Business Inside says Patch has generated only about $8 million in revenue in 2011 on an investment of more than $160 million. InvestorPlace says revenues were closer to $20 million, but that Patch still lost $150 million on the year. Some investors are calling for the head of Tim Armstrong (right) the former Google executive who took the helm at AOL nearly three years ago. Armstrong conceived of Patch in 2007 and funded the first two years of its operations before assuming the top job at AOL in 2009 and buying Patch outright. Since then he’s embarked upon an aggressive expansion program to place hyperlocal news bureaus in as many US locations as possible. He’s also spent lavishly on the acquisitions of Huffington Post and TechCrunch. At this point, critics are calling the strategy a bust.

The problem with Patch is that the hyperlocal revenue model doesn’t work nearly as well as the hyperlocal news model. According to Business Inside, Patch sells advertising through a network of mostly outsourced telesales representatives. It’s clear that these sales people don’t have their tentacles into the local communities that are the core of Patch’s model. The advertising on our own local outlet is mostly a mix of display ads from big national brands (presumably sold at remainder prices), Google AdSense and a smattering of classifieds. With that kind of revenue base, it’s not surprising Patch is losing a fortune.

As we’ve argued before, the hyperlocal model needs to work from both the content and revenue perspectives. Patch has clearly succeeded in hiring editors who are closely tied in to their communities, but it isn’t doing that on the sales side. This is a tough problem to solve. Small businesses aren’t big advertisers to begin with, and the cost of deploying dedicated sales reps to 800 local communities would be far higher than the centralized telesales model. On the other hand, the centralized model isn’t exactly killing it.

We hope Patch figures it out, because it’s inventing some creative new ways to report the news. We continue to like the business model of Sacramento Press, which positions itself as an integrated marketing partner rather than an advertising outlet. Addiction to advertising revenue is one of the reasons newspapers are in so much trouble in the first place. In its current iteration, Patch appears to be making the same mistakes.

Miscellany

As if reporters don’t like to gripe enough, there’s a new website where they can do it anonymously in public. It’s called Dash30Dash.org, and it was started by a former newspaper reporter who wants “to give reporters, editors and others a chance to post comments about their jobs and their ever-changing profession.” So far, it looks like the commentaries are mostly limited to contributions from the site’s creator, but it’s still early. The writing is lively and pointed, so check it out.

An Australian philanthropist and Internet entrepreneur has pledged more than $15 million to fund a new, nonprofit media venture called The Global Mail. Graeme Wood says he has only one goal in mind: “produce public-interest journalism.”

Wood, whose personal fortune is estimated at $337 million, was apparently taken with the example of ProPublica in the U.S. That nonprofit investigative venture was also started with a large grant from a single donor but has been successfully diversifying its support base and now employs 34 editorial staff members. Wood’s commitment to support The Global Mail for at least five years resulted from a dinner party conversation with former Australian Broadcast Corp. journalist Monica Attard, who is now the site’s editor-in-chief. That’s pretty good sales efficiency in our book.

How could this be? There are still more than 1,400 metro daily newspapers publishing in print in the US. As one tweeter pointed out, dailies would have to perish at the rate of five per week in order to meet USC Annenberg’s forecast.

We think the five-year timeframe is pessimistic, but we certainly believe USC Annenberg’s prediction will come true within a decade. We made precisely the same prediction five years ago – including identifying the same four titles Annenberg did – only we gave the print industry until 2025 to implode. It now appears that we were optimistic.

Here’s why the Annenberg prediction isn’t so far-fetched. American newspapers had a near-death experience three years ago when two venerable dailies – the Seattle Post-Intelligencer and the Rocky Mountain News – closed their doors, each after more than a century of continuous publication. Two other major titles – the San Francisco Chronicle and the Boston Globe – had their own brush with the reaper at the same time. Both were pulled back from the brink only after their unions made massive concessions and hundreds of highly-paid journalists lost their jobs.

Busting the Union

Early 2009 was when publishers broke the back of the Newspaper Guild. At the Globe, the union bargaining position was so weak that the contract that members finally accepted was actually worse than management’s original offer three months earlier. The showdown at the Globe was a turning point for the US newspaper industry. The management victory in the labor negotiations was so complete that publishers across the country were effectively given carte blanche to fire people by the thousands. Which they did. The amazing Erica Smith counted nearly 15,000 newspaper layoffs in 2009 and another 6,700 in the two years since. And her count doesn’t include the many jobs that were eliminated or scaled back without public announcement.

Newspaper publishers basically bought themselves time, and they used it to bring costs in line with revenues. Most newspapers have drastically scaled back the size of their print editions and many have cut back regional distribution. Publishers have raised subscription prices to milk more dollars out of the dwindling cadre of loyalists who are willing to pay for print. Unfortunately, they don’t have much time. The average ago of a daily newspaper reader in the US today is between 56 and 60, depending on whose estimates you believe. That population will shrink more rapidly than any other demographic group over the next 10 or 15 years. Seniors are also the least attractive audience to the advertisers who support print advertising. It’s a bad combination.

For the time being, printed newspapers can survive simply by cutting costs and raising subscription fees, but that strategy invariably turns into a death spiral. At some point publishers will no longer be able to afford to deliver a product that people want to pay to read in print.

