Before breathing a sigh of relief, though, note that about 2/3 of the ABC report is devoted to disclaiming comparisons of this year’s data to previous numbers. That’s because the bureau adopted a bunch of new rules that give papers more flexibility than they previously had in reporting circulation, including a redefinition of paid circulation to “paid/verified,” which now includes a lot of junk subscriptions like those given away to schools or distributed free in hotels. Basically, publishers now have more flexibility to report low-dollar circulation on their audit statements.

Still, the resilience of newspaper brands continues to impress, even though a sustainable business plan is elusive.

More Paywall Converts

Add the Globe and Mail to the growing list of paywall converts. The Canadian daily will begin to charge for access to articles on its website, although it hasn’t announced any more details. In fact, it announced so few details that 80% of the Reuters story is basically background.

U.S. News had an interesting piece last week (full disclosure: we were quoted in it) that likens the emerging paywall model to cable television. Danielle Kurtzleben cites several metro dailies that are having success with paywalls by going deep into local coverage or introducing sub-editions that target special interests. She quoted Tom Rosenstiel, founder and director of the Pew Research Center’s Project for Excellence in Journalism, comparing the model to HBO’s popular “Game of Thrones.”

“You’ve got a small group of people who really love that show and are willing to subscribe to HBO just for that show,” he says. Whether or not an HBO subscriber watches anything else on the network, he or she is still willing to pay the monthly fee to get that one program. The metro dailies that are having the most success with paywalls are the ones delivering new and focused content. Simply putting a registration screen in front of your existing product isn’t enough.

Help Bring ‘Fit to Print’ to the Finish Line

We’ve reported occasionally on the progress of an independent documentary called Fit To Print that hich examines the ongoing crisis within the U.S. newspaper industry and its impact on investigative reporting. We met the producers of this bootstrapped project in the early days and admire what they’re doing. The film is now in post-production, which means all of the interviewing and leg work has been done, but the producers are seeking to raise $10,000 to cover the costs need to bring the film to market.

We think the industry needs to hear the story that Adam Chadwick and Nancy Wolfe are trying to tell. They document examples of how the loss of journalism watchdogs has let crime and corruption run rampant in some cities and they make the case for why investigative journalism is an essential public service. Go here and donate money. Whatever you can. The producers are making some nice branded merchandise available for different donation amounts.

Donate on Passer.by.

Underlying the unique Bloomberg style is a 376-page style manual written by editor-in-chief Matthew Winkler (right). The most recent edition is the first that Bloomberg has made public (buy it on Amazon), and Wharton writes that it is a marvel of clarity and consistency. Some people might cringe at the manual’s many hard-and-fast guidelines, but consistency is a virtue when serving a time-pressed audience like equity traders. An excerpt:

Bloomberg stories should fulfill “The Five Fs” — that is, they must be First, Factual, Fastest, Final and take Future events into account. No story is complete if it doesn’t include “Five Easy Pieces” — information about the markets, the economy, government, politics and companies. The ideal lead is four paragraphs long and should always include a theme, a quotation, details and a nut paragraph that explains what is at stake. “Bloomberg News stories have a structure as immutable as the rules that govern sonnets and symphonies,” Winkler writes.

Whether you agree or not with Bloomberg’s style, there are tips in this article that could benefit any writer:

• Prefer short words to long ones
• Prefer specific terms to abstract one;
• Write the headline first;
• Avoid adverbs that are loaded with assertions, such as “lavishly” compensated or “stunningly” successful.

In many ways Bloomberg is the antithesis of The Wall Street Journal, which has long taken pride in the flourish it brings to its writing, and in particular its clever choice of adverbs. But we suppose both models can co-exist. The point is to have a distinctive style and stick to it.

The Knowledge@Wharton piece also explains Bloomberg’s controversial policy against the use of the word “but.” You’ll have to read to the end of the piece to understand that one, though.

Investors Pledge to Revive Philly Newspapers

There’s good news in Philadelphia, where a group of six investors has agreed to buy the Inquirer, the Philadelphia Daily News and Philly.com from a investment firm that has owned the news operations for the past two years. The investors, led by South Jersey businessmen Lewis Katz and George E. Norcross III, say they’re excited about growing the franchise, are committed to retaining current management and will not interfere in editorial affairs.

The bad news is that the group paid only $55 million for the media properties. That’s a little more than one-tenth the price that Brian P. Tierney paid when he acquired the properties from McClatchy for $515 million in 2006. Outsell analyst Ken Doctor is quoted in the story saying that the 90% valuation decline isn’t unusual. Most newspapers have lost that much value over the past decade.

