It’s disconcerting when the CEO of one of the emerging giants of online publishing is quoted referring to the acquisition of a news organization as “the future of the content space.” However, that’s how AOL CEO Tim Armstrong apparently sees the hundreds of millions of dollars in recent investments his company had made to acquire properties like TechCrunch, Patch.com and now Huffington Post. He’s filling a space.

He could do worse than to fill it with the staff at Huffington, however. The $315 million deal, which was announced late last night, puts HuffPo founder Arianna Huffington (right) in charge of all of AOL’s editorial properties, which include TechCrunch and the rapidly growing Patch.com network of local news sites. She also gets Mapquest and MovieFone thrown into the deal. This should be a dream come true for Huffington, who launched HuffPo as a blog six years ago and who has taken only $1 million in investment capital since then.  The New York Times has all the facts.

Huffington has a chance to shape a new kind of media company as AOL struggles to recover from its disastrous merger with Time-Warner and its reputation for editorial superficiality. AOL has made some innovative strides in investing in Patch, and its earlier acquisitions of TechCrunch and Engadget demonstrate a willingness to invest in distinctive editorial models that challenge mainstream media. However, as The New Yorker noted in a recent critical profile of AOL and Armstrong (summarized on PaidContent.org), the company’s failure to hire an editor-in-chief has made it appear strategically aimless. The installation of Huffington in that job is a chance to fix that.

HuffPo is growing like a weed. The organization now has more than 200 employees and is on track to generate $60 million in advertising revenue this year. Paywall fans might want to note that HuffPo has no paid subscription model. In fact, as The New York Times points out, readers’ ability “to leave comments on Huffington Post news articles and blog posts and to share them on Twitter and Facebook has been a major reason the site attracts so many readers.”

AOL has been such a backwater of editorial mediocrity for so long that it’s hard to shake the assumption that the company will find a way to screw this up. However, Armstrong does appear willing to place bets on some properties that are breaking the mold of how journalism has traditionally been done. With Huffington at the helm, AOL has a strong leader in this “space.” Please just don’t call it that.

Shaky Daily

Have you downloaded your copy of Rupert Murdoch’s The Daily for the iPad yet? Don’t rush. A lot of early adopters are apparently still waiting for it to load. PaidContent.org says the app routinely takes a minute or more to start and that crashes and freezes are common. In ratings on the iTunes store, “even the positive reviews mention load problems and crashes,” writes Staci Kramer. Adds John Gruber, “My opinion of it has declined each day.”

Alan Mutter is a little more definitive, pronouncing The Daily “a dud” based upon its first issue. With “the barest possible news report back-filled by a bunch of vapid features,” the journal is “more like the Etch-A-Sketch edition of Us magazine than the ground-breaking news platform it purports to be,” he writes. Ouch.

To be fair, The Daily is in start-up mode, and anyone who has ever launched a new publication will tell you that the first issue is usually not portfolio material. Few people will remember these early negatives if the venture turns out to be a hit (remember Amazon’s frequent outages in the late 90s? Neither do we). One impressive achievement for the new publication is the stable of blue-chip advertisers it’s lined up. AdAge says they include Macy’s, Verizon Wireless, Land Rover, Pepsi Max and Virgin Atlantic. It also ran a 30-second ad on the Super Bowl, but that achievement is made less notable by the fact that its parent company owns Fox Broadcasting.

The Times They Are Delaying

It’s been nearly a year since The New York Times announced plans to charge for access to its online content starting in January. Now January has passed and we’re still waiting for what publishers hope will be a model for other subscription wannabes across the Internet.

Perhaps the Times is dallying because it doesn’t want the paywall to be another Daily. Times staffers are laboring to fix more than 200 bugs in the technology for charging readers, Bloomberg says. The difficulties apparently stem from the complexity of the app, which has several payment tiers and which must balance limited access with the offsetting needs to be visible to search engines and to enable readers to easily post links  on Twitter and Facebook.

While the world waits for the time strategy to unfold, the paper has quietly launched an unrelated and useful recommendation engine. Neiman’s Megan Garber caught up with Marc Frons, the Times’ CTO for digital operations, and discovers that the engine does a lot more than simply spit back articles that share similar tags. Frons says the program also looks at “people’s patterns, and how they move around the site, and what sorts of different things they might look at.” It tries to figure out what you might like even if you haven’t read stories in that domain recently. On the back end, it gives the Times greater insight into what readers want, which probably has some value in determining what they will pay for.

And Finally…

We were so stunned by the ad for coupon broker Groupon that ran on the Super Bowl last night that we fished it out of YouTube to be sure we hadn’t heard it wrong. We hadn’t. Actor Timothy Hutton delivers a solemn soliloquy on the suffering of the people of Tibet under Chinese rule. “Their very culture is in jeopardy,” he says. But there’s a bright spot: “They still whip up an amazing fish curry,” and you can get it for half off with your GroupOn membership.

We hope this ad is a subtle joke. If so, it sets new standards for subtlety. In a posting on the Groupon blog, founder Andrew Mason explains that the ad is partly satirical. “What if we did a parody of a celebrity-narrated, PSA-style commercial that you think is about some noble cause (such as ‘Save the Whales’), but then it’s revealed to actually be a passionate call to action to help yourself (as in ‘Save the Money’)?”

