This is a straight up clip from SAI.  I was going to write on this today but they beat me to the punch and I'm rushed today so there's no use reinventing the wheel here:

Newspaper Web Sites Growing? Sure. But Papers Still Screwed.

Michael Learmonth | February 21, 2008 9:56 AM

Consumer research firm Scarborough released some vague data Wednesday that purports to show an encouraging trend for newspapers: Namely, more people are reading newspapers online.

That part might be true. Unfortunately, Scarborough's takeaway -- "The Internet has injected new life into an industry that has been battling declining audiences for decades" -- is not.

Problem one: While newspaper online audiences are growing, they're not growing nearly as fast as their competitors. Scarborough says that between August 2004 and March 2007, web audiences grew 14% among 88 papers in the top 50 U.S. markets. As we've discussed before, those numbers are anemic when compared to the overall spike in Web use.

Problem two is the real killer, though: It's not that newspaper Web sites are going unread. It's that newspaper Web sites generate a fraction of the revenue per reader that their print counterparts make. Put another way: The cost of creating content for newspapers remains much too high -- and newspapers remain screwed.

 

Earlier: Newspaper Sites Growing? Yes, But Slower Than The Web

Running The Numbers: Why Newspapers Are Screwed