Michael Arrington writes that starting with the new year content sites are all expecting a considerable slowdown in web advertising.

Display advertising revenue is going to fall of a cliff in January according to a number of content sites I’ve spoken with who rely on advertising for revenue. “Sales through December were mostly strong as advertisers used up their marketing budgets,” said one sales exec. But, he added, “there are few buyers for this next fiscal quarter, and those few that are buying are looking for steep discounts.”

Just how bad will it be? I’ve heard estimates of 30%-80% revenue drops over the next three months from companies that serve a variety of content (games sites, tech news, celebrity news, political news, etc.). The median pessimism point is around 50%.

This very closely matches my expectations. While online advertising has been “okay” thus for up to December, I am still waiting for that dive.

Here at Digitally Imported roughly half our revenue comes from advertising, the other from subscriptions to our Premium offering.

The advertising revenue is further split between visual ads (banners) and audio ads on the radio streams. And I can already tell that future orders of audio ads are significantly down, there’s just not much in the pipeline.

Internet radio is a very tough medium to keep profitable even without royalty concerns, this will just further decimate a few more shops.

Luckily we have the subscription stuff to fall back on, in bad economic times I don’t see people scaling back on this too much since it’s cheap, and it’s entertainment. But, almost no other small Internet radio outfit does subscriptions, so it’s going to be back to day jobs and living with mom for those folks – if they can find a job by that time that is.