The investors are talking a good game, at least. Katz, who was an investigative journalist at one point, said they’re investing in the community as well as in the business. “Cynicism or no, we put a lot of our money in this,” he said. “There was [sic] a lot safer places at my age to put money than in a news organization. You know what? This is my way of coming home.”

Rethinking the Paywall

Although fewer than a quarter of the U.S.’s 1,350 newspapers have built paywalls, the number of publishers who are experimenting with metered access is rising. Bulldog Reporter says more than 300 papers have adopted paywalls so far and the industry is hoping that their early success could be the harbinger of a turnaround. Nearly 20,000 people have signed up to pay $1.99 a week for the Minneapolis Star Tribune, the report says, and Gannett plans to expand paywalls from six test markets to all 80 of its small-market newspapers by the end of the year. That move, combined with circulation pricing increases, could add $100 million in annual profit, says the report, citing a company statement.

Writing on GigaOm, Mathew Ingram suggests another approach: Instead of putting up barriers to keep people from reading your content, how about building incentives to attract them instead? Ingram calls it the “velvet rope” strategy: Find creative ways to reward readers for getting involved with your product and they will respond by giving you money for special features and events. “Would you rather have a relationship with an outlet that is always asking you for money, or with one that sees you as a partner and gives you membership benefits that sometimes involve having you pay for things?” Ingram asks. It’s a good point, but Ingram’s post is a bit short on ideas about how to monetize this kumbaya. His argument seems to take it on faith that loyal readers will support a publisher they believe in. Unfortunately, there aren’t many examples of that approach working. Even NPR has to take government money to stay afloat.

Miscellany

Forbes has posted a heat map showing the most influential news outlets in the country and where they’re influential. The map uses data provided by URL-shortening service bit.ly to overlay geographic data on information about content that is shared most often. Darker states signify places where content is shared more actively and presumably read more often. You can also drill down and see which stories generate the most activity. Not surprisingly, newspaper influence  tends to be localized while broadcast networks have national reach. The map at right shows where Fox News is most popular. Incidentally, if you’ve ever wondered how bit.ly makes money, it’s by selling data just like this.

Last week we reported on the sudden shutdown of the Laurel (Miss.) Leader-Call. Thanks to comments from some alert readers, we’ve learned that Laurel won’t be newspaperless for long. Emmerich Newspapers says it will start a thrice-weekly newspaper to replace the Leader-Call and that the first edition will publish this Sunday. What’s more, Emmerich says it has hired the defunct newspaper’s entire staff and will probably throw in free donuts on Fridays. Emmerich publishes 25 community newspapers, primarily in Mississippi, and is very well-liked in Laurel these days.

We got an e-mail from a startup called Zypages that has an interesting twist on classified advertising. The service creates websites from flyers and product sheets uploaded by advertisers, using a cell phone number as the URL. “Most small contractors and service providers do not have web sites – but they all have mobile phones,” explained CEO Raymond Kasbarian in an e-mail. “Over 50% of the printed classified ads in our weekly newspapers out here list a phone but not a web site. By using the number listed in the classified add, a customer can get valuable information before calling.” Go to the website and click the “Examples” button to see how it works.

This blog was launched out of our frustration at my failure to find a publisher for an op-ed piece I wrote in 2006 forecasting the collapse of daily newspapers. The Wall Street Journal and The New York Times were polite in their rejections. The Boston Globe‘s Joan Vennochi, displaying the arrogance that was typical of that newspaper in those days, didn’t respond to multiple phone calls and faxes. Op-ed editors’ lack of interest in my point of view was understandable; 2006 was the best revenue year the newspaper industry ever had and forecasts of catastrophe seemed ridiculous. I knew from many years following the technology industry, however, that businesses often enjoy their best years just before their collapse. I self-published a longer version of that essay and started this site to document the death spiral that I knew was about to begin.

Transformational Time

The five years since then have been pivotal years in the history of media. The turning point came in 2009 when two venerable dailies – the Rocky Mountain News and the Seattle Post-Intelligencer - shut down with little notice, and several big papers, including my beloved Globe, were threatened with the same fate. More background here. The industry came out of that experience with a sense of urgency about its own survival and made changes that will prolong its decline but not change its fate. As Pew recently reported, most publishers are moving toward a digital future slowly and reluctantly. This still doesn’t look good.

The death watch began to bore me after 2009, and I’ve spent the last two years focusing more on the experiments that are sprouting up to preserve and evolve the craft of journalism. The good news is that there is a lot of innovation out there. I’m impressed by Pro Publica, Politico, Minn Post, Voice of San Diego, AllVoices, Global Post, California Watch and Sacramento Press, to name just a few. These startups all proceed from the assumption that good journalism can be practiced without the overhead of presses, paper, delivery trucks and newsstands. In fact, when you remove the expense of printing and delivering a newspaper, the actual cost of the journalism is pretty low. Then you can do some innovative things on the business side to pay the bills and maybe even make a profit in the long run. I applaud their work and the work of many others like them.

