What got Jarvis so excited was a July 4 experiment in which the company’s 18 dailies published using nothing but free, web-based tools. They called this the Ben Franklin Project in recognition of both the country’s birthday and Journal Register’s liberation from ancient proprietary production systems.

More importantly, the company changed the way it reported the news for that day. Readers were actively involved at the front of the process in directing the reporting staff and looking virtually over reporter’s shoulders as stories were prepared. “The Ben Franklin Project is the beginning of a new era of an open and transparent newsgathering process,” wrote Paton on his blog. This is a company worth watching again.

He also quotes from an article by BBC World Service director Peter Horrocks that calls for an end to “Fortress journalism.” Horrocks writes, “In the fortress world, the consumption of journalism was through clearly defined products and platforms… but in the blended world of Internet journalism all those products are available within a single platform and mental space… the reader may never be aware from which fortress the information has come.”

In the world Horrocks describes, the audience pulls together its own newspaper, woven from bits and pieces assembled from various online sources. The consequence of this is that media organizations can’t afford to reinvent the wheel anymore. Each needs to focus on what it does best and pool efforts rather than duplicate them. So maybe 90 of those 100 journalists who currently attend a Presidential press conference can spend their time out in the field assessing reaction and gathering analysis rather than listening to the same thing. What a concept.

Miscellany

Advertiser optimism continues to grow. Advertiser Perceptions Inc. (API) reports that 32% of ad executives now expect to increase their ad spending over the next 12-months. That’s the largest percentage increase since API began asking ad execs about their intentions in 2007. A year ago, the figure was -5%. The 1,412 ad executives who were surveyed continue to be pessimistic about magazine and national newspaper advertising, with intentions to increase spending down 10% and 32% respectively. But even those sentiments are greatly improved over the -26%/-46% plans of a year ago. The biggest winners are digital and mobile media, with more than 60% of ad executives planning to increase spending there.

Speaking of pay walls, Time magazine now has one. Secure in its role as the only newsweekly left standing, the venerable but mostly irrelevant magazine is requiring readers who want to read online versions of its print article to subscribe to either the print or the iPad edition. They can then see the same stuff that’s in the magazine on a screen. Online-only content will continue to be free.

To test, go to gocirculate.com and create an account. The confirmation page contains a link to the toolbar software. You can then browse and add pages to the knowledge base. We were able to install the menu bar, but couldn’t log onto the site for some reason, and Circ Labs provides no means to recover a password. We guess that’s why they’re calling this a test.

And Finally…

Roy Rivenburg is still at it. The jokester who dreamed up Not the LA Times two years ago continues to tweak the nose of the West Coast’s most self-important newspaper. A recent story has Times editors arguing over whether it’s better to start articles with the time or the weather. The inspiration is this page of formulaic opening sentences extracted from the real newspaper. “If I don’t find out the time of day in the first sentence, I stop reading,” says one subscriber.

The best quotes were from Alan Murray (right), Executive Editor of Wall Street Journal Online, who at one point characterized Huffington Post and similar aggregation sites as “parasites.” Facing HuffPo Managing Editor Jai Singh (below left) at the other end of the stage, Murray one point asked, “Isn’t that the Huffington Post model? Go do something else and then we’ll let you be a journalist?”

Singh, a print journalist who was an early pioneer in digital news at CNet in the mid-90s, declined to engage in battle, preferring instead to carry the banner for a new kind of journalism. Defending HuffPo’s participative model, he remarked simply, “Community is fundamental to journalism online.” Huffington pays few of its contributors, rewarding them instead with visibility and Web traffic. Singh noted that  a blogger recently asked HuffPo to pull down a link to his sites because the traffic was crashing his servers. Murray conceded that the traffic from Huffington was gratifying.

Murray was a bit smug in pointing out that the Journal never gave away its editorial content and today generates about $200 million annually in digital revenue, or about double its $100 million editorial budget. “But how many other pubs are going to be able to get to same place?” he asked

Ellen Levine, editorial director of Hearst Magazines, didn’t seem particularly worried about that question, although she acknowledged that journalists will no longer have the luxury of being insulated from the business side of the house. “The most important thing I’ve learned in last 54 years is if you don’t understand the P&L, you are out of business,” she said.

Levine sees the market dividing into two camps, with disposable print on one end and high-end luxury magazines on the other. The disposable market will migrate quickly to readers like the Apple iPad, but Levine said luxury publications are going to be around for a while. “The day I can wrap myself in my iPad in the bathtub, that’s when magazines will be gone,” she said, drawing the biggest laugh of the session.

