Pageviews replaced hits as the primary traffic metric not just because they're more meaningful, but because it also determined how many ads could be served. Ads were sold primarily on a CPM basis, so multiply your CPM by every 1,000 pageviews you got, and that's your dot-com revenue.
Reach (number of unique visitors) is also important, of course. comScore/Media Metrix uses uniques as its primary metric, because mainstream advertisers want to reach a lot of people, not just the same people over and over. You can also get pageviews, time spent, and several other data points from Media Metrix, but if you're the number one site on MM, it's because you have the most unique visitors for the month. Of course, if uniques were all that mattered, Blogger.com would be considered as big as MySpace by some accounts:
Whereas, if you look at pageviews, MySpace dominates:
That's why Alexa Rank is a combination of Reach + Pageviews, so you get something like this:
But it's this pageviews part that I think needs to be more seriously questioned. (This is not an argument that Blogger is as popular as MySpaceit's not.) Pageview counts are as suseptible as hit counts to site design decisions that have nothing to do with actual usage. As Mike Davidson brilliantly analyzed in April, part of the reason MySpace drives such an amazing number of pageviews is because their site design is so terrible.
As Mike writes: "Here's a sobering thought: If the operators of MySpace cleaned up the site and followed modern interface and web application principles tomorrow, here's what the graph would look like:"
Mike assumes a certain amount of Ajax would be involved in this more-modern MySpace interface, which is part of the reason for the pageview drop. And, as the Kiko guys wrote in their eBay posting, their pageview numbers were misleading because the site was built with Ajax. (Note: It's really easy to track Ajax actions in Google Analytics for your own edification.)
But Ajax is only part of the reason pageviews are obsolete. Another one is RSS. About half the readers of this blog do so via RSS. I can know how many subscribers I have to my feed, thanks to Feedburner. And I can know how many times my feed is downloaded, if I wanted to dig into my server logs. But I don't get to count pageviews for every view in Google Reader or Bloglines or LiveJournal or anywhere else I'm syndicated.
It's about TimeSo what's a better measurement? Good question. Like many good questions, the answer is "it depends." If you're talking about what's important to pay attention to on your own site, you have to determine what your primary success criteria are and measure that as best you can. For some sites, that could be subscribers, or paying users, or revenue, or widgets deployed, or files uploaded, or what have you. It may even be pageviews.
At Blogger, we determined that our most critical metric was number of posts. An increase in posts meant that people were not just creating blogs, but updating them, and more posts would drive more readership, which would drive more users, which would drive more posts. Of course, posts alone wasn't our only measure, because someone could have written an automated posting script to fill up our database (which some did), and by that metric, we're happy about it. So we paid attention to pageviews and posts per user and user drop off, and other things.
Of course, we all want to know how we're doing compared to other people/sites/companies, so internal metrics aren't enough. And things like Media Metrix and Alexa are paid attention to by investors, and advertisers, and acquirers, and the press. So some apples-to-apples comparison is useful. If I had to pick one, in addition to unique visitors, I'd say time spent would be much more useful than pageviews.
After all, everyone's competing for a bigger share of the one scarce resource, which is people's attention (although it is a growing resource, because people keep making babies, and those babies keep getting Internet connections). More or less, what you need is people's attention before you can meet whatever goals you have.
Time spent interacting with a site is a much better basis on which to compare sites' relative ability to capture attention/value than pageviews is. When it comes to media like audio or video, an increasing percentage of the web consumption, time obviously means a great deal more than a pageview.
However, time is a bit harder to measure. HTTP, being stateless, doesn't actually have a concept of time spent. If you read this whole post and then click off to another site, my web server won't know whether you were here for five minutes or five seconds. However, most web analytics packages do estimate time spent (as does Media Metrix). (The Alexa toolbar could actually measure it even better.)
Widgets are still a bit tricky, because a user may or may not be paying any attention to a widget that's on a page they're viewing. If you could measure time spent interacting with a widget (or media being streamed through the widget), that would be ideal. RSS consumption is harder to measure by time, but there are other efforts to measure attention in that realm.
[Added:] Finally, there's a big argument against time as a measure: People don't spend much time on Google search, because it gives them what they want so fast, and they go away. Which is obviously good for them and for users. Of course, Google doesn't drive many pageviews per visit either, but it's so good people return again and again. So aggregate time is probably still high. But just as pageviews can be gamed, you can slow your users down unecessarily (or accidentally because your servers are too slow) and increase time spent. In the long run, this is going to be bad for you, but it would screw up a market that paid too much attention to time spent, just as much as BS pageview counts do now.
In summary, there's no easy solution. There's a big opportunity (though very tough job) for someone to come up with a meaningful metric that weighs a bunch of factors. But no matter what, there will come a time when no one who wants to be taken seriously will talk about their web traffic in terms of "pageviews" any more than one would brag about their "hits" today.