Tipping Point

Circulation declines, which have been running about 8% to 10% annually, will accelerate. A tipping point will be reached and the whole print model will fall apart. We don’t know when that threshold will be reached, but demographic trends that indicate it will certainly happen within the next 10 years and will probably hit a lot of titles simultaneously.

The death of the printed daily doesn’t mean the death of print. Many publishers have cut back out unprofitable Saturday and Monday editions as a way to save costs, and more will certainly follow suit. Sunday editions may be around 20 years from now because of the revenue from flyers and coupons. But many newspapers will no longer be able to support a daily publishing schedule within a few years.

That’s the bad news. The good news is that many publishers are beginning to figure out the economics of digital revenues. A milestone was reached just a couple of months ago when the New York Times Co. released its first earnings report since it instituted a paywall early this year. As we reported at the time, Ryan Chitturn of the Columbia Journalism Review estimated that the Times’ digital revenue in the quarter actually exceeded its editorial costs, meaning that the paper could conceivably publish profitably without a print edition. We don’t expect the Times will shut down its presses anytime soon, but publishers across the country should cheer its success at crossing that threshold.

The Times is making the move to digital faster and more effectively than any other daily newspaper. Assuming other publishers follow its lead, we can expect that many major metro dailies will figure out a sustainable digital formula over the next five years. At that point they can begin to wind down their print operations without fear of giving up the farm. This won’t be pretty. Lots of jobs will go away when the presses shut down. However, the brands may survive and even begin to grow again.

Speaking of The New York Times, the parent Times Company is in “advanced talks” to sell off 16 regional newspapers, including titles in Florida, California, North Carolina, and Alabama. The Times Co. will continue to own the Globe and International Herald Tribune. Analysts are saying the move simply removes a headache for the Times, since the regional media were collectively losing money, and the company can now focus on its core business, which is a good thing these days.

Miscellany

We know the U.S. Postal Service is hemorrhaging money and facing criticism that it’s slow, antiquated and inflexible. So in a bold move to remedy its situation, the USPS is responding by becoming slower and less flexible. Read what the recently announced changes in service mean to publishers. We actually don’t want to be too hard on the Post Office, since many of its problems stem from a congressional requirement that it fund retiree health benefits 75 years into the future. That’s not a typo: 75 years.

And Finally…

The holidays bring family, friends, eggnog, and, best of all, the Crunks. Only they’re not called the Crunks any more since our friend Craig Silverman (left) gained the legitimacy of a Poynter affiliation and began publishing his collection of the year’s best media gaffes as “The year in media errors and corrections” on Poynter Online. Thankfully, the content is still the same.

This year’s roundup of the funniest and most outrageous mistakes and corrections is headlined by several major news organizations that confused the President of the United States with the world’s most notorious terrorist and announced the death of “Obama Bin Laden.” One anchorwoman on Canadian television made the mistake three times in just 17 seconds and apparently didn’t even notice.

We like the newspaper headline that reminded readers to “turn your cocks back one hour at 2 a.m. Sunday,” but our favorite is a lengthy correction from The Guardian about this year’s Royal wedding. It includes the passage:

“The piece referred to “damaging stories of royal profligacy past: Charles with his staff of 150, and an aide to squeeze his toothpaste for him”. [The couple’s press secretary] writes, “The Prince of Wales does not employ and has never employed an aide to squeeze his toothpaste for him. This is a myth without any basis in factual accuracy.”

This stuff is too good to be made up. Thank you, Craig.

No two are exactly alike, and some even challenge credulity, such as the Oklahoman, which charges 20% less for a combined print/digital package than for an online-only plan. That’s right, they pay you to take the newspaper. All the models have one thing in common, though: they’re working. Instead of being positioned as obstacles, they’re marketed as ways to serve  readers’ need flexible consumption via computer, smart phone, tablet or some combination of all three.

The INMA report cautions that hybrid subscriptions aren’t any easy sale. Readers need to have options and explanations laid out clearly, and digital can’t be positioned as an afterthought. However, readers have adopted so-called “digital replica” editions with surprising enthusiasm, indicating a fondness for the look and feel of print even when reading on a screen. The report also indicates optimism that paid subscription models can work when tuned to the needs of the specific audience.

Start by discarding the concept of a wall. Digital subscriptions need to be seen a convenience rather than a barrier. The emergence of multiple digital platforms may be the best thing that has happened to publishers over the last decade. It has given them a way to make simplicity a feature worth paying for, and audiences are proving to like that story.

Andrew Birmingham isn’t quite so optimistic. The CEO of Silicon Gully Investments and a former associate publisher of the Australian Financial Review pens a lengthy piece in the Australian edition of CIO magazine arguing that pay walls are a fundamentally defensive strategy undertaken by panicked publishers whose entire business models are collapsing around them. “The time to implement paywalls was 15 years ago when [editorial content] was worth paying for,” he writes. “The time to invest in editorial was also 15 years ago when [publishers] should have been erecting paywalls.”

Birmingham’s conclusions aren’t particularly novel, but his explanation of the spiraling downward cost of online advertising is worth reading. Advertising networks in general, and Google in particular, come in for particular criticism. Both promised publishers easy money in the late 1990s, when times were good. The consequence, though, has been cannibalization leading to a plunge in advertising prices “from hundreds of dollars per thousand to $1 to $2 dollars per thousand in Australia across general news websites,” Birmingham writes. “In the US, they are now measured in cents per thousand.