Actually, we think it’s a terrible idea. Using the suffering of people and the peril of entire species to sell advertising is sort of baldly offensive on its face, don’t you think? If the ad is intended to raise money for Tibet, it would have been nice to offer diners the option of sending their savings directly to Tibetan relief. But the ad neglects that detail.

If you agree that this campaign is over the top, please tweet your thoughts to Andrew Mason. Better yet, give to The Tibet Fund, where Groupon is saving face by matching donations up to $100,000.

Just when you thought there was already enough social media in your life, here comes Quora. The startup founded by former Facebook executives raised $14 million last year and was valued at nearly $90 million before even releasing a product. Now Quora is live, and the journalism community is buzzing.

“As more journalists have joined the network over the last week there has been a surge in journalism related questions and discussions,” notes Journalism.co.uk. Writer Kristine Lowe says reporters can use Quora to drum up story ideas the same way they have been using Twitter. The difference is that Quora doesn’t have a 140-character length limit and lets you follow topics as well as people, which is a feature journalists should love. It also connects to members’ Facebook and Twitter accounts, enabling friends and followers to monitor their questions, answers and topics as part of their news feeds. Caroline McCarthy has a good summary of the perfect storm that’s created so much Quora buzz.

Quora describes itself as “a continually improving collection of questions and answers created, edited, and organized by everyone who uses it.” Topics are raised in a question-and-answer format and answers are updated in real-time. You can follow questions, topics and people. The crowdsourced organization scheme is quick and reasonably comprehensive. The “Newspapers” topic, for example, shows the most recent additions by default, with options to view open questions or “best questions,” which are those with the most favorable votes from members. There are also subtopics for individual newspapers. Anyone can curate a topic.

Search results on Quora continue the question-and-answer metaphor. For trivia nuts, it’s a gold mine, but it’s also a good way to stimulate story ideas and find sources. Want to know how the “often prickly relationship between PR people and journalists can be improved?” There’s a topic on that, and every respondent is a potential source.

Writing in the Globe & Mail, Amber MacArthur comments that “Unlike Twitter in its early days, Quora appears to have a base of members that stretch beyond early adopters. Even business executives, such as former AOL Chairman and CEO Steve Case, are answering dozens of questions.” In fact, Case recently used Quora to answer a question about how much it cost AOL to distribute millions of CDs in the 1990s, which is a topic AOL has never chosen to discuss.

Writing on Poynter, Mallary Jean Tenor has six ways journalists can use Quora. She notes that D.C. online startup TBD has asked their readers to tag content that editors should follow and experimented with crowdsourcing a story on where to find the best pizza in Washington. Some journalists have also used Quora to solicit interview questions and to generate quick answers to difficult-to-search queries like “What percentage of 20-somethings subscribe to print newspapers?”

Elias Bizannes suggests that Quora is the future of journalism. Chris Crum says it’s kind of like Twitter with quality control, and that can be both a good and a bad thing. We’re curious to hear your thoughts. Is this an evolution or journalism or just another tool journalists can use?

Judy Sims nails it with this post about the denial that continues to plague the news industry. While paying homage to Journal Register’s John Paton, she asks why there aren’t more like him? Newspaper revenues have contracted by more than half in the last five years, yet the leadership at these companies continues to look for ways to bring back the past with $30 iPad apps and subscription models.

The end of the newspaper industry as we have know it is approaching more rapidly than anyone predicted. What better time to make meaningful changes than when facing your own mortality? This means discarding all assumptions, re-evaluating your whole value proposition, your business model, staffing, everything. Sometimes you have to kill the business in order to save it. Sims writes:

The first thing a realistic news exec needs to do is understand their disruptor…The Internet is not just another content distribution method.  It is social.  It is collaborative.  That means accepting that they are no longer publishers or broadcasters having a one-way “Gutenberg era” conversation with the masses.

Next, a realistic news executive has to admit that they don’t know where the business model is going.  That takes guts.

We are reminded again of Paton’s comment about the “aging managerial cadre that is cynically calculating how much they DON’T have to change before they get across the early retirement goal line.” Why aren’t boards of directors firing these people and bringing in management without legacy baggage? Or, as Sims puts it, “why aren’t Rafat Ali, Mike Arrington, Om Malik et al invited onto mainstream media boards?”

Good question.

Miscellany

Nieman has a great post about why the WikiLeaks disclosures are good for both the public and mainstream media. Nikki Usher writes that the 251,000 leaked cables gave media organizations a perfect opportunity to demonstrate their value by doing what citizen journalists couldn’t, namely, sorting through the mountain of material and getting perspective and commentary from top administration officials. These are two things that professional journalists do exceptionally well. But the public was also allowed to see the same stuff the media was seeing, she writes, and that’s a victory for public access. Usher contrasts the WikiLeaks case to the Pentagon Papers disclosures of the 1970s. In that case, the public was only permitted to read less than 2% of the leaked documents and was unable to discuss them with each other in any meaningful way. Today, both mainstream and citizen media have access to the same source material. “This is a moment of glory for all those who talk about crowdsourcing, user-generated content, and the like. Perhaps this is the ultimate form of users helping to create and shape the news,” she writes.

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The Sonoma Index-Tribune has dropped its three-month-old paywall. Is it a coincidence that it canned the $5 monthly charge shortly after AOL’s Patch.com opened a free outlet there? We think not.

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The Brenda Starr comic strip will end its 70-year-run on Jan. 2. It joins Cathy on the list of recent comic casualties. Not a good year for female cartoon figures.

