Not to harp on The Politico, but we continue to be impressed by the stunning success of this for-profit venture whose value is built on delivering – gasp! – quality journalism. To those who mourn the newspaper industry’s implosion as foreshadowing the end of public service reporting, we point to this news boutique as an example of What Might Be. MediaBistro’s Fishbowl NY has a brief but interesting interview with Politico co-founder Jim VandeHei, who comments on the appeal of his unique business model. The focused mission is to “provide the fastest, smartest, most essential coverage of Congress, the White House, politics and those who try to influence all three.” And not to rely on classified advertising, which is one reason things are going so well.

A vandal disrupted distribution of the Boston Herald Wednesday morning, just two weeks before the paper plans to shut down its printing plant and outsource the operations to the west. Someone who apparently knew what he or she was doing cut several belts and wires on collating machines. Workers scrambled to compensate, but not all subscribers got their Heralds that day. The unions denounced the vandal’s actions. Members stand to get severance benefits – but only if the transition to the new printer goes smoothly.

Steve Outing comments on NYU journalism professor and Pressthink blogger Jay Rosen’s initiative to get his Twitter followers to submit accounts of reporters who document untruths by the McCain presidential campaign. You can see some of the results here. Outing things social networks are a great way for people who share common interests to quickly self-organize around a common goal, such as the one defined by Rosen. Unfortunately, the tools can also be misused. In an update, Outing notes that some troublemakers are now trying to subvert the effort.

Somebody help this guy, if you know him. He needs a hug.

Appropriately named columnist Joe Grimm has useful advice for a newspaper veteran who fears he’s about to lose his job. 

Layoff Log

News has been trickling out about planned cuts at the Raleigh News & Observer, but some numbers are finally available: 53 people, including 20 newsroom staffers. Among the notables leaving the N&O: TV columnist Danny Hooley, illustrator Grey Blackwell, consumer-affairs columnist Vicki Lee Parker and book editor Marcy Smith. Cartoonist Dwane Powell, who earlier said he would scale back to part-time but keep his job, has also decided to leave. Most of the cuts were achieved through buyouts, but some layoffs were necessary. The N&O already cut 40 positions earlier this year.

Pittsburgh’s largest newspaper, the Post-Gazette, told its staff to expect layoffs soon. Meetings between management and union leaders to discuss the specifics begin next week. The closure of a major department store (and advertiser) downtown hasn’t helped. Stay tuned.

The Kenosha (Wisc.) News plans to lay off three full-time and three part-time employees, all from editorial.

The Tacoma News Tribune will lay off one employee and buy out 17 others in continuing reductions that have reduced its workforce by 100 people this year.

And Finally… 

How appropriate. Now you can generate your own tombstone messages for free. Tombstone Generator creator J. J. Chandler has left plenty of space for you to wax eloquent about the dearly departed – or those whom you wish would depart. 

Technorati has come out with its annual State of the Blogosphere report and some numbers are truly eye-popping. The site found blogs in 81 languages and daily posts are closing in on one million. Nearly 185 million people have started a blog (although most don’t tend them regularly). Newspapers have the bug: 95% of the top 100 US newspapers have reporter blogs. Four in five bloggers post brand or product reviews and 90% of bloggers say they post about the brands they love or hate. Most bloggers who accept advertising make a profit. Technorati did a big survey and got comments from various media influencers. We haven’t had a chance to read it all yet, but if you’re interested in publishing, you should check it out.

Meanwhile, The Politico, which is one of the more promising Web-only journalism ventures, is expanding. It will add employees, grow circulation of its Washington-area newspaper and and print more often. The staff will be expanded to at least 105 from its current 85. Circulation of its Capitol Hill newspaper will be increased 20% to 32,000 and a Monday issue will be added. All this will happen after the election, which is The Politico’s busiest season, but officials said there’s going to be plenty of news to keep people busy. Also, they expect to reach profitability next year, far ahead of schedule.

