Jay Leno included in one of his monologues recently a word of congratulation to the New York Times for being in business for 158 years. The punch line, however, was that he had read about the milestone on the Internet. Such is the state of the newspaper industry lately, as print editions struggle with eroding readership and advertising revenue, and online - while growing modestly - fails to fill the void on the more important metric of revenue. In an earlier post, I examined the growth in online newspaper site visitors relative to the decline in print readership audiences, and to what degree readers of the print edition are migrating to online newspaper sites for their news, either exclusively (i.e., they are becoming only online news readers) or as a complement to their print news reading.

Expanding on this news readership analysis, today I will examine three other dynamics facing newspaper organizations as they further evaluate their online strategies:

• Losing News audiences to other sources of News and Information
• Erosion of Classifieds audiences and revenues by Classifieds sites such as Craigslist
• The threat posed by the emergence of local ESPN sites (e.g., ESPN Chicago)

Clearly, newspapers face much greater competition online for news and information than they did in an earlier time of three TV networks, local radio, and print newspapers. All of these legacy media are using the Internet as an alternative channel for distributing news; and the portals, as well as pure-play news sites, add to the competitive dynamic. The table below compares the year-over-year growth rate in unique visitors for a cross-section of News sites compared to the corresponding growth for the Newspaper category.

The Newspaper category growth holds up well against other digital news sites, however the growth at more niche-targeted sites like TMZ and Huffington Post cannot be ignored. The size of their audiences now compares favorably with some of the more prominent newspaper sites.

Meanwhile, Newspapers can expect to continue to get more pressure on the Sports front as ESPN introduces more locally-targeted sites. ESPN Chicago was the first to launch this summer, with ESPN Boston launched this month, and others in Dallas and Los Angeles to follow. ESPN Chicago has already surpassed the Chicago Tribune Sports section in monthly Unique Visitors.

Interestingly, there is relatively little overlap (considering the similarity of the content) between the audiences of these two sites. Given the fact that the number of visitors to Chicago Tribune Sports has remained fairly constant since the introduction of ESPN Chicago, this would suggest that ESPN Chicago Visitors are not switching away from the Tribune Sports site. And, since 95% of ESPN Chicago Visitors also visit other parts of ESPN, this supports the theory that ESPN is building its local site’s audience from those people who are already visitors to ESPN. And this, in turn, reflects the power of the ESPN brand.

From the perspective of revenue generated from their print editions, newspapers have taken the greatest hit in classified advertising revenue as a result of competition from online classifieds sites, predominantly Craigslist but also from sites such as eBay. While Craigslist’s annual revenue is pegged at a modest $100 million (its services are free in many cities), it is estimated that classifieds revenue for print newspapers has declined from a peak of $20 billion in 2000 to approximately $10 million this year*. The size and growth of the Craigslist audience is compared below to the size and growth of the Newspapers category.

The growth in visitors to the Classifieds category as a whole and Craigslist in particular outpaces the visitor growth for the Newspapers category. Additionally, over the last year Craigslist has become an even more formidable player in the Classifieds category. In August 2008, Craigslist accounted for 67% of category visitors, while by August 2009 Craigslist’s penetration of the category had increased to approximately 80 percent. What is most astounding, however, is the size of the Craigslist monthly audience as a percentage of the Newspapers category: by August 2009, Craigslist’s audience was 59% the size of the entire Newspapers category, and rivaled the audience of any individual Newspaper site.

Given the strong adoption of online Classifieds sites such as Craigslist, it is hard to imagine a scenario in which Classifieds revenue for newspapers returns to previous levels. Therefore, Newspapers sites must look for alternative ways to offset that revenue from other online sources. While it will be interesting to see how the recent discussions in the industry regarding the pay-for-content model unfold, Newspapers sites must also examine ways in which they can increase their display advertising revenue. While the size of the online audiences for many top newspaper sites are reasonable, engagement is lacking (the average visitor to a Newspaper site is only spending 24 minutes per month on the site), which limits these sites’ available inventory. Newspaper sites need to continue to look for ways to more deeply engage with the visitors they are attracting, while also measuring and promoting the unique value of their audiences so they can command higher premiums on the rates they charge advertisers for reaching their audiences.

* E-Commerce Times, "Craigslist on a Tear as Newspaper Classifieds Wither”, June 2009.

You can’t help but read in the news today – ironically -- about the challenges facing the newspaper industry. In the course of the past few months, both the Rocky Mountain News and the Seattle Post-Intelligencer have ceased print news operations, with the Seattle Post-Intelligencer moving exclusively to the digital publishing platform. Both the Chicago Sun Times and the Tribune have filed for bankruptcy. More recently, the New York Times, having been in continued negotiations with its Boston Globe writer’s union (the company’s largest employee union), has reached a tentative agreement on pay cuts that will allow the Boston Globe to at least start their way down the road toward profitability.

In light of such turmoil in the publishing industry, I was interested in investigating the viability of the digital publishing platform as the print medium encounters more and more challenges. Are newspapers losing gross audience, or is the audience simply shifting online? How do these online and print audiences differ? How are newspaper sites performing relative to other online news outlets?

According to comScore Plan Metrix, the overall readership of print newspapers* is down 11 percent in the past year, from 86.4 million in April 2008 to 76.7 million in April 2009, but the total number of visitors to the online newspapers category is up 5 percent during that same period. Clearly, the decline in the number of print readers (-9.7 million people) is far greater than the increase in the number of online newspaper readers (+3.2 million). At the same time, the number of readers of news content online has increased by 8.6 million people. These data indicate that while some print newspaper readers are indeed switching to reading newspapers online, more are switching to reading news online at sites other than newspapers.