Investigative Journalism Under Siege

One thing all  panelists agreed-is that investigative journalism is under severe pressure because of lack of funds and reader preference for quick-hit sound bites. Investigative reporting “has been most challenged by the collapse of business models,” Murray said. “A team can work six months on a story and it will never be paid back.” Few viable alternatives to newspaper-sponsored investigative journalism have arisen. At the moment, ProPublica’s nonprofit approach appears to be working, but Murray questioned its scalability.  “ProPublica sets up investigative journalism as the equivalent of the opera or the symphony,” he said, choosing examples of organizations that are known to appeal to small, elite audiences.

Singh agreed. “Much of the news is commoditized. Investigative journalism is where the value is,” he said. But publications no longer get the mileage out of in-depth stories that they once did. Singh cited Rolling Stone’s blockbuster account last week of Gen. Stanley McChrystal’s insubordinate remarks about the Afghanistan war as evidence that exclusivity has almost ceased to be meaningful. “The Rolling Stone story was picked up by Time and Politico before it was published in Rolling Stone,” he said. Huffington Post has created a modest investigative journalism fund to help fill the gap.

Panelists agreed that it’s no longer viable for 100 newspapers to maintain Washington bureaus just to report the same news. “When I ran the Washington bureau [of the Journal] during the Clinton administration, there were 150 reporters chasing the same ‘blue dress’ story,” Murray says. “What’s killing the metro dailies is that they had monopolies. You can’t just differentiate by geography anymore.”

Investigative reports used to help sell magazines by enticing readers who were interested in one story to subscribe, Levine said. “That doesn’t work anymore. People just print out the article that interests them.”

Singh saw possibilities in that fact. “There is an opportunity to create products for people who just want to read one article,” he said. The others nodded, unclear about what that product should be.

Television journalism, which was never much to write home about in the first place, has become a pale specter of its former self as talent has fled the budget-strapped industry. On Tuesday, we chatted with Marijane Miller, who is one of those refugees. Miller is now a producer at WhatGives!?, a media company that creates programming to promote charitable causes. She spent more than 20 years in broadcast television, much of it producing documentaries and educational programming, and she worked on some pretty visible stuff.

Now Miller travels the country with a Sony videocam creating her own mini-documentaries of people doing work to make the world a better place. Miller said she became demoralized and frustrated during her last few years in commercial television as quality documentaries gave way to low-budget reality TV and voyeurism. Reality TV is anything but real, she told us. People who do stupid and outrageous things in real life are often only too happy to reenact their absurdities in front of the TV cameras. The sad thing is that many television producers these days are only happy to oblige.

The last straw for Miller was working on a reality program in which a person did something truly revolting. We won’t go into details, but Miller characterized the act as “sick. I thought they were going to throw the person off the program,” she said. “Instead, they asked him to reenact the scene.”

The happy ending is that Miller described WhatGives!? as a bit of a throwback to the golden age of television. “They just tell me to go out and find good stories and tell the truth, and” she said. “I haven’t had this much fun in years.”

This week the organization that is doing so much to advance the cause of innovation in journalism unveiled its list of a dozen winners of the Knight News Challenge, a contest that “funds ideas that use digital technology to inform specific geographic communities.” Not all the winners are focused on geographic applications (one proposes to combine reports from journalists embedded in Afghanistan with Facebook updates from soldiers in the field), but there are some innovative ideas in the group that will get enough funding to at least get off the ground. The best part is that the winners of the $2.74 million in grant money must make their inventions freely available.

You can read all the details at the page linked to above or watch the short video below, which quickly covers each project. What we like about all these ideas is that they’re doable with today’s technology (several are live  today) and they bring focus to the overused concept of “citizen journalism.” Most are also oriented toward leveraging geographic communities, which is where newspaper publishers absolutely must focus. We particularly like these brainstorms:

Pew gathered a year’s worth of data on the top stories discussed and linked to on blogs and seven months’ worth of comparable data from Twitter. The findings: The news that people discuss in social networks is a lot different from what the mainstream media discusses. Also, the type of media makes a different. Topics that are talked up on Twitter aren’t the same as those that get chatted about on YouTube.

Twitter is the techiest of the platforms. During the period measured, an astonishing 43% of news topics on Twitter related to technology, compared to just 1% in traditional media. On the flip side, mainstream media spilled 10% of its ink on the economy, compared to 1% in the Twittersphere.