Publishers did this to themselves, of course. Few understood the implications of the Internet on their businesses in the early days and most saw online advertising as simply frosting on the cake. Most are making the same mistake with social networks today, choosing to believe that Facebook is simply another publishing medium rather than a reinvention of the way people consume information. It’s good to see some paywall experiments paying dividends, but it’s also hard to believe that publishers will get themselves out of this mess. New entrants will have to figure that one out. In the meantime, playing defense probably makes sense.

Miscellany

Over in the UK, a hyper local startup called the Port Talbot Magnet is trying the direct approach: It’s asking readers to contribute donations to fund its news coverage. Visitors can pledge amounts starting at just £2 to sponsor a court reporter for a day, and PayPal is accepted.

The FT reported that it has breached the 250,000 subscriber mark, having grown digital subscriptions 30% during the last year. The FT charges about $390 for an annual subscription to its website, which would indicate total digital subscription revenues of nearly $100 million if everyone was paying the full annual price. However, the actual total is almost certainly lower than that, since print subscribers pay discounted fee and not all subscriptions are annual. However, the performance is still impressive. The FT said 100,000 of those subscriptions are from corporations.

The Times is confident enough in its paywall experiment to declare victory and begin branding itself as a social media poster child. Times publisher Arthur Sulzberger took the stage at the London School of Economics last week to crow about a report by lead mining firm NetProspex that declares that the Times is the number one most social company in the U.S., based upon the total number of employees using social media and their fan/follower reach. Sulzberger said the designation recognizes the success of individual employees, such as Nicholas Kristof and C.J. Chivers, at building their own social followings.

“In 2000, we were #3 in terms of uniques behind the Washington Post and USA Today,” Sulzberger said.  “Today we’re proudly the #1 newspaper website, with a worldwide audience of over 45 million uniques…and that’s after we started asking readers to pay for unlimited access to our content.” The Times’ aggressive adoption of Twitter, in particular, has paid off in word-of-mouth awareness. Sulzberger said a Times story is now tweeted every four seconds.

Read a transcript of his comments for more examples. Note, in particular, the emphasis on “digital first,” and the speed with which the Times is creating hash tags and real-time Twitter feeds to lead the conversation on breaking news. Sulzberger also has some interesting points about the reading habits of mobile users and how they differ from those of traditional print subscribers. The ability to “literally get into bed” with readers is an opportunity to expand the Times’ franchise, not simply an adjunct to the print product.

The good news continues overseas, where News International reported a 10% increase in digital subscriptions to the Times and Sunday Times over the past three months to a total of more than 111,000. The company said it would start reporting monthly digital subscription updates, indicating confidence that the number will grow.

Does this mean paywalls are the answer to the industry’s woes? We’ll believe that when we start hearing similar success reports coming from major metro dailies that aren’t The New York Times or that don’t deliver high-value financial news. For now, publishers can take some comfort in the fact that the hemorrhaging appears to be under control. Print circulation is actually growing in emerging markets like Latin America and Southeast Asia, and North American advertising revenues actually were up slightly last year.

Nonprofits Gain Traction

Nonprofit news organizations are some of the most promising candidates to replace the investigative journalism that’s been lost to cost-cutting in mainstream media, but one of the keys to success is to go beyond simply filling that gap. That’s according to an impressive new report from Knight Foundation, co-authored by our good friend Michelle McLellan, that looks at critical success factors for nonprofit success.

Poynter’s Rick Edmonds has an excellent summary of the study, which looked at the business models of seven promising local ventures, ranging from the ambitious Texas Tribune to the much smaller, hyperlocal St. Louis Beacon. While none has reached self-sustainability just yet, these startups are learning tactics that can serve as a model to others.

The report cites three “next-stage” opportunities, but they can really be boiled down to one truth: Go beyond replacing the newspaper model. Successful ventures are leveraging the unique advantages of online media to deliver information that can’t be expressed in print, such as databases and first-person video. That means hiring technology and data analysis specialists, not just reporters. The featured nonprofits are also diversifying their income streams beyond a few big foundations to include paid memberships, syndication fees, events and sponsorships.

Knight’s study is an encouraging sign that investigative journalism will not perish from the earth, and may even be reborn in a smaller, focused and more-efficient form.

Go Google+

Has your news organization registered its Google+ page yet? Better hurry. Google opened up its rapidly growing social network to company pages on Monday, and news operations like The New York Times have already staked a claim (tagline: “All the News That’s Fit to +”). Even if you have no immediate plans to build a Google+ outpost yet, you want to be sure to grab your brand before somebody else does. As many businesses learned with Twitter, failing to register accounts on new social networks can create an embarrassing situation when others begin speaking on your behalf.

“The Times has created the perfect paywall,” writes Ryan Chitturn on Columbia Journalism Review. “It’s getting tens of millions of dollars from hardcore readers while letting in enough Google traffic and casual readers to continue boosting its online readership and collecting ad revenue off of those eyeballs.”

Chitturn estimates that the Times will take in about $63 million in digital subscriber revenue this year and more than $210 million in total digital revenue. That’s more than it costs to operate the newsroom. Which means that The New York Times could theoretically get out of the print business entirely and still make money.

