Can newspaper publishers survive this revenue freefall? Perhaps, if they embrace a digital future.

Without the fanfare that accompanied the recent release of its online readership data, the NAA quietly posted last week its latest compilation of quarterly revenue data for U.S. daily newspapers, in a data set it has maintained for 50 years. The latest figures, for the second quarter, show an alarming drop of 30.15 percent in print revenue and 15.90 percent in online revenue versus the same period in 2008. Despite signs elsewhere that the recession may have bottomed out, these figures are even worse than the first quarter results (declines of 29.70 percent in print and 13.40 percent online).

Alan Mutter, the Newsosaur, analyzes these numbers by category and projects that for the full year 2009, combined print and online revenue will be “no more than $27 billion” — and worse if the economy doesn’t pick up — a drop of more nearly $11 billion from 2008’s $37.8 billion. My guess is slightly higher: print revenue of $25 billion; online revenue of $2.5 billion, total $27.5 billion — a drop of $10.3 billion.

How did this happen to an industry that in 2005 garnered record revenue of $49.4 billion ($47.4 billion of it in print)? By adjusting the historical numbers for inflation, as Mutter did, the industry is half the size it was in 1986, when it scored $52.3 billion in 2008 dollars. But that doesn’t paint the whole picture.

A better way to look at the historical revenue record is to place it in the context of total advertising expenditures across all U.S. media. I’ve done that, and here’s what it looks like:

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NAA/Nielsen stats show newspapers own less than 1 percent of U.S. online audience page views, time spent

The NAA has issued another of its regular updates on the state of the U.S. daily newspaper Web audience. As usual, the numbers, sourced from Nielsen Online, sound impressive:

Newspaper Web sites attracted more than 70.3 million unique visitors in June (35.9 percent of all Internet users), according to a custom analysis provided by Nielsen Online for the Newspaper Association of America. Newspaper Web site visitors generated 3.5 billion page views during the month, spending 2.7 billion minutes browsing the sites over more than 597 million total sessions.

NAA mentions that Nielsen has changed its methodology (in part by increasing the sample size of its online usage survey to more than 230,000 panelists), so the numbers should not be compared with those issued in prior months. But just in case you do compare, they are nicely up in the unique visitor and page view categories — so far so good.

Comparison with past performance is one way to put the numbers in context, but another that seems appropriate is to compare them with the total online audience. In other words, just how much of time spent online, and page views, are going to newspaper Web sites? And how do newspaper numbers compare with top Web brands? The answers are, unfortunately, rather dismal.

A few weeks back Nielsen issued some information, also based on its new methods, painting a picture of the total online audience in June. Combining those number with the ones put forward by NAA, here’s the whole picture in context (all figures for the month of June, all from Nielsen Online):

• The total “Active Digital Media Universe” (Nielsen’s term for total U.S. unique visitors online during the month, both at home and at work): 195,974,309.
• Of these, 70,340,277 or 35.89 percent visited a newspaper Web site. (On the other hand, 64 percent got their news elsewhere.)
• The average member of the Active Digital Media Universe visited 2,569 Web pages. That adds up to 503,457,999,821 page views.
• Of those 503 billion page views, 3,468,549,698 (3.5 billion) went to newspaper Web sites. That’s less than 1 percent of all page views, or 0.69 percent to be exact.
• Nielsen says the average page view (in that universe of 503 billion) lasted 57 seconds.* That translates to 7,971,418,330 hours spent online or 40 hours, 40 minutes and 33 seconds per person.
• Of those 7.9 billion hours spent online, time spent at newspaper Web sites was 45,022,485 hours. That’s less than 1 percent of all time spent online, or 0.56 percent.

Further context: the total audience as measured in unique visitors for the top eight online brands, individually, exceeded the audience for all newspapers combined. Those eight, with their unique audiences, are: Google (147,778,000), Yahoo! (133,139,000), MSN/WindowsLive/Bing (111,352,000), Microsoft (96,071,000, AOL (92,705,000), YouTube (87,686,000), Facebook (87,254,000) and Fox Interactive (72,724,000). Most of these brands also far exceed the average time spent, in total, at newspaper sites (38 minutes, 24 seconds in June). Time spent by the average visitor at Facebook, alone, was 4 hours, 39 minutes, or more than seven times the newspaper average.

The challenge to newspapers is not simply to improve their numbers over prior months, or to post numbers that look impressive at first blush — the challenge is to gain market share. To do this, newspapers need to build not only unique visitors, but visits per person, pages per visit, and time spent per visit. At less than 1 percent of page views or time spent, newspapers are barely on the radar screen.

The dialogue in the industry should not be about building paywalls, punishing aggregators, tweaking copyright laws or anything else that would constrict, rather than build, the online audience for newspaper content. And it should not be about “protecting print.”

The dialogue should be primarily about transforming newspapers into online-first digital enterprises. That’s what those eight brands I listed are, that’s what everyone working for them understands, that’s what drives every decision they make, and that’s how they are able individually to far outpull the entire newspaper industry in online audience share.

*The release as originally posted transposed some numbers but I’ve confirmed with Nielsen that 57 seconds is the correct time per page view.

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