Newspaper companies have been increasingly investing in online over the past years, but as the U.S. economy falters, online revenue for U.S. newspaper Web sites is down for the first time in 17 quarters, The New York Times reported.

Online revenue in the second quarter of 2008 dropped 2.4 percent, to US$777 million – the only year-on-year decrease recorded since the Newspaper Association of America started measuring newspapers' online earnings in 2003, the group reported.

Overall, newspapers are seeing online ad growth, but as they add pages, they are being “forced to sell ads at cut-rate prices,” according to The New York Times. For example, large dailies, such as The New York Times or The Washington Post, sell ad space on their home pages for $15 to $50 per thousand impressions. However, those large dailies and other smaller papers are becoming more dependant on ad networks for selling harder to sell space, which The New York Times reports is usually for about $1 per thousand impressions. Meanwhile, the ad “networks usually charge advertisers double that or higher, industry insiders said.”

Most publishers are faced with two options: make nothing off space they can't sell, or make “a few cents” by using an ad network. According to a Bain & Company and Interactive Advertising Bureau study, 5 percent of online ad space at seven top U.S. publishers was sold using ad networks in 2006. In 2007, that number rose to 30 percent, The New York Times reported.

While more newspaper companies are relying more heavily on ad networks, others are limiting ad space and banning the use of networks.

At Weather.com, networks are not used and ad space is limited so the site can sell out every day. The result has been a 10 to 15 percent increase in prices compared to last year, Paul Iaffaldano, general manager of TWC Media Solutions Group, told The New York Times. TWC sells advertising for Weather.com and the Weather Channel.

For more on newspaper companies using ad networks, as well as those that have banned using them, visit NYTimes.com.