Bloggers most closely matched mainstream media in the topics they discussed, but even they have a techie orientation. During the week of May 24-28, when most of America was riveted on the oil spill that threatened the entire Gulf Coast, bloggers talked mainly about Facebook privacy. Meanwhile, on Twitter the talk was all about Apple surpassing Microsoft in size.

The research draws some interesting contrasts in the styles that dominate these social media. In the year studied, “bloggers gravitated toward stories that elicited emotion, concerned individual or group rights or triggered ideological passion,” researchers said. On Twitter, in contrast, “The mission is primarily about passing along important — often breaking — information in a way that unifies or assumes shared values within the Twitter community.” There’s a narcissistic fascination with Twitter itself in much of this news. Still, Twitter was the only medium of the four studied that devoted significant attention to the Iranian election protests.

Pew also remarks on the attention-deficit style of consumption that dominates the Internet. Stories quickly pass from prominence into obscurity. “On blogs, 53% of the lead stories in a given week stay on the list no more than three days. On Twitter that is true of 72% of lead stories, and more than half (52%) are on the list for just 24 hours.”

Blogs shared the same lead story with traditional media in just 13 of the 49 weeks studied. On Twitter, it was just four of 29 weeks studied; just 5% of the top five stories on Twitter remained among the top stories the following week;More than 99% of the stories linked to in blogs came from legacy outlets such as newspapers and broadcast networks. On Twitter, the ratio was considerably different, with only half of the links going to legacy outlets;YouTube is the most international of the four platforms studied. One quarter of the most-watched news videos on YouTube were of non-U.S. events.

A few other striking findings:

What can we learn from this? For one thing, it appears that, when left to their own devices, long form social media practitioners gravitate toward a mainstream media model. The profile of blog content is remarkably similar to that of traditional media. This is probably a matter of the blogosphere reflecting its sources of information rather than the other way around, because, the survey also found that mainstream media reflect very little of what starts in the blogosphere. It does indicate that the topics covered by mainstream media match pretty closely the interests of people who care enough to compose thoughtful commentary about the news of the day.

It’s also clear that bloggers need mainstream media, although maybe not as much as media professionals would like to believe. The research found that 80% percent of the mainstream media citations from bloggers went to just four outlets: the BBC, CNN, The New York Times and the Washington Post.

Twitter and YouTube are not cast in the same mold as blogs. Those outlets reflect a specific set of interests, most notably the digirati who use Twitter. It’s also interesting that the research found such a small percentage of content devoted to technology on YouTube, but that may be due to the nature of the medium. Most computer stuff isn’t very visual.

There’s nothing in these results to indicate that blogs are going to replace mainstream news anytime soon. “Bloggers gravitated towards stories that elicited emotion, concerned individual or group rights or triggered ideological passion,” the survey authors wrote. In other words, blogs are commentary, not news.

Miscellany

Yahoo is continuing its slow crawl into the world occupied by news outlets. In the past year, the company has hired several editors to staff a fledgling news bureau and acquired Associated Content. Now TechCrunch says Yahoo wants Huffington Post. The two are in a content syndication deal and Yahoo may even try to acquire HuffPo, although the price is probably prohibitive.

Huffington Post is now the biggest blog on the planet, TechCrunch says, with more traffic than NYTimes.com. It’s on track to generate $100 million in revenue next year, making it a pricey acquisition for the struggling Yahoo. Meanwhile, Google continues to insist that it’s not interested in getting into the original content game, indicating that Yahoo may be the bigger threat to traditional publishers.

The article quotes Sambrook as saying that Edelman realizes its clients can now take their message directly to the consumer. “”The walls of the traditional box of PR are falling away and Edelman is taking the opportunity to move into new territory,” he said. “We are at a moment when a lot of the traditional lines between PR and consulting and advertising and broadcasting are blurring.”

This trend may make a lot of traditionalists cringe, but it’s clearly gathering momentum. In recent weeks we’ve talked to several business bloggers who are refugees from flailing media operations. The question is whether businesses have the guts to let these journalists do what they do best or if they will try to box them into the traditional role of corporate shill. It’s unlikely that people like Sambrook will tolerate the latter approach, which is why his hiring has considerable symbolic importance.

Lewis Dvorkin of True/Slant

They range from Demand Media, which generates assignment lists based entirely on search terms, to Global Post, which hopes to charge readers for direct access to its foreign correspondents. A few themes are apparent through many of the business models. One is their reliance upon search as both a guide and a source of revenue. New-age publishers see Google as the pulse of reader interest and have tuned their models to respond, in some cases, in near real-time. Another is that they pay very little for journalism.

