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And, says the report, newspaper sites in midsize cities had substantially fewer visitorsin 2007 than in 2006. “Of the nine sites included in the average, two had modestgrowth, one had flat growth, and six had negative growth,” the study says.The study also sampled the Web sites of nine small-city dailies and found that they,too, were losing ground. “Although two of the nine sites we sampled had a trafficincrease of 20 percent or more from the previous April, five sites suffered a decline,including one that lost 20 percent of its Web audience.”If newspapers’ future is on the Internet, and many newspapers are losing rather thangaining Internet traffic, what does that mean? Mark Potts believes that the daily paper— whether in print or online — is simply losing its relevancy. “If a big newspaper in ametropolitan area dropped dead right now,” he says, “nobody under 30 would care.”And this guy is a friend of newspapers.Peter Appert of Goldman Sachs, who has been analyzing newspaper company stocksfor 25 years, uses a more sophisticated method than Potts. He works with quarterly aswell as yearly numbers and separates ad revenue into national, retail and classified. Hebelieves national will continue to decline over time. “Retail is tricky,” he says, “becausethe numbers are weak now,” but he thinks this category won’t plummet as dramaticallyas the others.But classified advertising, which accounts for 30 percent to 40 percent of a newspaper’sad base, “may not exist in print at all at some future point,” Appert says, “becausefrom an advertiser’s standpoint, the online alternative is a better way to reach yourtarget audience.” While papers have traditionally had a monopoly on classified ads inprint, the competition is fierce online at such venues as craigslist.org, where most jobpostings are free, and Yahoo! and other sites where advertisers can focus on readers withspecific interests, and at a cheaper rate than they have to pay for print ads.So Appert agrees that the outlook is generally grim — so grim, he says, that some ofhis fellow stock analysts have turned away from newspapers as a specialty. Who wants tostake a career on a business with such poor prospects? Appert spends much of his owntime analyzing non-newspaper firms — information service companies, electronic databasecompanies and the like. “If I was covering only the newspaper industry, I wouldhave to kill myself,” he says.His overall 2008 forecast for newspapers is this: Print will be down 9.3 percent,online up 10 percent and total ad revenue down 7.9 percent. “Frankly,” he tells me, “Ithink people might say that my projections are not cautious enough.”If one plugs Appert’s “not cautious enough” percentages into Potts’ model andreplaces Potts’ revenue numbers with the actual numbers for 2007, as compiled by theNewspaper Association of America, the result is disaster.Scenario #2: Future Newspaper Ad RevenueYEAR PRINT ONLINE TOTAL2007 $42.2 $3.2 $45.42008 $38.3 $3.5 $41.82009 $34.7 $3.9 $38.62010 $31.5 $4.3 $35.82011 $28.6 $4.7 $33.32012 $25.9 $5.2 $31.1BEA—Educating tomorrow’s electronic media professionals 15