Power of One

It’s been amazing to see how much attention one person can attract with a little perseverance and the right tools. I’ve been interviewed on Al-Jazeera and CNN, featured on Australia’s leading network news program and spotlighted in a documentary. Spain’s largest daily newspaper featured me in a center spread. I’ve been cited in the Journal, USA Today, The Economist, The New Yorker and many other well-known publications. You can find a complete list of media mentions here. I get e-mail inquiries from media outlets every couple of weeks and always help out as best I can.

More rewarding have been the opportunities I’ve had to work with journalists and students through fine organizations like Poynter Institute, USC Annenberg, the American Press Institute, Boston University, Emerson College, SUNY Stony Brook and Emmanuel College. My point of view hasn’t always been popular with the editors and teachers I’ve met, but I’ve found most of them to be open-minded. I try to emphasize what I’ve said many times: The problem with newspapers isn’t the quality of their journalism but the weakness of their business model. It’s ironic that readership of newspaper content in print and online is at an all-time high while the revenues of the US industry are at a 60-year low. We should be focused not on preserving newspapers but on preserving journalism.

Power of Free

I earlier called Newspaper Death Watch a microcosm of the changing media industry and here’s what I meant: This blog has annual expenses of $57 for website hosting. It is a labor of love and an outlet for passion.It has long been a top Google result for queries about the decline of newspapers, and a couple of years ago Google decided to make it one of the top search results for “newspaper industry.”

As a result, the site gets between 400 and 600 visitors on an average day and has more than 1,200 RSS subscribers. One day in February, 2009 it was visited more than 3,000 times. I get a steady stream of e-mails from students asking about journalism careers or seeking help with term papers. Fifteen years ago that kind of visibility would have cost tens of thousands of dollars to create and thousands annually to sustain. International reach was almost unthinkable. Today it’s basically free.

This is just one small example of many thousands of blogs that are making a difference because the bloggers have something to say.  The ability of one person to create conversation today is stunning. Last month a man in North Carolina pumped eight rounds from a .45 into his daughter’s laptop to protest her selfish behavior. He posted the video below on YouTube and within three days started a global conversation about parenting, generational conflict and the impact of social media on young people. These kinds of events are commonplace today. They represent a fundamental shift in power and influence from the media to the individual.

It used to be said that power resided in the hands of those who bought ink by the barrel. Today it resides in the hands of those who have something to say and the passion to find a way to say it. What could be wrong with that?

–Paul Gillin

Framingham, MA

Editor & Publisher

The mini-case studies are a grab bag of ideas, ranging from novel circulation promotions to radical new lines of business, but they all have one thing in common: They leverage the newspaper’s unique position as a trusted companion within a geographic area.

Some papers have found ways to innovate within their traditional business, like the Carrollton, GA Times-Georgian, which scrapped its advertising rate card in favor of a time-based package that gives advertisers a variety of positions and sizes. It’s a smart idea that recognizes that advertisers are the least-qualified people to dictate where and when an ad should run.

Others are diversifying outside of the advertising dependence that has been the crack cocaine of the newspaper industry. The Altoona Mirror in Pennsylvania launched an events business that hosts thematic gatherings around things like cooking and outdoor recreation. The new line of business is a natural extension of the newspaper’s traditional role as community gathering spot, but also requires a change of philosophy. “We’re not selling a product called ‘a newspaper’ but manufacturing a product called ‘audience,’” said General manager Ray Eckenrode. That wasn’t so hard, was it?

Several organizations have completely merged their print and online operations, which surprised us because we assumed most newsrooms had done that a long time ago. Still, the reorganizations have cut production times and improved staff morale as journalists have bought into the idea of platform independence. It’s hard to believe that at some newspapers copy is still thrown over the wall between Web and print instead of created from scratch for an online audience.

A couple of entries even highlighted efforts by newspapers to push into the broadcast market. Manitoba’s Winnipeg Free Press, which is one of the largest papers to be recognized, took advantage of cutbacks in election coverage by local TV stations to set up a live webcast at a coffee house and analyze election results throughout the evening. Considering the dismal quality of most local TV news operations after years of cutbacks, this seems like low-hanging fruit.

E&P also lists 11 honorable mentions for a total of 21 stories of innovation. The package is nicely edited and there’s an accompanying photo gallery. It would be nice if there were hyperlinks to some of the featured examples, but we supposed E&P has still got some learning to do.

