The report came just before the New York Times announced that it would cut 69 jobs, or 17% of staff, from its loss-making on-line edition, blaming the slow growth in advertising revenue. Last Thursday, Rupert Murdoch’s News Corporation announced the merger of its US digital media unit with Fox TV to cut costs. Reports suggest that 200 workers at News Digital Media will be made redundant.
Most content sites are dependent on advertising revenue. However, Forrester says that only a very few top sites make money from banner advertising. Its report also observes that making money from e-commerce is difficult unless the site is offering unique products because there are so many sites offering the same things.
The report concludes that on-line advertising will grow from today’s value of $7 billion to $40 billion by 2005, making it the main source of revenue for profitable content sites.