NEW YORK (AP) — Newspaper circulation fell over the past six months at the slowest rate in two years.
Figures released Monday by the Audit Bureaus of Circulations show that while circulation is no longer in free fall, spending on newspapers is not picking up the way it has for many other consumer goods coming out of the Great Recession.

Several trends factor in the decline. Free news on the Web is a big reason. Publishers also have been looking to offset reductions in advertising revenue by raising newsstand and subscription prices, losing some paying customers in the process. And some newspapers have reduced delivery to less profitable areas, figuring the cost of trucking newspapers far afield doesn't pay off in extra advertising dollars.

According to the report, average daily circulation fell 5 percent in the six months that ended Sept. 30, compared with the same period a year earlier. That's better than the 8.7 percent drop seen in the previous reporting period, which ran from October 2009 to March. The last time the reduction rate was lower was in the April-September period of 2008, when circulation fell 4.6 percent.

Sunday circulation fell 4.5 percent in the April-September period, also smaller than the 6.5 percent drop in the six months before that.

The comparisons are based on 635 weekday newspapers and 553 Sunday newspapers that had comparable data for the recent six months and the same period a year ago.

Circulation declines hurt newspapers financially not only because they are losing revenue from subscriptions but also because the bulk of newspaper advertising revenue is still generated by printed editions rather than their websites. The pace of circulation losses has slowed from a 10.6 percent drop a year ago, which marked the steepest decline yet in a slide that began during the 1980s.

Of the 25 biggest newspapers by circulation, only The Wall Street Journal, owned by News Corp., and The Dallas Morning News, owned by A.H. Belo Corp., posted weekday gains in the most recent reporting period. The Journal recorded growth of 1.8 percent, with average daily circulation of 2,061,142. The Morning News grew 0.25 percent to 264,459.

Circulation figures include paid online subscriptions. The Journal benefits from that because it charges for its main website, while most other daily newspapers leave their sites free and only charge for digital replicas of the print edition, a market that remains small.

Among those largest newspapers, the biggest decline came at Newsday, the Long Island, New York, daily owned by subscription TV provider Cablevision Systems Corp. Its weekday circulation fell nearly 12 percent to 314,848.

The Houston Chronicle and San Francisco Chronicle, both owned by Hearst Corp., also lost more than 10 percent of their weekday circulation.

John F. Sturm, president of the Newspaper Association of America, said the continued circulation declines came in as expected and he pointed out that newspapers now reach many thousands more readers on the Web and cell phones.

The challenge for newspapers is turning that digital audience into reliable revenue.

Newspapers began putting news online in the mid-1990s, figuring that as print circulation declined, a greater online reach would generate enough advertising revenue to make up the difference.

Instead, because of the near endless array of options for advertising online – think Google or Facebook or any of the millions of blogs out there – digital ads still cost just a fraction of what print ads do.

Newspapers have tried to reduce their reliance on advertising by charging readers more for print subscriptions and single copies on newsstands. The New York Times Co. has raised prices at its flagship daily and The Boston Globe, lifting annual circulation revenue by 3 percent in 2009 and 2 percent the year before that. But even those gains appear to have diminished recently. Without further price increases, the company has reported circulation revenue declines over the past few quarters.

Now, both The New York Times and The Boston Globe will be asking readers to pay for at least some online news beginning next year. Wall Street Journal owner News Corp. has started charging for full access to more of its websites, including that of The Times of London. Newsday charges online readers who don't subscribe to either Cablevision or the print newspaper.