Amazon.com is finally addressing complaints about licensing fees for its Kindle reader. Starting next month, the online retailing giant will give newspapers 70% of revenue from digital versions of their publications sold in Amazon’s Kindle Store. That’s what Apple and Google give developers for their iPhone, iPad and Android devices, so Amazon is merely playing catch-up.

Amazon also introduced Kindle Publishing for Periodicals, a program that’s intended “to speed up the process of producing a version of the newspaper for the many platforms where Kindle software can be downloaded,” according to CNN

Amazon has been criticized for being greedy in the royalties it extracts from news publishing clients. The change in royalty payments brings it in line with industry standards, and the new publishing platform is said to make it relatively painless for clients to get their content on Kindle-compatible devices, including the iPhone, iPad and Android. The move also appears to be aimed at the scarcity of iPhone-savvy coders, which is somewhat limiting the growth of that platform. ” Apple has sold more than 125 million gadgets — iPhones, iPods and the iPad — that run its mobile operating system. But finding developers capable of coding software for the system can be difficult and expensive,” CNN said.

Take Two Tablets and Call Me…

How big is the tablet market going to be? Really, really big, says Gartner, which sees nearly half a billion tablets selling in 2013 alone. The sudden explosion of this market seems curious in light of the fact that tablet – or “slate” – computers have been around for more than a decade. Gartner casts some interesting light on this phenomenon.

Early table computers were mainly Windows machines, meaning that they differed from PCs only in form.  Gartner points out that, in contrast, the usage model of the new breed of tablets “is closer to what consumers do with a smartphone…It is about running applications, playing games, watching video content, reading books and magazines…If you can do all of this without having to take five minutes to boot up, without having to look for a power outlet after a couple of hours… and with a user interface that allows you to easily get to what you need, why would you not buy a media tablet?” Makes sense.

We were at the Web 2.0 Summit this week, which ordinarily would have been lousy with laptop computers. However, we estimate that about one third of the attendees were toting iPads. Part of this trend is Silicon Valley chic, no doubt, but there’s no question that one appeal of the iPad is that it takes about 10 seconds to boot and the battery doesn’t die after 90 minutes. We found ourselves staring lovingly at the iPads being hoisted by others in our row as our laptop battery drained to zero.

Early tablet-makers obsessed over features like handwriting recognition and supporting an 800 X 600 screen. Apple chose instead to reinvent the experience around user need. Gartner sees the cost of tablets quickly dropping to under $300 as competition increases. Meanwhile, publishers are being careful not to screw up this market opportunity like they did the Web.

WaPo Gets Hyperlocal

The Washington Post is floating ideas about its next foray into online news and it looks like it’s going hyperlocal with a vengeance. TBD, itself a recent D.C.-area startup, reads the tea leaves from a recent Post survey and deduces that the newspaper is planning a major mobile thrust with a social networking flavor. TBD also quotes an anonymous source saying the plans include “this new crop of sites would be even more hyperlocal than AOL’s Patch.com sites that are now spreading around the region. The mission of the Patch sites is to dig deep on municipal news, including school board meetings, high school sports, trash collection and the like.

The new Post initiative, says a source, would “carve things up even more micro” than the Patch sites, as in subdivision by subdivision. It’s unclear how the Post would fund such an initiative or find the volunteer citizen sources to do the reporting, but it’s breaking with the pack in making such a strong commitment to local coverage. Few publishers have the cash – or the cajones – to disrupt their traditional model to that degree.

Speaking of the Post, it just released a new iPad app that aggregates “social media conversations, videos, photos and user engagement through Twitter and Facebook about the top three to five issues of the day,” according to a press release picked up by Editor & Publisher. It’s free here for now, $3.99/mo. beginning in February.

Miscellany

US News & World Report, the former newsweekly that has been monthly for the last couple of years, will stop publishing its monthly magazine in 2011. The magazine, which is famous for its annual rankings of the best colleges, hospitals, personal finance and other businesses, will continue to publish the rankings in print along with four special topic issues. Everything else will go online.

US News has long been the weakest competitor in a three-horse race dominated by Time with Newsweek a distant second. The whole newsweekly sector has been devastated by online competition, forcing the Washington Post Co. to sell Newsweek this summer. Its circulation has plunged more than 25% in the last year.

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The San Diego Union-Tribune is turning the tables on the traditional model of selling a printed newspaper and giving away electrons for free. The struggling daily, which was bought by private investment firm Platinum Equity last year, is offering readers a free copy of the  print edition when they use their mobile phones to check in on Foursquare, Gowalla or Facebook. All a checked-in member has to do is show a mobile device to workers at kiosks around the city. We’re sure the U-T’s newsdealers are just thrilled about this idea.

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The Oregonian just got a $50,000 grant from the Knight Foundation via the American University’s J-Lab, and it’s going to spend the money on hyperlocal journalism. Read Editor Peter Bhatia’s passionate and persuasive argument for the need to adopt a “big tent” strategy and partner with localized news outlets of all shapes and sizes in order to “offer a level of local and neighborhood detail our staff…cannot get to.” It’s nice to see a newspaper editor embracing amateur journalism instead of dismissing it. “In the digital media world there really aren’t any limits on who can gather news and distribute it. Anyone with a laptop can create journalism,” he writes. The usual assortment of nut-nut commentators weighs in with their spew about how Bhatia is ruining the newspaper. He responds with admirable restraint.