And perhaps there’s gold in them thar websites. BIA Financial Network and Borrell Associates have a new study that estimates that newspaper websites are the most lucrative local media around, with valuations of the largest properties reaching $450 million. That makes local alternatives like TV and radio small potatoes in comparison. “Given their growth potential, the value multiples of media Web sites may be 2 to 4 times that of the core business,” the BIA president is quoted as saying. The study also praises the strong cash flow at media websites. The problem is that growth is slowing. BTW, the $450 million number is only for the largest properties, so don’t get too excited. We estimate the market value of Newspaper Death Watch is about $1.23.

Miscellany

In the department of publishers that still don’t get it, we’d like to include The American Scholar, which publishes a provocative list of “12 Questions about the future of journalism” by Bill Kovach without offering visitors a way to respond. Um, guys, that’s part of the problem.

In chaos, there is opportunity, or at least that’s what Michelle Rafter says. She points to new launches at Slate, The Wall Street Journal, Silicon Valley Insider and Forbes as evidence that there’s opportunity in business journalism right now. Just make sure you get cash up front.

Death is good business, it seems. Tributes.com, which runs obituaries and related memorial messages, is teaming up with The Wall Street Journal to create a print counterpart to the website. For $80, you can buy a listing on Tributes.com where you can post photos and memories of a departed loved one. Now, for an additional $250, you can run your message in a dying medium, too. Tributes is a startup that was spun out of Eons, a social network for the over-50 crowd. Both are the brainchildren of Monster.com founder Jeff Taylor.

In the 80s, New York City brought us the Village People. Now it brings us TimesPeople. That’s The New York Times‘ new social network. “TimesPeople provides NYTimes.com readers with a way to share their thoughts and recommendations about The Times‘s content with other readers, making their public activities on the site more open,” says a company press release. Apparently you can only share your thoughts about Times content, not anybody else’s, which we suppose makes sense. You can also see the most recommended articles. The Times is a latecomer to the social networking world, trailing The Wall Street Journal by a whole eight days.

Scott Karp analyzes Matt Drudge’s influence and concludes “It’s the Links, Stupid.” The action in online publishing is in filtering and linking, not corralling your audience, he says. Drudge is successful because he tells cable TV and radio reporters what’s important and that shapes their daily broadcasts. Newspapers, in contrast, tend to tell people only what’s important in their pages on any one day, and that’s far less interesting to readers than a guide to that vast Worldwide Web. “In the web media era, when all news content is accessible by anyone, anywhere in the world, and no news brands no longer have a monopoly over news distribution, the power of influence lies in the ability to FILTER the vast sea of news,” he writes.

Layoff Log

• The Anchorage Daily News is reducing its staff by about 10%, laying off 13 employees and holding another dozen positions vacant.
• The Raleigh News & Observer has started making cuts after only 16 newsroom employees accepted a buyout offer. Its editorial cartoonist, a 33-year veteran, and ombudsmen will be cut back to part-time but their jobs won’t be eliminated.
• The Pittsburgh Post-Gazette is going to buy out or lay off workers unless it gets concessions from its unions. Between 10 and 20 Teamsters will lose their jobs, according to a union spokesman, but that’s just the beginning. The paper’s Ohio parent has been losing money for years and is threatening to sell its Pittsburgh property.
• As if the Seattle Times Co. didn’t need more headaches, now the truck drivers are threatening to strike. About 70 truckers could walk off the job on Oct. 21 in protest over the company’s bid to outsource its trucking to Penske Logistics.
• Threats by the publisher of the Newark Star-Ledger to close the paper if cost-cutting goals can’t be met have apparently put a bee in the Jockey shorts of the local union. The union representing 400 mailers at the paper agreed by a 10-1 margin to a three-year wage freeze and buyouts of a quarter of its members. The Star-Ledger is still looking to buy out another 200 of its 750 full-time nonunion employees.