Rice visits True/Slant, an operation that uses a digital speedometer to match content on its site to trending topics on Google and Twitter. Thousands of writers contribute to the service, which posts about 125 articles a day. Journalists are paid a fraction of what that would make at traditional media organizations, but at least there’s a little money in the work. True/Slant has only five full-time staff and about 300 contributors. “It’s not so much a unified publication as a loosely connected commune of bloggers, who generate a continual stream of content with minimal editorial intervention,” Rice writes.

The 125-story-per-day figure may sound like a lot, but it’s a pittance compared to the daily output of Huffington Post (500) or Examiner.com (3,000). These publishers produce news in the kind of volumes meant to serve picky advertisers, who only buy proximity to certain keywords. Since advertisers don’t have to waste money on audiences they don’t want any more, the publishing model being built by these new companies is to churn out huge quantities of content and serve lots of niche advertisers.

Everything is search-optimized and, in some cases, search drives the boat. Demand Media actually assigns stories based upon search popularity. Freelancers pick from a list of topics culled from popular search queries and turn out articles and video that post to sites like eHow, which has a revenue-sharing agreement with Demand. No story is assigned unless there’s a high probability it will pay for itself.  Demand “says these mathematically generated ideas are 4.9 times as valuable as those devised by mere human brainstorming,” Rice writes. Journalists get $15 to $20 per item and Demand Media booked $200 million in revenue last year.

The new economics of search-driven publishing have thrown open the question of how much journalism is worth. Contributors to many of the sites Rice describes are paid anywhere from $10 to $25 per contribution. Search advertising is such a low cost-commodity that one publisher estimates a journalist needs to attract 1.8 million monthly page views in order to earn a $60,000 annual salary.

If all of this makes you slightly nauseous, you’re not alone. Many of these emerging business models play to popularity as measured by search volume. Nor surprisingly, sex and sin sell. “Writers and editors know that click-driven Internet economics tend to reward lowbrow gimmickry. They have to decide whether to work around that or to embrace it as a fact of life,” Rice writes. Some new models play directly to the will of the crowd, such as Henry Blodget’s (yes, that Henry Blodget) gossipy Business Insider and Demand Media.  Other new operations, like GlobalPost, The Politico and Awl, are attempting to produce thoughtful journalism and make money at it, mostly through creative use of alternative funding sources.

The elephant in the corner is the rising interest of businesses in inserting themselves into the media stream. Nearly everyone Rice interviews agrees that the companies that pay the bills want – and deserve – a role in determining  content. True/Slant, which is run by 57-year-old former newspaperman Lewis Dvorkin, gives its advertisers the same tools to contribute to the news stream as its reporters. “It’s the way the world is moving,” Dvorkin says.

Carlton isn’t a publisher. She’s a career public relations professional who set out a little more than a year ago to figure out a way to drum up new business in a dismal economy. She knew that there were still plenty of innovative companies in the area that were starved for visibility. Finding investors and customers in a crummy economy was a time-consuming, trial-and-error process. The few conferences that were available for such purposes were either expensive or subjected applicants to long and seemingly arbitrary approvals processes.

Carlton hit on the idea of a cheap, frictionless approach she called Mass Innovation Nights. The events would be free to everyone. Entrepreneurs could show their stuff and hope to catch a big break.

Carlton borrowed meeting space from a local museum.  She partnered with Dan Englander of High Rock Media to build a website and a Twitter account and started promoting Mass Innovation Nights entirely through online word of mouth.  There was no hype and no inflated expectations. If the event bombed, then attendees got what they paid for.

Only the event didn’t bomb. MassInno, as the affair is now known, is a raging success, with exhibitors now competing for limited space. The most recent meetup was tweeted more than 600 times and drew more than 400 attendees. Carlton is toying with the idea of syndicating the idea across the country.

Today, Carlton has so much business coming in from startups that were boosted by Mass Innovation Nights that she’s having to refer work elsewhere. That makes her a popular person in the depressed local PR economy. Partner High Rock is booming, too.

Why was one woman able to exploit a simple idea at almost no cost while media institutions with hundreds of employees stood by and watched? Because newspapers didn’t think it was their job. They believed they were in the advertising delivery business, not the business of growing the local economy. Newspapers that continue to think this way will shrivel and die over the next few years. But there is a path to salvation. It’s in doing what Bobbie Carlton is doing on a grand scale. But how many publishers are willing to make the sacrifices to seize that opportunity?

