not even survive.

It's going to take some years before we see what will really happen in the industry. The amount of competitors online are springing forth exponentially day-to-day. And they're all looking to get a piece of the online ad pie. It's still going to be a few rough-and-tumble years before we start to get a picture of what is going to happen.

One thing is for sure: the individual newspapers will all be smaller than they are today, other than if they simply make acquisitions to make it look like they're growing. But for the individual newspapers in each market, they are going to continue shrinking overall.