Does that mean it’s time for everyone to jump into the pool? Bill Mitchell thinks so. Writing on Poynter.org, he tells of moderating a panel at the World Editors Forum in which publishers who had taken the paywall plunge spoke of their initial trepidation and then relief when the steep declines in traffic that they had feared failed to materialize. Traffic to the Berliner Morgenpost has actually doubled since it put up a paywall in late 2009.

Mitchell quotes The New York Times’ Jim Roberts saying the wall has had a morale dividend. “There is more of an investment I feel in the newsroom among our journalists since the introduction of the paywall. They feel a greater stake in the product,” he said.

Perhaps the time is right. The Newspaper Association of America reports that traffic to newspaper websites jumped 20% in September compared to a year ago among the coveted adult demographic. “Average daily visits were up 21%; total pages viewed were up 10%; total minutes spent were up 11 %; and unique visitors were up 9 %,” the NAA reported.

Thus the great paradox continues. Newspapers are more popular than they’ve ever been, but the business model is broken beyond repair. The NAA numbers are encouraging, and perhaps indicates a flight to quality among readers who are fed up with social media noise. For the past five years people have been  publishing all kinds of nonsense online because they could. Now the novelty is wearing off and quality is becoming a differentiation point.

Google’s new Panda search algorithm is supposed to be a game changer in its ability to distinguish quality content from crap. We noted recently that Demand Media, which specializes in crap, has had to remove 300,000 articles from its website because Google won’t pay attention to them anymore. And the world hardly noticed.

The fact that newsrooms turn out a good product has never been debatable, but the idea that people who had been accustomed to getting it for free for 15 years would decide to pay for it is still an open question.

Give credit to the early adopters for fine-tuning the balance of free vs. paid content to achieve some success. The idea is to grant just enough access to entice readers to pay but not enough to give away the farm. The Wall Street Journal lets you read a couple of hundred words gratis but then wants a credit card. Perhaps it and the Times have figured out the formula.

We’ve been skeptical about paywalls for two years, but we’d be the first to cheer their success.  If they enable good journalism to flourish once again, we’re all for it.

Washington Post Co. Holds Out

Apparently the Washington Post Co. isn’t convinced. Publisher Katharine Weymouth was quoted in Politico last week saying that paid subscriptions don’t make sense for the Post at the moment. The newspaper’s philosophy is that its website should be “open to everybody and attract as many people as we can to spend as much time as they can with our journalism, and assume that that will bring them back for more.”

Politico points out that the Post has hardly been a beacon of publishing success lately. It has shed more than 45% of its newsroom staff and it just last month announced plans to close nine of its 11 suburban regional bureaus. The Post Co. does have a couple of things going for it, however, including its profitable Kaplan education division and its phenomenal 30% market penetration. You’d think a market share like that would be an incentive to charge more for the product, but Weymouth seems in no hurry. She isn’t ruling out a paywall but says she’s content to wait and see what works.

“They Won’t Invest in You”

Invantory is developing software tools to help people sell things. It wants to be kind of an alternative to Craigslist, with a mobile twist. The founders thought newspaper publishers would be potential customers, because they already know the classified advertising business and they have a desirable channel. But Invantory gave up on doing business with newspaper publishers. The principal reason: their computer are a mess.

“Newspapers’ online technology platforms [are] not standard,” wrote co-founder Ian Lamont on the Invantory blog. “This means that non-trivial integration work is required for practically any new feature or service, whether created in-house or purchased from a vendor. There are dozens of online content management systems (CMS) in use, most heavily customized.”

In other words, any chance newspaper publishers might have to federate their once-highly profitable classified advertising businesses into a network that could compete with Craigslist is undercut by technology decisions made years ago and incompatibilities perpetuated by customization.

The Invantory co-founders met with Newsosaur Alan Mutter at the New England Newspaper Publishers Association. Mutter, who himself tried to start a business to service newspaper publishers a couple of years ago, told them to forget about pursuing a model based up on serving the dying newspaper industry. “VCs with any experience won’t invest in you,” he said.

Miscellany

The i newspaper celebrated its first anniversary this week, challenging the conventional wisdom that print dailies are dead. The commuter-friendly daily, which delivers news in bite sized nuggets, has succeeded in building a paid circulation of 184,000 during its first year. And it’s reportedly profitable, too.

“Data journalism,” in which reporters mine public information to discover nuggets of news, is an increasingly popular discipline. Editors Weblog has a list of free tools anybody can use to become a data journalist.

M.E. Sprengelmeyer with the first issue of the Guadalupe County Communicator

It was a man-bites-dog story.

Young newspaper reporters have typically dreamed of working their way up from a small-town weekly to a big-city daily. The title of Washington bureau chief or foreign correspondent was the pinnacle of success.

Michael “M.E.” Sprengelmeyer had those dreams as early as age seven, when he decided he wanted to be a reporter. But something in the back of his mind drew him toward the small-town roots where he and thousands of other young journalists got their start.

Sprengelmeyer got to the summit, becoming a national reporter and foreign correspondent for the Rocky Mountain News. When the Rocky abruptly shut down nearly three years ago, he went searching for his childhood dream: To run a community weekly.