* Newspaper Print Readers includes Internet users 18+ who read at least one of the following daily papers in last 7 days: Atlanta Journal-Constitution, Boston Globe, Chicago Tribune, Dallas Morning News, Denver Post, Detroit Free Press, Financial Times, Houston Chronicle, Los Angeles Times, Miami Herald, Milwaukee, Journal, New York Times, Philadelphia Inquirer, San Francisco Chronicle, USA Today, Wall Street Journal, Washington Post.

To gain more insight into readership trends, I did some further analysis by looking at three mutually exclusive segments of newspaper readers:

1. Those who only read print newspapers
2. Those who read both print and online newspaper formats
3. Those who only read the online format

Here we see clearly that readers of print newspapers are abandoning the format. The audience who reads only the print edition declined 12 percent vs. year ago, while those who read the print edition and visited a newspaper site also declined -- by 10 percent. On a slightly more positive note for newspapers, visitation to sites in the online newspapers category grew 26 percent vs. year ago among those who did not read the print edition.

However, if we look at the total combined newspaper reading audience, we find that readership is down 2-percent overall – certainly less alarming than the 12 percent decline among print-only readers but a decline nonetheless, and one that is occurring in the face of an increase of 6% in the number of visitors to sites in the overall news category. So as print newspaper readership declines, we are not seeing a sufficient increase in online newspaper readership to offset the decline. Rather, readers appear to be shifting to non-newspaper sources of online news.

These trends demonstrate the challenge for newspapers to more deeply engage online with the growing number of consumers who do not get any of their news information from the print or online editions of their newspapers. Beyond looking for approaches that will attract these consumers to their own sites, the newspapers must explore alternative ways – including using social media or distributed content as potential distribution models - to reach this audience as the Internet becomes the preferred medium for news consumption. By continuing to evolve their services in a way that aligns with their consumers’ preferences, they may be able to identify alternative ways to offset the revenue lost from their declining print channel.

Once upon a time, accessing content on the Web required the digital consumer to be tethered to their desktop computer, which was in turn attached to a phone line that enabled access to the Internet at blazing 56K speeds. The web-accessing Neanderthal soon became more upright with the widespread availability of broadband access. Later, mobility was generally available – we could access the Internet from different access points (home, work, coffee shop, library, airport) without the burden of wires connected to our computers (a luxury I enjoy while writing this post on my laptop, connected to the Internet through a wireless router). And of course, now the digital consumer can access the Internet from nearly anywhere through their iPhone, Blackberry, or other web-enabled mobile device.

Just as the digital consumer has become increasingly mobile, so too has the content we consume. A web landscape that once required people to go to specific web destinations for content has evolved to one in which content is pushed to consumers, where and how they want to consume it. Starting with RSS feeds and customizable home pages, web content has grown legs and is finding its way around the web.

This dynamic was pioneered by, and is commonplace among, Web 2.0 leaders such as MySpace, YouTube, and Facebook. YouTube, for example, gives users access to easy-to-use tools to embed a video in their customizable home page or Facebook or MySpace profile page. Additionally, the introduction and rapid mainstream usage of widgets, gadgets and other social media applications, all of which allow consumers to get access to a publisher’s content away from that publisher’s site, has exploded over the last 24 months. Facebook has built an entire ecosystem around the idea of their site being a platform for other publishers and application developers to make content available to their users. Publishers face the reality that there can be more consumers of their content off their site than on their site.

As this complex ecosystem rapidly evolved, we at comScore have had to move quickly to provide the critical 3rd-party services that measure consumer engagement with publishers’ content wherever it occurs. It is essential that the many emerging media formats are able to prove their value to advertisers in reaching their desired consumers. For example, since our initial release of the comScore Video Metrix service in 2006, we’ve had to measure the viral nature of video as it is distributed and viewed across the web. Most importantly for video monetization, one needs to properly attribute credit to the publisher that serves the video. So, in the case of a consumer watching an embedded YouTube video on MySpace, it’s important to give proper credit to YouTube for the view. Similarly, a video that is watched on a portal through the Hulu player is attributed to Hulu. (Jason Kilar, CEO of Hulu, recently commented that Hulu content is embedded into over 60,000 Web sites, including MySpace.)

Additionally, as comScore’s video measurement evolves with the use of server-side tagging for enhanced measurement and classification, we will be able to introduce reporting views that account for the distributor, as well as the content creator and the partner site where it was watched.

The more recent forms of portable content - widgets and social media applications - have exploded in their reach over the last 18 months. Our data show that more than 75 percent of U.S. Internet users have viewed a widget or social media application. Social networking sites are prime places for distribution of content in easy, bite sized pieces, through such applications. A new wave of media companies, such as Slide, RockYou, iLike and WaterCooler, have stormed onto the scene as a result of Facebook and other social media sites opening their platform to distributed content. With the initial launch of comScore’s Widget Metrix service in mid-2007 – which subsequently evolved into our Extended Web reporting just last month, we have been able to provide media buyers with a view into the consumer uptake for these new media formats and media publishers with new ways to demonstrate their incremental reach with these vehicles.

We enter 2009 with little doubt that distributed content will continue to grow as consumers get more sophisticated in their media consumption habits and demand content in more portable formats. At comScore, we look forward to measuring what we expect to be an increasing mobile consumer interaction with increasingly portable content. We would be interested to hear how your organization is enabling one or both of these market dynamics.

Hello, my name is Steve Dennen, and I am a vice president of product management at comScore. I recently was interviewed by Steve Smith in his Behavioral Insider column at MediaPost, and thought I'd share the link with you here on the comScore blog. We discussed cross-media measurement, online/offline media planning and comScore Segment Metrix - click here to check it out.