Online newspaper ad revenue grew faster than the overall online ad market in 2004 and will do so again this year, according to eMarketer's "Online Publishing: Focus on Newspapers" report - according to which online newspaper revenues surpassed the $1 billion mark in 2004, reaching $1.03 billion, the majority of it from online advertising. Online newspaper publishing revenue increased 38 percent last year, and this year's performance is on track for similar gains. Revenue is expected to reach $1.4 billion this year, and grow to $2.26 billion by yearend 2008.

Newspapers are benefiting from the healthy online advertising market. eMarketer estimates that online adspend accounted for 3.6 percent of total ad spending in 2004 and projects that it will grow to 4.6 percent this year - increasing to 7.5 percent in 2009.

Consumers are increasing their online consumption of news while advertisers are cautiously turning to online channels and beginning to shift their budgets - and they view newspaper publishers as a safe and stable environment in which to advertise, according to eMarketer.

However strong these gains may appear, it is important to keep them in perspective, according to the report's author: "The $1 billion mark is no small achievement," says Ezra Palmer, "but it was passed long ago by portals - Yahoo, Google, AOL and MSN alone generate more than eight times as much advertising revenue as the entire online newspaper industry."