Strange Quest

It seemed a strange quest for a reporter who had been near the top of his profession, but Sprengelmeyer had caught the community itch at a young age. “At 17 I saw a movie called Milagro Beanfield War,” he said. “There was a character who ran a small newspaper and I always wanted to see what a newspaper could be if I ran it.”

Sprengelmeyer’s career had been anything but small town to that point. A graduate of the prestigious Northwestern Univerity journalism program, he had worked at a variety of small- and medium-sized papers before landing at the Rocky in 1999, a month before the Columbine shootings. His career advanced quickly. Within two years he was sent to the paper’s Washington bureau, where he arrived just before the Sept. 11 attacks on the Pentagon. That job morphed into a military beat, overseas assignments and a coveted job as a presidential campaign reporter.

But even as he was setting up the Des Moines, Iowa bureau for the Rocky to cover the 2008 presidential race, he kept searching for the opportunity to take over a small-town weekly. When the 149-year-old Rocky suddenly went up for sale in 2009, he was as surprised as anyone. But instead of wringing his hands, he stepped up his small-town search. “I was hunting for newspapers to buy within a week,” of the Rocky’s closure, he says.

When the paper shut down, he hit the road, eventually landing in the beautiful but impoverished community of Santa Rosa, N.M., on the staked plains where the Pecos River crosses historic Route 66.

The local Guadalupe County Communicator served up the usual local fare of local government meetings. The paper had a circulation of less than 2,000, but Sprengelmeyer saw potential. Despite its economic distress, Santa Rosa has a disproportionately large base of businesses on Rte. 66. Sprengelmeyer negotiated the purchase, leaving him with just $1,700 in the bank. He told the story of his quest on the blog of former Rocky publisher John Temple.

Changing the Model

Like many local weeklies, the Communicator served up coverage of local government meetings and photos of winning high-school football teams, but Sprengelmeyer wanted to take it to another level. “I kind of had a chip on my shoulder about the closure of the Rocky and I wanted to send a message about what a newspaper could be,” he says.

His first move was to shut down the paper’s website. “Community newspapers have a captive geography. As long as you can keep everyone within 10 miles reading your piece of paper, you can deliver value for your advertisers,” he says. “The Web gets people from all over the world, but you can’t tell an advertiser they’re going to walk in and buy avocados at his variety store.”

He then started investing. He hired a veteran daily photographer on a freelance basis, contracted with local stringers and engaged professional cartoonist Drew Litton. The first issue of the Communicator under Sprengelmeyer’s hand featured a giant photo from the county fair and the first editorial cartoon the paper had ever run. It was a shock to locals, but also a signal that the paper had turned a corner.

You can’t easily find high-resolution images of the Communicator online, but you can get a sense of the layout, story selection and headlines from thumbnails in the paper’s Facebook album. The look-and-feel is big-city all the way, with a clear emphasis on local government, citizen advocacy and people-oriented features. The headlines and story selection are cut from the major metro mold.

Pleasant Surprise

“The reaction has been incredible,” says Sprengelmeyer. While some residents miss the point-and-shoot photos of Little Leaguers on page one, most have responded positively to the tougher coverage of town government, crime and local regulations. The Communicator won seven state journalism awards its first year. Sprengelmeyer’s unusual odyssey has landed profiles in The New York Times, CNN and other national media outlets.

Scrutiny of local officials has ruffled a few feathers, but the newcomer says his outsider status and commitment to fairness has kept the pushback to a minimum. “You smooth out the feathers when you write an accurate, fair story,“ he says. And the Little League photos still run in the Communicator, but no longer on page one.

More importantly, circulation has grown to more than 2,000, or nearly equal to the population of Santa Rosa. Its Facebook page, which was started by a local enthusiast and is now maintained as a joint effort, has been liked more than 1,100 times. Circulation growth has been largest among native Santa Rosans who now live elsewhere. “I’m real proud of that, because we’re a town in economic trouble, where kids grow up, go off to college and settle elsewhere” says Sprengelmeyer. “Now they’re re-connecting with their community.”

Advertising business has grown steadily, if not spectacularly. The publisher’s philosophy is to invest most of the profits back into the property. “When you start cutting expenses to match revenue, you’re on a backwards slide,” he says. A small staff handles advertising sales.

And each week, the new Communicator becomes more embedded in the community. Sprengelmeyer still works seven days a week, but the hourly load has gradually declined. “I’m not banking a lot, but each edition pays for itself and I have enough left to pay my rent and fix my car,” he says.

“I won’t become a millionaire, but that wasn’t the point. The first year was about surviving. The second year was about expanding. The coming year will be fun. This started as a fancy way to spend my life savings in six months, only we’ve gone on for two years. It’s the best thing I’ve done and it’s still left me excited about what we can do next.”

To subscribe to the Communicator, e-mail your info to comsilvercom@plateautel.net and cc: ersthap@hotmail.com. Order a full year’s subscription and send a check for $30 (U.S. delivery only) to The Communicator, P.O. Box 403, Santa Rosa, NM 88435.

Update 10/29/11: The Communicator won 26 awards and “Best of Show” among small weekly newspapers in the 2011 New Mexico Press Association/Associated Press Managing Editors’ awards.