Money from Content

We recently reported on a little-noticed milestone in the New York Times Co.’s fourth-quarter earnings: Revenue from digital sources surpassed editorial operating costs, making it theoretically possible for the Gray Lady to get out of print entirely without affecting its editorial quality.

Now the Financial Times may be about to turn another corner. Content sales are about to eclipse advertising revenue. CEO John Ridding sprang this news on an FT conference in London earlier this month. The secret is mobility. By reaching paying audiences on phones and tablets around the globe, the FT is able to greatly increase its reach at almost no marginal cost. More important is that it now knows something about those people.

“The real power is in data,” Ridding said. “We’re moving from the dark ages where people would walk into a newsagents and we wouldn’t know them but now we know pretty much everything about them.” Contrast that thinking to a recent Pew report that found that few newspapers are using targeted advertising to reach online readers based upon their interests. But the FT is a business paper, after all.

Of course, the crossover is also influenced by the ongoing precipitous declines in print advertising. US newspaper ad revenues fell 7.3% year-over-year in 2011 to $23.94 billion, according to the Newspaper Association of America. We doubt the FT’s UK and European markets fared much better. Like the success stories spotlighted in Editor & Publisher, the FT is finding ways to escape the burning house before it’s too late. Incidentally, 60% of publishing leaders polled in one informal survey said they expect print publishers to be digital-only by 2020.

That’s it in a nutshell. The newspaper industry is standing on a railroad _­trestle 100 feet above a rushing river while a locomotive bears down on it. The only thing worse than getting hit by the train is jumping out of the way. The study outlines in depressing detail how paralyzed the industry is in its search for new business models, although there are glimmers of hope in the successes of a few innovators.

Pew’s Project for Excellence in Journalism surveyed 38 US newspapers and conducted extensive on-site follow-up interviews to examine the industry’s search for new business models. The sample was representative of the composition of US newspapers as a whole, with a mix of geographies and a preponderance of smaller titles.

In general, small papers are faring better than the large ones, but all are facing the same specter off print advertising declines that far exceed growth of digital alternatives. In fact, researchers concluded that for every $1 gained in new digital revenue, newspapers are losing $7 of print revenue.

“There’s no doubt we’re going out of business right now,” said one executive.

No Names, Please

One of the project’s most frustrating characteristics is its anonymity. Researchers had to promise not to name names in order to get executives to let down their guard. The result is some memorable quotes but few actionable examples. We learn of one small paper that posted 63% growth in digital revenue in the last full year while also growing print sales 8%. Another major metro daily was said to have grown its digital business 50% in the last year. It would great if these outliers would come forth and tell everyone else how they did it, but we may never know their identities.

The Pew study is emphatic in identifying the industry’s core problems as more cultural than operational. “There’s a big difference between understanding the new media environment and comprehending what it takes to adapt,” says one executive.

Fifteen years after the arrival of the commercial Internet, the industry continues to rely on print advertising to an alarming degree and has made only halting progress in developing new revenue streams. That isn’t for lack of trying. Everyone is trying to find digitally savvy salespeople, most are paying premiums for online ad sales and all publishers are aware of the need to experiment with alternative revenue sources like daily deals and business services.

However, they’re mostly having meager results. Few papers studied in the report are taking advantage of the growth in targeted digital advertising. Most are still reliant upon low-margin display ads. Nearly half of the publications have experimented with alternative revenue streams like consulting services and digital shopping malls, but only one reported any significant revenue.

Culture Clash

Unfortunately, rapid sales declines in the profitable print business are creating a hair’s-on-fire hysteria that sabotages change. The kind of salespeople publishers need to hire don’t want to work in an industry that’s in crisis. The number of print-focused sales representatives outnumber digitally focused reps by about 3-1 at the newspapers surveyed and there continues to be debate at some companies about whether digital is event the future. That sounds incredible, but the study identifies entrenched resistance among many publishers to diverging from the business model that served them so well in the days of monopoly market share and 20% profit margins.

Officials at 10 of the 13 companies said their biggest challenge was the continuing tension between people in their organizations who are advocating a more aggressive digital approach and those more aligned with the legacy tradition. In essence, they described a conflict between going faster and going slower…”We haven’t needed innovative people,” explained one executive. “So you get what you need. The kind of people that came into this industry were more operationally focused, executors instead of innovator risk takers.”

The good news is that there is broad awareness at the highest levels of the companies surveyed that the industry’s problems aren’t going to heal themselves. In fact, no one quoted in the report suggests that the current downturn is temporary or cyclical. Where they differ is on what to do about it. “The data and interviews suggest companies are almost evenly divided between optimists and pessimists-evidence of a lack of consensus on how to proceed in developing the new business model,” the report says. Unfortunately, at a time like this the only certainty is that inaction is death.

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.