Update: The Bivings Group has a wiki set up with suggestions on how to improve newspaper Web sites. There are a ton of good suggestions there already, many stemming from the report mentioned below.  The discussion section, unfortunately, has been spammed, but the rest could result in an interesting collaborative effort. 

So I’m a little bit late to the party on this, but I read “American Newspapers and the Internet: Threat or Opportunity?” from the Bivings Group. The white paper was published July 19 (and it’s available free here).

The Bivings Group, an Internet strategic communications and research firm based in Washington, D.C., conducted studies on the top 100 U.S. newspapers’ Web sites (based on print circulation) to evaluate “how well American newspapers are taking advantage of new Internet technology.” The report follows up and builds on a similar report completed in 2006.

The central finding:

Our team at The Bivings Group argues that the Internet does not have to be solely a threatening competitor for newspapers. Certainly, newspapers are facing competition from online news outlets. However, as newspapers Web sites differentiate themselves from their printed counterparts, Web sites can be a tool for newspapers to expand their reach and revenue. For this to occur, however, newspapers need to develop new business plans. 

Other findings:

• There was an overall increase in the use of interactive features from 2006 to 2007.
• Newspaper Web sites are continuing to become “a distinct product in their own right.”
• Most newspapers use RSS feeds. “Much like last year, however, newspapers are failing to take full financial advantage of RSS feeds,” according to the report. (See NAA’s report from earlier this year, “RSS Best and Next Practices for Newspapers” for more on RSS.) Notably, none of the top 100 had RSS feeds that include ads.
• There has been a significant increase in the number of newspaper.coms featuring online video, though several rely on The Associated Press or partnering television stations for that content. Also, more newspapers are producing podcasts and reporter blogs.
• The number of newspapers in the top 100 requiring some form of user registration increased.
• “The Internet does not inherently pose a threat to newspapers.” (emphasis theirs)

It’s good that many newspaper Web sites are becoming their own products and taking advantage of technology to add new features and drive traffic, and the vast majority of The Bivings Group paper focuses on that. But it’s the revenue model issue that is keeping online general managers awake at night. Despite significant and impressive growth in online ad revenue for newspaper Web sites, the increases are not enough to offset the decline in revenue from the print edition – this shouldn’t be news to anyone in this industry.

There are revenue strategies working, especially in the online classifieds area, and The Bivings Group paper does well briefly explaining these with examples from the Austin-American Statesman and others. The paper also touches on the Yahoo! newspaper consortium, newspaper partnerships with Google, and search engine marketing. As the paper works its way through analyzing the questions, the authors have good suggestions from within and outside the industry on ways to earn revenue from newer editorial features. With RSS feeds, for example, The Bivings Group notes some large blogs are offering partial feeds with no ads or full feeds with ads,” creating a win-win situation for the site.

The Bivings Group ultimately advocates “offering hyper-localized information on their Web sites that is difficult to find elsewhere.” But, again, the 3 a.m. question for many online newspaper people is, ‘How can we turn page views and reader interest into revenue?’

That answer remains largely elusive.