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Gannett Blog estimates that USA Today has five reporters covering Congress and 27 covering entertainment. We have no idea if those numbers are true, but if they are, we are going back to bed and putting a pillow over our head.

A couple of weeks ago, we profiled Sacramento Press, a bootstrapped startup that appears to be doing a lot of things right, including adopting a diversified revenue model and partnering with other small publishers to share in advertising contracts. Well, they’re moving fact. Ben Ilfeld, the 29-year-old founder of Sacramento Press, sent us this announcement yesterday. He’s hoping to expand and duplicate the Sacramento business model in other towns throughout California. Tomorrow, the world! Here’s to the renamed Macer Media’s success.

The following is an edited press release:

Looking to help communities elsewhere build successful new local online media models as traditional media struggle to survive, the founders of The Sacramento Press have chosen a new corporate identity – Macer Media LLC – to underscore their philosophy to keep their operations lean, even as their business continues to develop new sources of revenue and grow at a healthy pace.

Macer Media will serve as a corporate umbrella over several operating entities, including The Sacramento Press, Sacramento Local Online Advertising Network (SLOAN), The Bay Area Publisher Partnership (BAPP) and DealTicket, an online local daily deal site.

Macer Media aims to assist 21^st Century publishers in other markets in understanding and obtaining the innovative blends of news gathering, advertising, social media and technology needed to succeed at seeding their own “hyper local” new media outlets.

“We want to run a lean company in the spirit of these local and hyper-local champions and be a company that not only has a stake in the hyper-local fight in the form of The Sacramento Press, but also helps out others in our space by providing the tools to build healthy local media ecosystems,” said co-founder Geoff Samek.

The Macer Media team is focusing initially on creating trusting relationships with local publishers throughout California to test the sharing of news, as may be appropriate for their readers, and as a means for local advertisers to expand their reach.

The Macer Media team encourages publishers to develop their own distinctive blends of news gathering, advertising, social media and technology infrastructure rather than adopting a “cookie cutter” approach to serving local audiences.

“We learned fairly quickly that people respected what we’re doing with The Sacramento Press in terms of our mix of technology, advertising and news gathering,” Ilfeld said.  “We’ve demonstrated an ability to innovate with technology and then leverage our strengths in technology and marketing to start SLOAN, our local ad network.  Those are hallmarks of what we do.”

We can’t remember the last time we went two weeks without updating the Death Watch, but a crush of work (though not so much money) has overwhelmed us recently. Plus we saw the new Harris Poll that found that over half of online adults now believe traditional media as we know it will no longer exist in 10 years, causing us to wonder if there’s really any point to “chronicling the decline” any more when the majority now agree  on the end point. But we forge ahead for SEO purposes, if nothing else. Here are some stories we’ve bookmarked lately.

Nielsen: 362K Paying for London Times

How are the early Murdoch paywall experiments in the UK faring? That involves unraveling some complex formulae about the value of free versus paid circulation and the opportunity cost of a paid subscriber. However, for now we are calling the early figures from Nielsen encouraging. The media monitoring service recently estimated that some 362,000 people have been accessing subscription content on the Times of London’s website each month since a paywall went up in June. The trade-off: unique monthly visitor traffic is down about 44% from 3.1 million to 1.78 million.  A separate analysis by Hitwise concluded that there had been a “large reduction” in visits to the Times’ website since the paywall was erected, resulting in a drop in online market share of nearly 60%.

So does this mean the Times’ paywall is a good or a bad idea? Here’s one way to look at it: The Times charges £1 per day or £2 per week for online access, with print subscribers getting a free ride. The back of our envelope says that if the Times can get half of those 362,000 monthly visitors to pay for one week’s worth of access each month, then it will have traded 1.3 million visitors for £362,000, or about 25 pence per visitor. The question then is whether those lost visitors can be monetized to the tune of 25p.

That actually should be a fairly easy calculation. If the Times looks at its online advertising revenue for the prior year, for example, and compares it to average unique monthly visitor volume, it can calculate the value of a free visitor pretty quickly. If that value is less than £.25, then the paywall is working, at least for now.

It isn’t that simple, of course. Those 362,000 monthly visitors aren’t necessarily paying the full price for Times content. Some are using free or heavily discounted promotions account or are print subscribers when get the online product bundled. However, they may also be more valuable that afree visitors. If advertisers are willing to pay more to reach paying customers on the theory that they’re better prospects, then those 362,000 visitors could be worth more than two bits apiece.

There are also intangibles, like the lower cost of operating a computing infrastructure to serve a smaller visitor base. However, we would suggest that the quick and dirty calculations aren’t all that complex, and if other Murdoch titles forge ahead with similar strategies, then the paywall is probably working.

A Case for Editorial Accountability

“In reality, publishers and CEOs have little understanding about what their editors are doing,” writes Neil Heyside (left) of New York-based CRG Partners in a provocative piece on MediaShift about the cost of content. Heyside shares some anonymized cost figures from client newspapers in the US and UK showing that the ways in which publishers allocate budget for different kinds of content varies wildly.

He makes the argument that publishers can reduce the amount of staff-generated content by increasing contributions from free (aka citizen) sources and making more use of “reworked” or rewritten material like press releases. He also suggests that publishers can make use of pooled or wire service material for topics that have little local relevance but that are important to carry anyway, such as international news and movie reviews.