It’s a fun and inspiring read, and would be even better if it were true, but Muller makes an essential journalism error in not providing any factual evidence to support her “thriving” claim. In fact, weekly local newspapers have been taking it in the neck for years. We long ago stopped tracking news of local newsweekly closures because the volume was overwhelming. Back in 2009, Journal Register Co. closed scores of weekly holdings in one fell swoop, and Gannett and others have followed. Weeklies were some of the hardest-hit properties in Media News’ recent consolidation. Reports of other weekly shutdowns hit our Google Reader every couple of weeks. We’re frequently asked how many local weeklies have closed but we know of no one – not even the amazing Erica Smith – who keeps count.

Which isn’t to take anything away from the many dedicated journalists who put up with long hours and low wages to publish the thousands of small-town weeklies that still survive. Local publishing has never been a lucrative business to begin with, and the pressure is only getting worse as low-overhead online operations like Patch – not to mention bloggers and independent Web publishers – nibble away at their local advertising base. We admire the dedication of these publishers and are inspired by stories like that of M.E. Sprengelmeyer, a daily journalist who found fulfillment running a 2,000-circulation weekly in Santa Rosa, N.M. after losing his job in the Rocky Mountain News closure in 2009 (see video). Muller celebrates Sprengelmeyer in her op-ed, but also uses a word we hear a lot when discussing this topic: “exhausted.”

Small-town weekly publishing is a lot of things: rewarding, fulfilling, responsible, important and endangered. There’s one thing that it clearly isn’t, though: thriving.

Boston Globe Splits Web Presence

The Boston Globe has come up with a novel twist on the paywall concept: It’s launching a paid portal that “offers an innovative, inviting reading experience that is the only gateway to all of the Globe’s journalism.” BostonGlobe.com is the new online companion to the 139-year-old daily that provides the full contents of the print edition as well as bonus features. It will be free through the end of this month and $3.99/mo. thereafter. Home delivery subscribers get access for free. The website will be formatted for reading on a variety of desktop and mobile devices, although few details were provided.

Boston.com, the regional site that the Globe launched in partnership with several local media outlets in 1995, will remain free. It will focus on daily sports coverage, online features and lifestyle information, and also include five stories from the daily print edition and summaries of other content that can be read in full on BostonGlobe.com.

In positioning the bifurcated strategy, Globe Editor Martin Baron described Boston.com as a site for the common man with BostonGlobe.com as its more erudite sibling. “BostonGlobe.com is essentially purely journalistic, and Boston.com is more of a town square where you get news and information, but you can also buy tickets to events and exchange information and opinions with your neighbors,’’ he said. Boston.com will continue to be advertising-supported.

The Globe was actually an early innovator in hyperlocal journalism. When Boston.com was launched as a partnership between the Globe and several local print and broadcast outlets, it broke the then-emerging newspaper mold by focusing on regional coverage rather than delivering an electronic version of the print product. However, as partners dropped out of the venture over time, Boston.com increasingly became the online face of the Globe, eventually getting to the point that articles about Israel and Japan routinely led the home page. With the new strategy, the Globe appears to be returning Boston.com to its roots.

Miscellany

If you’re still on the fence about buying a tablet computer (we took the plunge last month and are enjoying the experience), you can get one at a really good price if you also buy a subscription to two Philadelphia newspapers and a website. The Philadelphia Media Network, which publishes the Inquirer, the Daily News and Philly.com, has teamed up with three local sponsors and the French electronics company Archos to sell Archos’ Arnova 10 G2 Android tablets preloaded with gobs of Philadelphia news for $285. The advertised price of the tablets themselves is as low as $99, or about half what they cost on eBay. The catch is that you have to buy a subscription to three news apps as part of the deal. We suppose there are enough Philadelphians, who can never get enough Eagles coverage, to sell out the 5,000 units being offered on Phillytablet.com.

Petroni live-blogged throughout the storm, encouraging her readers at Framingham.Patch.com to be her eyes and ears. Readers snapped cell-phone phones and e-mailed them to Petroni to post on the Patch site. Locals flocked to the Framingham Patch page on Facebook to update each other on power outages and roads blocked by fallen trees. Petroni stayed on the phone with town officials to update her audience on disaster preparedness warnings and clean-up plans. For residents who had lost power, the Framingham Patch Twitter feed kept updates coming to cell phones.

In the days that followed, Susan Petroni’s online outposts became rallying points for citizens trying to find out when power would be restored or whether the opening of the school year would be delayed. Much of this information came not from her but from each other. Facebook was a quicker way to find out where the lights were coming on than the overwhelmed officials at the local utility.

The same scene played out at dozens of Patch sites up and down the east coast, demonstrating the power and agility of a new type of media we might call “curated citizen journalism.” It’s a model that relies upon the news judgment of professionals like Susan Petroni, who is an accomplished and award-winning journalst, and the contributions of concerned citizens who want to be part of the action.

Like many online journalists, Petroni left the daily newspaper grind for Patch in order to gain scheduling flexibility and spend more time with her young daughter. She posts five to seven stories on a typical weekday and a couple on Saturdays and Sundays. Like any good Metro reporter, she covers the important local government meetings and any news that would be likely to make the regional newspaper. However, most of her posts are short and few are earth-shaking.

A typical Patch story might update residents on how long traffic will be disrupted by a sewer renovation program or tell how school bus routes are being changed. A weekly police log update tells where crime was a problem in the last week. Not Pulitzer Prize-winning stuff, but these are the stories that matter to the daily lives of the people who live nearby.

