The New York Times Co said the number of subscribers to its flagship digital products increased in the third quarter while overall advertising revenue at the company slid sharply.

Paid digital subscribers at nytimes.com and related digital products was 324,000 at the end of the third quarter, compared with 281,000 subscribers at the end of the second quarter.

The New York Times rolled out an online pay system in the spring in a move closely watched by other newspapers. The industry needs to quickly find additional forms of revenue as print shrivels up.

The pay (model) number was good, said Douglas Arthur, an analyst with Evercore Partners. I don't call it a rocketship, but it's making steady progress.

One of the interesting aspects of the New York Times digital subscription strategy is that it has boosted its circulation revenue. Overall, the company reported a 3.4 percent jump in circulation revenue, citing the introduction of digital subscriptions at its flagship.

The Boston Globe, another one of the company's newspapers, rolled out an online digital pay package in October.

Shares of the New York Times rose 3.8 percent to $6.77 in early afternoon trading on Thursday.

Directionally, everything is a little bit better, Arthur said.

Digital advertising revenue in the third quarter for the News Media Group, which includes nytimes.com, rose 6 percent compared with the same period last year.

Overall digital advertising declined 4.5 percent on a severe drop at the About Group. Revenue at the group, which competes with the likes of Demand Media, plunged almost 21 percent due to increased competition and changes that Google made to how it returns search results.

About.com provides short articles, videos and other content that tend to appear high in search queries and sells advertising against those results.

Total advertising in the third quarter slid almost 9 percent to $261.7 million on a 10 percent drop in print advertising, additional evidence the newspaper industry's efforts to pull out of the ad slump have not succeeded.

Gannett Co, the largest newspaper chain in the United States by circulation, reported on Monday advertising revenue at its U.S. newspapers fell 9.3 percent during the third quarter.

The New York Times said that total advertising trends improved modestly in the first half of October.

Total revenue fell 3.1 percent to $537.2 million. Analysts were expecting $540.9 million in total revenue, according to Thomson Reuters I/B/E/S.

Third-quarter adjusted earnings per share of 5 cents beat analysts average estimates by a penny.

(Reporting by Jennifer Saba, editing by Dave Zimmerman and Gunna Dickson)

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