“One paper printed 8% of its material from free content,” Heyside writes. “If that number moved up to 20% …a reduction of the use of 16% of staff-produced material led to a savings of 28% in staffing costs.” Sounds easy, but as anyone who’s worked with a substantial amount of contributed free content will tell you, the time required to massage it into something worth publishing can nearly equal the cost of paying for good material in the first place. Commenter Scott Bryant makes this case with some passion. Both Heyside and Bryant are right. Publishers should scrutinize the process and costs of creating content more carefully and editors should be more accountable for what they spend. However, quality is an intangible that defies rigid classification. As Sam Zell and his team found out at Tribune Co. a couple of years ago, boiling editorial content down to column inches, source counts or other rigid metrics is a recipe for trouble.

AP: Newspapers Are Now Loss Leaders

For the foreseeable future, publishers don’t seem to be funneling their investment dollars into wire services. Associated Press CEO and President Tom Curley (right) tells Poynter’s Rick Edmonds that newspapers now make up only 20% of the AP’s revenue and that figure is expected to continue to decline by 4% to 5% a year for the foreseeable future. In fact, “The AP loses money on services to newspapers and effectively subsidizes those offerings with more profitable lines of business,” such as photo wires and corporate business news, Edmonds writes.

The silver lining for the AP is that the drop appears to be a consequence of the industry’s overall decline rather than the contentious battles that erupted between the AP and its member newspapers two years ago. Curley says that unpleasantness has largely been put to rest as a result of adjustments to AP’s licensing fees and a lot of face-to-face meetings.

There is one battle still ongoing, however: with CNN. The AP claims that the broadcast giant is effectively using wire service material without paying for it by picking up (and attributing) stories moments after they hit the websites of AP subscribers. Here’s another area in which copyright law has failed to keep up with the velocity of digital information. As long as CNN summarizes and attributes information, it isn’t technically doing anything illegal, but the AP also has a defensible case for arguing that those actions are unfair to it and other members.

Miscellany

Could Starbucks soon compete with the newspaper publishers whose products it places next to the cash registers at its ubiquitous coffee shops? Yes, but for now it’s taking pains not to call its new in-store information service a “news” network, even though it sure looks like one. Instead, the Starbucks Digital Network is being positioned as a means for the retailer to gather more intelligence about what interests its customers in order to deliver to them better…um…latte? Sounds like a bit of a stretch to us. More likely, Starbucks is testing ways it can use localized and even personalized news as a way to improve customer affinity and maybe even sell advertising.

We proposed more than two years ago that Starbucks could become a major force in the US media market (see slide 28 in embedded presentation below) if it chose to pursue the opportunity. Our scheme was to provide printed, personalized mini-newspapers optimized for reading by commuters. Since we floated that idea, though, the iPad happened, and it now makes more sense to deliver news digitally to a tablet-toting public. However the plan works out, we think publishers should look at Starbucks as a potential partner rather than a rival, because anyone who feeds the caffeine jones of millions of affluent professionals enjoys a chemical bond that no editor can hope to match.

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Forbes’ Jeff Bercovici rang up a media appraiser who correctly estimated the value of Newsday two years ago in order to find out what the Boston Globe is worth. Kevin Kamen’s guess: a maximum of $120 million and a realistic value of $75 million. That sounds terrible in light of the $1.1 billion that Globe parent New York Times Co. paid for the New England Media Group in 2003, but remember that money was relatively easy to come by in those day and that the Times Co. couldn’t find someone to take its Boston Harbor boat anchor off its hands last year for a paltry $25 million. Since then, cost-cutting has made the Globe a little more valuable, Kamen estimates. Perhaps that’s why a group of investors, led by entrepreneur Aaron Kushner, wants to buy it, Bercovici reports.

And Finally…

Rupert Murdoch has been the most strident of all publishers in demanding that readers pay for content, which is why the circulation promotion now being used by his Sun in the UK is so deliciously ironic. The paper stuffed thousands of banknotes into Saturday’s issue. Presumably it used small denominations so as not to encourage assaults on its street vendors. The daily has recently suffered a 4% drop in circulation. Perhaps Murdoch is hoping that readers will put their winnings to work to pay the access fees for the Times or News of the World.

About 55,000 readers of the Los Angeles Times in the San Gabriel Valley and Riverside were surprised to open their morning papers late last month to discover that the Times had acquired a sudden fixation with topic of “briefs subhed (see below).” Actually, it was a production error.  “About 55,000 papers were printed before the error was discovered,” the Times wrote in a correction. “Readers feared that all the copy editors had been laid off, or even ‘massacred,’ as one put it.”

We got an invitation to speak to the founder of the Sacramento Press a couple of weeks ago, and since few hyper-local publishers have the desire or financial means to do any PR these days, we were curious to hear what Ben Ilfeld (right) had to say.

Ilfeld is a 29-year-old entrepreneur who has created a different approach to community journalism. He has no journalism background, and that’s probably a virtue, because Sacramento Press is unencumbered by preconceptions about how publishing should be done. It is also experimenting with a diversified business model in which advertising is only a piece of the revenue picture. That’s an idea we’ve been advocating for some time.

Anybody can contribute to Sacramento Press and about 1,200 people have. About 65% of the content is generated by the community and managed by a full-time editorial staff of five people. The underlying principle, though, is what is sometimes called a “Folksonomy.” In other words, the community organizes the site.