Curated Citizen Journalism

Patch encourages citizens to contribute to the effort without mixing their contributions with those of the single professional editor and assortment of freelancers who make up the core of the typical Patch site. Bloggers from the community get their own digital sandboxes, and comments are clearly distinguished from reported stories. People are free to post news reports to Facebook or the forums, but news only makes the main news feed after it’s been vetted by a pro.

Patch disclaims reports from the community, but also encourages them like crazy. There has been little problem with error or abuse, says Danielle Horn, Associate Regional Editor for Patch Metrowest Boston. The key is to know when it’s appropriate to turn over the reporting job to the citizens and when a pro needs to step in.

“If someone says the power is out on their street, then the power is probably out,” Horn says. “We haven’t run into any situations where people have posted news that is clearly incorrect. [Community newsgathering] is working out great.”

Patch has a thin staffing model, with typically one full-time editor anchoring each region. “Each editor knows his or her community like the back of their hand,” says Horn. The meat and potatoes of a Patch site is the little details that matter in residents’ everyday lives: library programs, school sports and street closings. “We want to be a resource for information that can enhance people’s daily lives,” Horn says.

Addicted

We’ve developed a mild addiction to our local Patch site, and we even contributed some photos to the recent storm coverage. Why? Because we were asked. As our photos began to show up on the gallery, we found ourselves mildly intoxicated by participating in storm coverage. We were also gratified to get a thank-you note from Petroni herself. At the nearby Boston Globe, e-mails to editors generally disappear into a black hole, and phone calls are rarely returned.

Patch, which now boasts more than 850 hyperlocal sites nationwide, has been criticized for maintaining a sweatshop atmosphere and for paying its editors meager wages. In our brief conversation with Petroni (corporate policy dictated our interview request be directed to a regional editor), she said the flexible working conditions were one of the best parts of the job. Horn noted that while Patch editors are expected to produce content seven days a week, they have considerable latitude in how they do it.

Essential Truths

The jury is still out on whether Patch will succeed, but we believe the experiment is already proving some essential new truths:

The Internet rewrites the economics of news. Our town could never support a daily newspaper, but it can pay the salary of a single editor with no overhead other than a PC and a couple of cameras. Thanks to thousands of layoffs at newspapers nationwide, quality journalists can be found who will work for modest salaries in exchange for workplace flexibility.

Hyperlocal is instinctively appealing. We long ago stopped reading our regional newspaper because so little of its coverage related to our local community. In contrast, the daily Patch e-mail is packed with news that impacts our daily lives, mundane as some of those issues may be.

Empowerment is intoxicating. Patch is drawing lines that enable the community to participate in newsgathering while keeping a firm editorial hand on the tiller. As we waited for Internet service to return following the storm, we monitored the Patch Facebook page from the local library and found it to be a more timely source of information than the statements of utility officials.

In our town, and in hundreds of towns like it, Patch is filling a gap left by the collapse of traditional media. The question is whether its business model is sustainable, and a lot of people think it isn’t. We hope AOL will stick with this venture and innovate beyond the traditional advertising-funded model. Even if the Patch business fails, it has laid a foundation upon which others can build.

We will not be charging to view the following content online: the front page, classifieds, all advertisements and advertising promotions, special sections, auctions, community calendar or customer service pages.

Webpages that will be charging for viewership – after 15 free views per month – are local, state, national and world news pages; local and regional sports; news accessed by Facebook and Twitter; opinion pages; obituaries; entertainment (except AP wire); health, outdoors, weddings, anniversaries; births, lottery; weather; archives; comments; photo galleries and videos.

A monthly online subscription is $4.99; if you have a print subscription, your online subscription is only $1.99 per month. An annual online subscription is $49.99 per year; or if you have a print subscription, it is only $19.99.

Got all that? Better keep a pen and paper handy, because once you get to those 15 views, get out the credit card. That is, unless you’re reading the front page or a “special section,” whatever that is. And forget about the kind of free pass from Twitter that The New York Times gives you. Social media referrals count toward the 15-ppm limit.

In Hawaii, the Honolulu Star-Advertiser has joined the paywall parade. Here’s how PaidContent.org described its plan:

Existing print subscribers get free digital access. Non-print subscribers can either sign up for an “all-access” package for $19.95 per month, which includes digital access and a print subscription for one person, or purchase a digital-only subscription—the price of which varies based on location.  Oahu residents pay $9.99 per month or $50 per year; other Hawaii residents pay $4.95 per month or $25 per year, and those outside the state of Hawaii pay $1.95 per month or $10 per year. The site is also offering a $0.99 day pass, primarily aimed at tourists and former tourists who are interested in specific events.

Clear enough? If you really want to know what’s going on in Hawaii, you’re best off moving out of state. God forbid you’re unlucky enough to live in the newspaper’s home city.

One more example, from the Augusta (Ga.) Chronicle:

Digital-only subscribers get unfettered access to our site for $6.95 per month. This subscription fee will include the iPad app as well. Current print subscribers pay a reduced rate of only $2.95 to add these services…Passers-by and casual readers still will have access to breaking news, video, photos and blogs. We also will allow all users access to 25 premium pages monthly as a sample.