The Folly of Paywalls

Newspaper publishers are confronting their current business challenges in the wrong way. They’re trying to battle online competition by becoming more like their competitors, building massive online presences to serve global audiences when their advantage is inherently local. They’re also hyper-focused on a source of revenue – advertising – that will only become more competitive and less profitable in the future. They need to change the rules.

The eyes of the industry are currently trained on The New York Times, which is trying to re-bottle the evil genie it released 15 years ago when it elected to give away its content for free. The Times’ paywall experiment will be modestly successful because it is The New York Times. Publishers in Baltimore, Dallas, St. Louis and hundreds of other cities will be unable to exploit the idea, however, because they lack the Times’ brand and international reach. Paywalls are a waste of time.

Instead, publishers should concentrate on diversifying their revenue streams away from advertising and into local business services that promise stability, growth and a future. This is a market in which they have a natural advantage. Small business is the one great untapped revenue opportunity left in America, which is why giants like American Express and Bank of America are practically throwing money at the market. But these global companies lack the local connections and the feet on the street to truly become partners in small business success. Local newspapers have that advantage.

Most major metro dailies have long regarded local business advertising as the cherry on top of the sundae of display contracts from national advertisers and department stores.  Local businesses fueled the classified section, but counted for only a small part of the total revenue picture. Now national advertisers are marketing directly to customers, classified advertising has collapsed and local businesses are publishers’ only hope for a future.

The Local Opportunity

Look at the merchants in your local community. Most don’t know the first thing about marketing. Few are even very good at managing their businesses. Marketing is tough for little guys. They spend their dollars on a mishmash of coupons, flyers, Yellow Pages listings, classified ads and occasional radio and television.  Few of them track ROI or have any means to assess the performance of these investments. Online, they’re practically invisible. They know nothing about search marketing or customer relationship management (CRM). In short, the kinds of sophisticated analytics and tools that big companies use are out of reach to mom-and-pops. Lots of businesses want to market better, but they don’t have anyone to teach them how or give them a cost-effective platform to do so.

News organizations can be that platform. They can start by delivering a basic package of marketing and business services on a subscription basis and expand as local conditions dictate. They can potentially manage many of the overhead and backroom activities that sap small business owners’ time. Here are five ways news organizations can monetize this opportunity. There are plenty more where these come from:

Website Development – Few small businesses know anything about the Web.  Outside of restaurants and entertainment providers, most have websites that are little more than online brochures, if they have websites at all. Their sites aren’t optimized for search, don’t deliver calls to action and have no means to retain visitors as subscribers. Forget about analytics. If small business owners want to adopt new platforms like blogs or Twitter, they either pay outside consultants or figure out the tools through extensive trial and error.

This is a huge opportunity for news organizations. These companies have long-term relationships with business customers, local credibility and expertise in publishing. They can deliver advanced online features like e-commerce, e-mail marketing, search optimization and analytics at low cost by leveraging economies of scale. There is no reason why the local newspaper publisher can’t also be the dominant provider of online services to local businesses.

Affinity Programs – Every hotel, airline, national retailer and supermarket chain has a loyalty program these days.  The reason is simple: they work. Customers who carry affinity cards typically buy between 10% and 30% more product from the merchants who offer the programs than from those who don’t. Unfortunately, few small-business owners have the option of participating.  The administrative overhead is high and customers won’t carry cards for every merchant in their community. News organizations could set up these plans as cooperatives, allowing groups of noncompetitive businesses to participate at a modest cost.  Commercial grade analytics could be bought and scaled to provide reporting that demonstrates the return to business owners.  Revenue would come from the fees paid by the participants and potentially even subscribers to premium buyers clubs.

Events – Lots of small businesses would like to use event marketing to share their expertise and meet new prospects, but if you’ve ever tried to stage a promotional event, you know what an ordeal it is. The details and hidden costs can be overwhelming and few small businesses have the means to manage the leads that result.  Again, publishers can come to the rescue.  By building expertise at event management and applying it to different businesses within the community, publishers can provide targeted thematic events (for example, outdoor recreation or pet care) at a scale and cost that makes them affordable to local businesses. They can gather and manage leads that result and create marketing programs that optimize them for their customers. The news organization becomes a business partner and consultant, not just an outlet for advertising. There’s even the possibility of generating fees from event attendees in some cases.

Value-Added Advertising – Craigslist has won the war for the low end of the recruitment advertising market.  Publishers need to stop mourning the loss of this commodity business and move the bar higher. Christopher Ryan and Steve Outing published a manifesto for competing with Craigslist more than a year ago. Unfortunately, few publishers seemed to have noticed.  We won’t try to reinvent their wheel; ReinventingClassifieds.com has some great ideas publishers can apply to take advantage of their local reach and marginalize Craigslist.