Ilfeld and co-founder Geoff Samek created Sacramento Press’ content management system from scratch in Java. It incorporates a new navigation concept called a “story line.” Everyone who registers is asked to create one.

A story line links together all the work an author has done on a particular topic, providing a sort of background narrative. The site also relies heavily upon tags to give members the means to self-organize its content. “You can create a tag like ‘Marshall School Park’ and apply that tag to any other content,” Ilfeld said. “We then give you a URL and that creates your own front page.” The site also employs a traditional section taxonomy and its default front pages are laid out by human editors.

Merit Rewards

Members are urged along through a system of merit badges that rewards them for accomplishments like covering the fire department beat or participating in one of the many free workshops the company offers on topics like “writing for readers” and “interviewing techniques.” Basically, the more you contribute, the more recognition you get. This rewards system is a staple of user-generated content sites like Yelp and Kaboodle.

Sacramento Press’ greatest innovation, however, may be its business model. The company created a local vertical advertising network called Sacramento Local Online Advertising Network (SLOAN) that gives advertisers and independent online publishers a chance to participate in national and regional ad campaigns. SLOAN takes care of negotiating deals and each publisher shares in the revenue. The network now represents over 50 sites and brings in over $10,000 a month.

But it goes beyond advertising. “The number one thing we do as an organization is provide marketing services,” Ilfeld says. “If building a Flickr account will help a client’s business, we’ll do that for them.” Advertising now comprises less than 50% of revenue. “Most of our sales are coming from social media work, events and services,” he says.

Sacramento Press isn’t profitable yet, but that doesn’t worry its founder. “Every time we approach profitability, we reinvest in the business,” Ilfeld says. With 90,000 unique monthly visitors and a 10% to 15% monthly growth rate, Sacramento Press is quickly becoming a significant force in the local media scene. Its ad network is also raising a barrier to entry for others.

Sacramento Press is demonstrating that a hyperlocal news model can work if publishers discard assumptions and think of new ways to generate revenue. Local media organizations are ideally positioned to provide marketing services to small businesses that lack the resources to manage their own campaigns. By diversifying their businesses, publishers can insulate themselves from disasters like the current collapse in advertising rates and position themselves as essential partners to local businesses.

We find ourselves, once again, completely in Jeff Jarvis’ camp on the issue of tearing down the advertising/editorial wall. Jarvis makes his case here in response a thoughtful but retro post by the Guardian’s Roy Greenslade. The ad/edit wall that has existed in newspapers for the last three generations is a luxury that media institutions can no longer afford and also an insult to the journalists within them. Are reporters children who are so incapable of safeguarding their own integrity that they need to be shielded from the business? Are advertisers such a corrupting force that they must be prohibited from any contact with the people who create the product they support with their ad dollars?

Jarvis notes that nearly everyone who’s starting a media operation these days has to wear both editorial and sales hats. And guess what? Many of them still manage to deliver fine products. In fact, we’d argue that the informal standards that top bloggers apply to their work are at least as good as the written standards put forth by various news organizations. That’s because integrity is one of the few assets media people have, and they know that bartering it away undermines their future. Readers are also smart enough to figure out when they’re being taken for a ride.

We’d go one step further and suggest that one reason that the American public has been blindsided by affairs like the sub-prime mortgage crisis and the S&L meltdown is that the quality of business journalism in this country is so terrible. At most newspapers, the business desk is either Siberia or a necessary labor one must complete on the track to a glamor job in the State House. How can a company like Enron build a financial house of cards that ultimately collapses and throws 20,000 people out of work without someone at the Houston Chronicle noticing if something was fishy (BTW, did you know Enron had a code of ethics?)

Probably because newspaper reporters have traditionally been told that business is evil, ad-buyers are a corrupting influence and you’re best off staying as far away as possible. That’s not really an option any more, and maybe the new breed of online publishers will prove that journalists don’t have to be treated like 10-year-olds in order to do their jobs effectively.

Miscellany

Pulitzer Prize-winning editorialist Leonard Pitts, Jr. has kicked off quite a ruckus at the Miami Herald over his skewering of citizen journalism.  His target is James O’Keefe III, the political activist whose hidden-camera wizardry is credited with bringing down the Association of Community Organizations for Reform Now (ACORN). It turns out O’Keefe’s videos exhibited questionable editing practices that caused prosecutors to decline to file charges. What’s more, O’Keefe has been in a raft of trouble since then. “It is a mark of the low regard in which journalism is held that that load of bull pucky ever passed as wisdom,” Pitts writes. “If some woman flashed a toy badge, would you call her a citizen police officer? Would you trust your health to a citizen doctor just because he produced a syringe?” No, but the contexts there are somewhat different. We agree that the O’Keefe case is an example of citizen journalism gone wrong, but we think trashing the whole concept over a few bad examples is no more responsible than dismissing traditional journalism because of Jayson Blair. About 80 commenters weigh with their views.

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Let’s keep this death watch thing in perspective. World Association of Newspapers and News Publishers CEO Christoph Riess told the World Editor’s Forum in Hamburg last week, “Whatever form the newspaper takes, it will remain the dominant media force in the world.” He cited the 61% growth in print newspaper circulation in 185 countries over the last year as evidence, and noted that print newspapers “reach more audience than the Internet.”Riess is right that newspaper circulation is growing dramatically in many developing countries. However, whether that trend holds up for long is questionable. As these economies mature, it’s likely that more-prosperous citizens will leap directly to online outlets and bypass the 15-year learning curve that the U.S. went through.