With 46% of small newspapers already charging for some online content, and another 39% planning to do so, the online news world will soon be pockmarked with digital toll booths, each charging different fees. Even the major metros can’t agree on a plan. PaidContent.org assembled a comparison chart of what the big papers are doing earlier this year. If you can find any patterns there, let us  know.

We’re not saying variety is a bad thing – lots of businesses compete on price – but when the product is already perceived as a commodity, then confusion tends to drive customers away. Small publishers evidently don’t see it that way, given the large number that are settling in the paywall camp these days. But are they growing their businesses or just trying to protect what’s left of them?

Mathew Ingram said it well in a recent piece in BusinessWeek:

The biggest flaw in a paywall isn’t that the math is questionable, or even that a wall is inherently a backward-facing strategy, aimed at stacking sandbags around a paper’s content…The biggest flaw…is that walling up your content is an invitation to free competitors…to come and take away your readers.

One of the major reasons the newspaper industry is in such dire straits right now is because barrriers to entry have collapsed. Paywalls are an invitation to competitors to take away all but the most loyal (i.e., oldest) readers. AOL’s Patch has recently opened an outpost in our home town, and we admire the work its tiny staff is doing to bring us news from around the corner that our regional daily doesn’t cover. Despite allegations of sweatshop-like working conditions at Patch, we believe AOL will have no trouble finding journalists to staff its local offices. Between Patch, labor-of-love sites like this one and an assortment of listservs and Facebook pages, we’re more aware of what’s going on in our community than we ever were when we subscribed to a daily.

We believe that paywalls can work if they are simple, transparent and perceived by the customer to be reasonably priced. There is room in the market for services that could federate many small publishers under a single subscription plan, and we expect some cohesion to emerge from the current mess.

Ultimately, though, paywalls will only work if the publishers who deploy them can deliver value their readers can’t get anywhere else. Can the newspaper owners holding the sandbags today honestly say they are doing that?

Miscellany

We’ve noted before the irony that editors who are so committed to hacking through everyone else’s hype roll over when the spin doctor is their own employer. The Orange (TX) Leader upholds that proud tradition in an un-bylined story announcing a reduction in its publishing schedule and the end of home delivery by news carriers.

Combining the Saturday and Sunday editions isn’t a cutback in frequency, but a reader service, said publisher Eric Bauer. “It will be available in the Saturday mail, so people will have more time to enjoy it,” he said. And editor Gabriel Pruitt is almost giddy about cutting frequency to thrice-weekly: “I could not be more proud and excited about how we will better serve this community…Readers can expect more in-depth stories, insightful information, photos and videos.”

The words “reduction,” “cutback” or “cost-cutting” don’t appear anywhere in the story. In fact, there’s no indication that the changes are anything but a reader service. We suspect that if the announcement was coming from the local public works department, it would be handled quite differently.

Print stalwarts will be relieved to hear that at least one major professional group is still committed to the supremacy of ink on dead trees: America’s school administrators. A recent survey conducted by The Haselton Group found that administrators prefer print editions of top trade magazines rather than online editions or e-newsletters from the same publications. Administrators get 45% of their industry-related information from printed trade magazines, “far outweighing the combined total of next three greatest sources: blogs, national newspapers and local newspapers.”

Administrators are joined in their loyalty by the many college journalism programs that are still teaching inverted pyramid style and how their students can find their first job on a daily.

Publishers send us a lot of books to review, and we wish we could get to them all more quickly. It took us 18 months to finally read Ken Doctor’s Newsonomics, but we’re glad we did. Doctor’s perspectives on the future of news are as fresh today as they were in early 2010. We were surprised and encouraged by his optimism.

Many journalists view the economics of their profession as bitter medicine. Doctor makes it clear that survival in the new world will mean understanding the business, but those journalists who know how to package and market their work will thrive. And they won’t have to sell their souls or lower their standards to do it. Here’s our review on Amazon:

Journalists hate to talk about the economics of their profession, which is why this is such a valuable book. Doctor proceeds from the assumption that the newspaper industry as we have known it is an irreversible decline and that only a handful of national dailies will exist in a few years. There’s no reason to belabor that point, and he doesn’t.

Instead, he devotes the rest of the book to the much more important discussion of how journalism can be reinvented and deliver value in an economically sustainable model. His perspective is both optimistic and uplifting. Doctor sees the end of the vertically integrated news organization as creating opportunities for focused and nimble ventures to emerge that can indeed deliver quality journalism and pay their reporters a living wage. Competition will raise quality standards and ultimately deliver a better product. We have to go through an ugly deconstruction process in order to get there, but Doctor sees bright light at the end of the tunnel.

A lot of journalists are uncomfortable with Doctor’s views because they fear the loss of the comfortable salaries and modest output demands they have long enjoyed. Well, welcome to the new world. Jobs are going away and journalism is becoming a business of self-employed contractors. Journalists with initiative, innovation and skill will be able to make a better living working for multiple masters than they could have made working for media companies. News organizations will be under pressure to be more responsive to their readers’ demands, but Doctor does not believe this will result in the “dumbing down” of news. Tiered models will emerge that deliver high-quality journalism to those who are willing to pay a modest amount for it.

Newsonomics was published 18 months ago, but its lessons and predictions are just as valid today as they were then. This is a clear, concise and ultimately hopeful look at the economics of $45 billion industry in the middle of wholesale reinvention.