According to JP Morgan analyst Imran Khan, U.S. newspaper ad revenue declined 8.6% in 2007, and he believes the decline will accelerate in 2008. In 2006, the decline was only 1.7% compared to 2005.
Web advertising on newspaper sites is not making up for the loss.
Khan expects the CPM (cost per thousand) rate to increase 4% in 2008 and 20% in 2009. However these increases are based on the assumption that there won't be a recession in the U.S. Currently, 85% of online display ads in the U.S. are sold at less than $1/CPM.
In an attempt to stay profitable, newspapers are cutting staff. On the photo side of the business, they are moving as fast as possible into offering video online instead of concentrating on stills.
TV sites also offer plenty of video and tend to be much more appealing destinations for users that newspaper sites with the same capacity.