According to Editor & Publisher, next Monday's Audit Bureau of Circulation report will show that U.S. daily newspaper circulation dropped another 2.5% over the past six months. Sunday sales also fell, by 3.0%. These results are hardly surprising, as the trend has been percolating along for a couple of decades.

Stock prices for companies with large newspaper holdings such as Gannett Co., (NYSE: GCI) whose EPS was down 10% this quarter, and McClatchy Co. (NYSE: MNI) whose EPS dropped from $0.59 to $0.11, (well shy of analysts' expectations of $0.27), demonstrate the market's awareness of the dreadful long-term prospects for paper-based daily news.

The report will include some good news, however. Dow Jones' (NYSE:DJ) Wall Street Journal circulation grew by 0.6%. As well, some local papers managed to staunch the bleeding, at least for the time-being, including the Indianapolis Star and the St. Paul Pioneer Press. Traffic to web site affiliates of newspapers shot up 5.3%, to a new high.

The newspapers are in a race to transition their brand strength to electronic media before other on-line delivery sites can establish themselves as the go-to sources for news. Most newspapers squandered their considerable lead in public recognition and are now scrambling to recoup, but if they aren't major players in the internet game today, they may soon find themselves with a warehouse full of buggy whips and nothing but cars in sight.