For example, they can offer real estate agents or car dealers video walk-throughs of the products they sell. Or they can provide peer recommendations like Angie’s List (more than one million members at $35/year). They can tweet ads and push them to mobile phones. They can even provide transaction and fulfillment services that Craigslist can’t. In short, they can do all the things that Craigslist doesn’t do and build these features into a monthly subscription service that makes them all but invisible to the customer.

Transaction Fees – If you’ve ever used Ticketmaster, you’ve experienced the sticker shock of discovering that those $40 Nine Inch Nails tickets carry an eight dollar “convenience fee.” But you pay it because it’s easier than standing in line for two hours. Publishers can tap into that revenue stream.

The local garden show probably isn’t interested in ticket brokering. It may outsource the task to TicketMaster for the sake of convenience but it would really be interested in using a local organization that could combine fees with demographic marketing, behavioral targeting and amenities like e-commerce. Who better to deliver that experience than a service provider that knows the local community? Do you think restaurant or hair salon owners would like to have automated scheduling? The newspaper could provide that, too, with fees from the buyer, the seller or both.

Bottom Line

The five scenarios outlined above are just a sample of the opportunities available to local publishers once they stop thinking of themselves as advertising vessels and become partners in the success of local businesses. At their core, newspapers are marketing tools. Instead of simply providing advertising space, publishers can become marketing consultants, value-added resellers and service bureaus. They can offer the kind of expertise and analytics at a price that mom-and-pops can finally afford.

There are many more possibilities: Publishers could offer accounting, tax preparation, creative services, executive recruitment, business telephony, technical support, facilities management, order fulfillment and so on. Where they lack in-house expertise, they could partner with local providers under an approved-vendor program. Does this mean publishers might compete with their prospective advertisers? Sure, but how many of those companies are advertising now, anyway? Members of the approved-vendor program could potentially buy bigger schedules from the publishers who feed them business.

Back to the Future

Few publishers will choose to pursue the business model outlined here. It’s too hard. Departments such as circulation will need to be downsized or eliminated. Sales people must be retrained or released. Experts must be hired in new areas and partnership networks will have to be formed. New services will have to be created and priced, software licenses acquired and technology infrastructure put in place. These changes are painful, but reinvention isn’t pretty. It’s easier to sit and hope that paywalls will succeed in letting you do what you’ve always done.  Good luck with that.

If this transformation sounds radical or risky, consider that it’s already been done. More than 20 years ago, many computer companies faced the same kind of near-death experience that confronts newspaper publishers today. Their core hardware products, which generated 80% margins, were suddenly assaulted by cheap, standardized components. Many of these companies died or were acquired, but a few, like IBM and Hewlett-Packard, took the strong medicine that was necessary to transform themselves. Today, IBM derives more than half its revenue from services, a revenue stream that barely even existed 20 years ago. Its 2008 revenue was a record $103 billion. HP made the shift even earlier. Twenty years ago, it was less than one-fifth IBM’s size. In 2009, it was bigger than IBM.

Thanks for sticking with us through this long essay. Now tell us what you think. Are we off the wall or could business services be the prescription that nurses this dying industry back to health?

Their oped  raises an important point about the influence of traffic on journalistic quality and the declining value of circulation. As we noted last September, circulation at some of the country’s largest magazines is down between 60% and 75% over the last eight years. This threatens the business models of these publications and the journalistic standards that they support. Here’s why.

Circulation is a complex and arcane discipline that is critical to the health of publications. Publishers manage circulation carefully, each seeking an ideal balance between subscription and newsstand sales. For consumer publishers, a high percentage of newsstand sales creates subscriber churn which delivers new blood that is desirable to their advertisers. For professional and trade publishers, many of which don’t distribute on newsstands, renewal rates signify reader loyalty, which their advertisers crave. In all cases, circulation quality is at least as important as circulation quantity.

All magazines have paid subscribers who contract to receive the publication for a defined period of time, regardless of whether they actually read it. Subscriptions provide a degree of security for publishers because they increase the likelihood that a reader’s perception of the product will be shaped over time rather than by one headline. One of the reasons newspapering has been such a stable business for so many years is that renewal rates for newspaper subscribers have been astronomically high. Subscriptions create incentive for publishers to produce information that has broad appeal to their target audience. While some would argue that this leads them to “dumb down” content, it also gives them the luxury to deliver information they believe readers need to have, even if they don’t want to have it.