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Which may not be such a bad thing. Scarborough Research reports that the 9 million people who use e-readers are also avid news consumers. “E-Reader households are 11% more likely to read a newspaper regularly than an average adult,” writes Editor & Publisher. What’s more, e-reader households are nearly 50% more likely than average consumers to visit a newspaper website. You can find the press release here.

And Finally…

From The Onion:

Citing a desire to gain influence in Washington, the American people confirmed Friday that they have hired high-powered D.C. lobbyist Jack Weldon of the firm Patton Boggs to help advance their agenda in Congress.

Known among Beltway insiders for his ability to sway public policy on behalf of massive corporations such as Johnson & Johnson, Monsanto, and AT&T, Weldon, 53, is expected to use his vast network of political connections to give his new client a voice in the legislative process.

Read more…

Poynter’s always-insightful Rick Edmonds asks if he’s missing something: In Hyperlocal News, Where’s the Urgency?, He examines an assortment of hyperlocal news startups and comes away wanting more. “Sampling a host of aspiring online hyperlocal franchises — Examiner.com, Outside.in, OurTown.com and others — I’m consistently underwhelmed. One roundup of ‘news within a mile of me’ had crime stories a month old and many reports on the business travails of Outback Steakhouse’s parent company.”

Edmonds makes an important point about the distinction between “content” and quality. Basically, having a blog does no one any good if it’s used to publish crap. However, a lot of blogs (many hyperlocal publications are essentially blogs) put publishing ahead of reporting. Throw it up there and see if anyone reads it because – you know – you can. This is a natural result of the current fascination with social media as a shiny new object. People are publishing because it’s cool to publish. Five years from now, that novelty will have worn off and we’ll be figuring out what these new tools are really good for.

We expect that hyperlocal journalism ventures will consolidate into a small number of professional publishers who have the operational and sales skills to run profitably a lean organization of semi-professional journalists who contribute news about their immediate area. There will always be neighborhood bloggers – and some of them will be good enough to build significant followings – but readers won’t adopt the current cacophony of amateur local reporters as a replacement for major metro newspapers. Professional oversight will be needed.

There’s a land grab going on in this area right now, with aggregators like Patch, Everyblock (above) and the three organizations mentioned earlier each jockeying for position. They’re mostly using whatever low-cost sources of content they can find, and people like Rick Edmonds are astutely calling them on the shortcomings of that approach. We expect that as more ad dollars funnel down from dying dailies into hyperlocal ventures – and as the owners of these ventures become savvier about finding new sources of revenue – the quality will improve and jobs for professional journalists will emerge. They won’t be the cushy union gigs that the previous generation of scribes enjoyed, but they will be enough to bring some pros back into the business.

How to Manage a Blogger Network

Megan Garber speaks with Eric Berger about what it takes to build a good blogger network. Berger is the Houston Chronicle science reporter and blogger who created a network of science blogs at the newspaper back in 2008. The experiment was somewhat groundbreaking for a newspaper at the time, although ScienceBlogs and LexBlog were doing the same thing years earlier. Garber wants to know what makes a blog network successful and Berger shares advice that anyone can use to head down the same path:

Blogging requires passion – “If you’re writing about stuff that you’re interested in and enjoying what you’re doing, it’s going to come through in your writing.” Forcing people to blog never works. If they don’t catch the bug, they’ll simply mail in their entries until they can gracefully escape.

Blogging is a conversation – That includes responding to comments. A lot of folks think once they post an entry, they can walk away, but that isn’t so. The best bloggers want a dialog with their readers. Berger notes that it’s particularly difficult to find scientists who want to follow up on their original posts.

Don’t ignore the news hook – Key advice here: “People want stuff either that’s related to the news of what’s happening or that has some kind of popular hook.” Blogs are best at communicating timely information.

Good source = good blogger – This is a great point. “Experts who make good sources might also make good bloggers,” Berger notes. That’s because they have a natural inclination to explain.

Miscellany

Lauren Kirchner does what reporters do too rarely: Updates us on last year’s hot news. In this case, the subject is Kachingle, a tip-jar-style service that lets readers contribute micropayments to the Internet publishers they like without having to make a conscious effort to do so. The service was all the rage when announced in early 2009 (we gave it several paragraphs in February), but its star seems to have faded since.

Kachingle has signed up about 300 publishers, but none whose title begins with the word “The.” Kachingle founder Cynthia Typaldos said she’s been getting a great reception from news organizations, but the sales process seems to die at the executive level. Kirchner speculates that Kachingle’s transparency – visitors can see which sites inspire the most contributions – may be one barrier. But more likely it’s just bureaucratic intransigence: “Fitting a little Kachingle widget seamlessly onto a homepage isn’t actually as easy as it sounds, if the homepage you’re talking about is nytimes.com.”

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Huffington Post has scored another big hire: Howard Fineman . The 61-year-old veteran Newsweek reporter and MSNBC news analyst will become HuffPo’s senior political editor. In an interview with MediaMatters, Fineman contributes some insight on why his new employer is having so much luck attracting senior journalists. Arianna Huffington is trying to bootstrap a professional news organization that stresses quality journalism and independent politics at a time when news is splintering into partisanship and theatrics. She apparently has the money to do it. “Bringing in the best of the old involved more money than we had when we launched. But now that our Web site is growing, we’re able to bring in the best of the old,” she told The New York Times. Journalists like Fineman don’t work 16-hour days and file stories every four hours. Huffington is doing something right to attract prominent people like him and veteran technology editor Jai Singh. We’d suggest that HuffPo is emerging as one of the first big winners in the race to supplant conventional news organizations.