Google Is the New Newsstand

On the Web, of course, there is no circulation. While a few professional publishers do limit access to their content to paying subscribers, most rely upon search engines and referral links for the traffic that sustains their business. This severely disrupts their business models. When the luxury of subscribers is gone, publishers must compete for readers on every single story. This means that speed, sensationalism and search-friendly headlines like “Top 10 Tips for Whiter Laundry” become more important factors in delivering a volume of visitors that can be monetized (Consumer magazines honed this to a fine art years ago). It also creates an incentive to shortcut quality for timeliness. A notable example of this was the death of singer Michael Jackson last June, which was first reported by the celebrity gossip site TMZ. The Los Angeles Times reportedly had the story at the same time but held the news because of lack of verification. Quality lost out to speed.

The impact of the industry’s shift from subscriptions to search results and links is enormous. Publishers now have to compete on every single story, which means anything that doesn’t deliver a large audience is bad. You can imagine how this influences reporting on niche topics. It also creates an incentive to make stories bigger than they really are. The problem is compounded when editors are rewarded solely on the basis of page views. Balance gives way to expediency and errors are more easily excused when they can be quickly and quietly fixed online.

Navansky and Lerner implore people who care about journalistic quality to “take up the challenge of debating and discussing — and, we would add, codifying — the values, standards and practices that ought to prevail online.” It’s an admirable call to action but unlikely to result in any enforceable standards. As long as publishing success hangs on a thin thread like traffic, the temptation to practice bad journalism will remain strong. If publishers can come up with a persuasive way to sell the quality of their audiences, then the tide might begin to turn. Until then, we’re going to see a lot of articles on whiter laundry.

There are 10 full-time and several adjunct faculty at the only journalism school in the 64-campus SUNY system, and I met with many of them, including Dean Howard Schneider and Undergraduate Director Paul Schreiber, both of whom are 30+-year Newsday veterans. The school is only four years old and isn’t much burdened by the calcified thinking that tends to set in at more established schools. The fact that they would actually invite an iconoclast to visit demonstrates that. We didn’t agree on everything, but we had vigorous discussions, and that’s what counts.

Three things in particular impressed me about the program:

• The faculty has completely bought in to the idea that students must learn to work in multiple media. That doesn’t mean they force a gifted writer to become a video producer, but they do insist that their students master the tools that they will need to survive in a digital media world. They’ve even built a futuristic newsroom with all the tools and sources that students need to master.
• A “News Literacy” program is offered to the entire school and even to outside educators. These courses are aimed at teaching students in different concentrations to understand how media works so that they can become better communicators and smarter consumers. It’s a great idea that could be the foundation of growth for the entire journalism program.
• All journalism majors are required to take an ambitious slate of courses in one of four multidisciplinary concentrations: Public Affairs, Diversity and Society, Science and the Environment, Global Issues and Perspectives. The idea is to get students started on a concentration early in their careers. That’s smart thinking, since the days of the general assignment reporter are basically over.

Radical Thinking

The advice I shared with the faculty should come as no surprise to regular readers of this blog, but here’s a summary:

• The core principles of journalism – accuracy, fairness and trust – are more important than ever in a world that’s awash in opinion, speculation and rumor. Don’t stop teaching these skills.
• Entrepreneurship should be a core competency for any aspiring journalist because the institutions that sustained careers in the past won’t be healthy or even available in the future. Students must learn to take responsibility for their own success.
• Not-invented-here thinking is death. Journalists must learn the skills of curation and aggregation because their audience is no longer seeking more information but rather ways to manage the overwhelming amount of information they already have.
• Media democratization can be an opportunity or a threat, depending on how you look at it. The opportunity is in the fact that professionals in nearly all disciplines will need to be skilled communicators in order to get ahead. Journalism education should become part of core college curricula. However, this may require blowing up some existing journalism schools and spreading those resources throughout other departments. Most journalists still see democratization as a threat; educators that choose to see opportunity can quickly move ahead of their peers.

I wrapped up the day by speaking to one of Prof. Barbara Selvin‘s classes. I took the opportunity to haul out the Flip cam and ask seven journalism majors why they’re bucking conventional wisdom. Their responses were encouraging. See the brief video

In it, Loyola journalism professor Michael Giusti (right) makes a misguided assumption that the print media model is going to be just fine, basing his conclusions on the assumption that the worst is over, advertising activity is starting to pick up again and that his own reading habits can be projected out to the general population. We hope this isn’t what he’s teaching his students, but we suspect otherwise.

Giusti does have some interesting figures from Lee Enterprises to support his point. They show a 50% drop in classified advertising revenue compared between 2006 and 2009, compared to just a 20% decline in display advertising. Giusti finds reason for optimism in this fact, based on the assumption that a recovering economy will stimulate the latter category while the worst is over in the former. Even better, newspaper publishers have largely completed their cost-cutting initiatives and will learn to make due with smaller staffs.

“With their leaner personnel roles, newsrooms can continue operating within their tighter post-Craigslist budgets. Most publicly traded newspapers are now posting positive numbers, and many are even on track to post profits for the first quarter of this year.”

This conclusion appears to assume that nothing will change in the future, but evidence indicates otherwise. The Internet  recently became the world’s largest advertising market and it’s going nowhere but up in the foreseeable future. Meanwhile, newspapers who  have lost the young audience are focused mainly on milking whatever revenue they can out of an aging reader base while doing little to prepare for a digital future other than trying to charge for the content they now give away. This is not a healthy state of affairs.

It’s disturbing to see such blind optimism from someone who is supposed to shape young minds. For starters, the core problem for newspapers isn’t Craiglist but efficiency. Advertisers now have vastly more leverage in the way they invest their dollars than they did a few years ago. What’s more, the online competitors that newspapers face operate far more efficiently than print publishers do. The cost of advertising is only going to decline further in the future. Publishers are enjoying a respite right now because of the slowly recovering economy and the benefits of cost-cutting over the last two years, but to believe that the worst is over and the future is bright is to take a dangerously optimistic point of view. The business model is anything but “solid;” it is on very shaky ground.

Also, Mr. Giusti’s statement that “I plan to read my newspaper in its paper edition long into the future” demonstrates that he is out of step with his students. We addressed a class of public relations seniors at a major university last week and asked our usual question: How many of you have read a print newspaper in the last week? Out of a room of 25 students, one hand went up. This is par for the course in our experience with young communicators and it indicates that while Mr. Giusti may plan to read his newspaper far into the future, very few of his students will.

Online News Readers are Tech-Savvy

Alan Mutter quotes new research demonstrating that visitors to newspaper websites are more technologically savvy than many of us would believe. The research by Greg Harmon found that online newspaper readers are about the same age as their print-focused counterparts but are 1.5 times more likely to own a smart phone. He also quotes Harmon characterizing as “stunning” the finding that 30% of these readers are hungry to buy an Apple iPad.

It seems that the usual pattern in consumer gadget purchase is that about twice as many people plan to buy a gizmo at any give time as actually own it at that moment. But Harmon discovered that in the case of the iPad, five times as many online newspapers readers plan to buy it or some other kind of e-reader as currently own one.  This suggests that newspaper enthusiasts are keen to embrace the new technologies, a finding that should encourage news executives to get off the mushrooms on which they’ve been sitting since late January and start figuring out how to turn these loyalists into e-reader subscribers.

Sadly, the whole newspaper industry has been gloomily silent in that time. Perhaps they’re waiting for the population of iPads to reach critical mass – by which time someone else will have captured the market – or maybe they don’t know how to offer a differentiated product on a portable digital platform. Here’s an idea: regional aggregation. And there’s more where that came from if you’d care to give us a call.

Miscellany

The Financial Times must be thinking it has figured out the paywall model. The British business daily has completely eliminated free access to its content, except for readers who arrive from Google. Previously, FT.com visitors got five articles per month for free and 25 if they filled out a free registration form. Now those thresholds have been reduced to 0 and 10 stories, respectively. Annual subscriptions cost as much as $550.

A scan of the site reveals that readers do complain vociferously about seemingly ridiculous things. Jenkins, who fields reader letters as part of her job, estimates that only about 1% of communications from readers are positive. The most common complaints: alleged favoritism toward a particular restaurant/school/candidate and the classic “You’re just a bunch of bleeding-heart liberals” accusation. She invites you to submit your own favorites, whether from print, broadcast or online.

And Finally…

Reporters are editors disagree all the time, but rarely do you see their differences erupt in the way they did between these two TV newsmen in a recent exchange. We assume these guys don’t often go out for beers after the evening newscast.

Garfield was interviewed at the South by Southwest conference in Austin, where the people who are incubating the changes he describes have gathered for their giant annual mind meld. Running time: 19:17.

Bob Garfield on Media in Chaos from Newspaper Death Watch on Vimeo.