And Finally…

“The English language, which arose from humble Anglo-Saxon roots to become the lingua franca of 600 million people worldwide and the dominant lexicon of international discourse, is dead, ” begins a wonderful essay by the Washington Post‘s Gene Weingarten. He proceed with a litany of recent butcherings of the language by some of the US’s most notable publications, including The New York Times, which has used the term “reach out to ” as a synonym for “attempt to contact ” at least 20 times this year. Other offenders: The Winston-Salem Journal‘s use of was “Alot ” to describe the number of locals Salemites who would be vacationing that month, the Miami Herald‘s report on someone who “eeks out a living ” and his own employer’s publication of a letter referring to the first couple the “Obama’s. ” We hope you’re socialize this article to others and reach out to Weingarten to complement him.

Only 25% of Americans say they have a “great deal” or “quite a lot” of confidence in either newspapers or TV news, according to a Gallup survey. That puts mainstream media on par with banks and slightly better than health maintenance organizations on the trust barometer. The stats are from Gallup’s annual Confidence in Institutions survey. At the top of the trust heap? The military. And at the bottom? Congress.

The results varied significantly by age. Nearly half of Americans between the ages of 18 and 29 said they had confidence in newspapers. However, disillusionment evidently sets in early, as the confidence level dropped to 16% among 30- to 49-year-olds, making them the most cynical group. Even liberals, who have traditionally been a stronghold of support for mainstream media, expressed support to the tune of  only 35%. It’s important to keep the results in perspective, though. Gallup has been conducting this survey annually for the last 20 years, and confidence in newspapers has never exceeded 39% during that time. However, confidence dipped from the low 30s to the low 20s about four years ago and has been stuck there ever since.

Good News for Hyperlocals

Hot new DC news startup TBD “resembles a sleek, coolly designed, high-tech house with several unfurnished rooms — and a market value yet to be determined,” writes Howard Kurtz in a generally favorable review of the most ambitious hyperlocal launch of the year. The site, which has 15 reporters buttressed by an army of 127 local bloggers, “has a voice, a sense of fun and a knack for packaging short items that creates the appearance of flow and momentum,” Kurtz writes. It also has some good political reporting, although the staff seems to be more focused on local news than national or global politics. TBD has been closely watched as a potential model for hyperlocal startups because of its inclusive approach to community journalism and its backing by a major media company, Allbritton Communications, which also owns The Politico, as well as a collection of regional television stations

Also on the hyperlocal front, BringMeTheNews, an aggregation and podcasting venture founded by former Twin Cities news anchor Rick Kupchella (right), just raised $1 million from two local investors. The site has an interesting business model and has reportedly been profitable since day one. It aggregates headlines and summaries from “hundreds of online news and non-traditional sources” around Minnesota and publishes them on its website. It also produces audio news summaries that are picked up by Minnesota radio stations and broadcast to about 1.5 million listeners each day. At the moment, the site produces no original content.

The advertising model is also novel: The site carries no more than four paid sponsors, who buy contracts of at least six months’ duration. Sponsors are also expected to “provide informational advertising of interest to our audience.” According to MinnPost, “Sponsored copy is integrated into the links BringMeTheNews curates, and carries the sponsor’s logo. Theoretically, the copy is useful information for readers (Explore Minnesota tourist guides, OptumHealth wellness tips) while still advancing the sponsor’s interest.”

Despite having only one-eighth the traffic of MinnPost, BringMeTheNews has apparently hit upon a revenue model that works, even at low volume levels. Kupchella said the business would still be viable without the radio component.

Miscellany

The Worcester (Mass.) Telegram & Gazette will begin charging up to $15/mo. for access to local news articles. Non-print subscribers will be able to read 10 stories for free before the paywall goes up. The T&G is owned by The New York Times Co., which plans to build a paywall at its flagship newspaper in January. The Worcester experiment may be a pricing trial balloon. If a lot of people will pay $15/mo. to read the T&G, it’s good news for the Times. We doubt it, though.

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More good news: PaidContent.org is hiring reporters. If you are  “deep into areas like online video or digital advertising or gaming,” “can pick apart a media company’s balance sheet” and/or “are dogged and enterprising,” drop a line to jobs@paidcontent.org. You’d better have expertise in media, though. That’s a given.

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Having driven Tribune Co. into the ground in record time, Sam Zell now wants his money back. The Chicago real estate mogul invested $315 million in Tribune Co. back in 2007, which was arguably the worst time in history to invest in a newspaper company. He then demonstrated near-total ignorance of the business challenges facing the $6 billion company that he designated himself to run, and succeeded at steering the company into bankruptcy in a little more than 18 months. Well, that was fun, but now it’s time to cash out and go home. Chicago Business sorts through all the legalese, if you’re interested.

And Finally…

As if to underline the shrinking attention span of the American news consumer, American Public Media’s Marketplace Radio devoted all of six sentences to summarizing the world financial situation last week. The idea came about during a daily news meeting, when staffers were boiling down the factors underlying the global financial crisis and thought it would be funny to express them as simply as possible. Megan Garber has the background on Nieman Journalism Lab. We snipped out the 90-second segment below for your listening pleasure.

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