John Yemma

The Christian Science Monitor marks its 100th anniversary this fall, and the publisher is celebrating by re-emphasizing its commitment to thoughtful journalism. The Monitor has long been a maverick of the American newspaper field. It’s based in Boston, but that’s almost irrelevant to its role as an international observer. In the tradition of The Wall Street Journal and The Economist, the Monitor sees itself as a newspaper of record for citizens of the global community, but without the financial bias. The Monitor provides sober analysis of world events for an educated audience. Its 100 writers and editors emphasize explanation over immediacy. This approach is sometimes at odds with a market that increasingly values form over substance, but it is a badly needed service in a world of decimated reporting staffs and shrinking bureaus.

The nonprofit Monitor enjoys a healthy subsidy from the Church of Christ, Scientist, but the goal is to make it financially self-sustaining by leveraging new-media tools and targeted advertising. In July, the Monitor recruited Boston Globe veteran John Yemma as its new editor. Yemma clearly understands the dynamics of the changing newspaper field. Although a veteran of print, he spent his last three years at the Globe overseeing the newspaper’s multimedia operations and campaigning to pull its ink-stained editors into the online world. A soft-spoken and thoughtful man, he sat down with Newspaper Death Watch to discuss the realities of the new reader-driven world and how he hopes the Monitor can serve as a model for other publishers.

The one-hour interview is available as an audio file by clicking on the link below. The following time-stamped show notes direct you to important points in the conversation. Time stamps appear on the left with corresponding comments on the right.

[audio:http://www.newspaperdeathwatch.com/audio/Yemma.mp3]
Listen to the interview (1:00)

[audio:http://www.newspaperdeathwatch.com/audio/Yemma.mp3]

Venture capitalist Esther Dyson

MediaPost assembles a panel of a dozen experts to discuss the future of media. They include top editors, marketers, regulators and technologists. While there’s no single conclusion to this long and varied discussion, the group agrees that marketers’ focus is shifting away from content and toward audience. Publishers who attract the right audience – in whatever medium – will win.

Technology enables those audiences to be smaller and more focused than in the past. There is nearly unlimited opportunity to define and attract these new groups online. As a result, the group agrees that it’s a great time to be a publishing entrepremeur. They point to sites like Dopplr and yappr as examples of new Web 2.0 ventures that creatively combine member contributions in ways that amplify the value of the group. This community publishing model has explosive potential, they believe.

Much of the discussion centers on the future of newspapers. While there’s no consensus on where the business is going. everyone agrees that the economics of mass distribution are becoming irrelevant. “A newspaper is going to kind of bifurcate into, on the one hand, a magazine with pictures, perhaps, and then something online where the news is actually up to date, and where you get news that’s tailored for you,” Dyson says. “I want to know what’s happening in my own neighborhood. I want to know which of my friends broke up and that belongs online, because the economics of mass distribution doesn’t make sense.”

Miscellany

Poynter interviews Pulitzer Prize-winning columnist Connie Schultz of the Cleveland Plain Dealer about the secrets of her craft. There’s good stuff in there about how to connect with communities, which is a skill Schultz has evidently mastered. Check out the organization of this piece, too. It’s an audio interview chopped up into small segments, each of which has its own text description. Very user-friendly.

We noted recently the surprise announcement by the publisher of The Sun of New York City that the paper would go out of business shortly without an infusion of cash. The New York Times has a nice account of how The Sun came to be, although at times the piece reads like an obituary.

The Duluth News-Tribune is laying off eight people and eliminating two sections, but it’s also make some strategic moves to prepare for a brighter future.  Executive Editor Robert Karwath explains.

Investors were all aflutter at the news late last week that Mexican billionaire Carlos Slim had purchased a 6% interest in The New York Times Co. Slim, whom Forbes estimates to be the world’s second richest man behind Warren Buffett, has made his fortune principally by buying low and selling high. It helps that he owns one of the world’s largest privatized monopolies, Telefonos de Mexico, which he acquired in 1990.

Shares of NYT jumped nearly 15% on Thursday on the news, helped by Slim’s statement to reporters that his interest in the publisher was “purely financial.” Are newspaper stocks finally going to be perceived as the bargain investors believe them to be? Probably not, argues The Wall Street Journal‘s Martin Peers. Writing in Thursday’s “Heard on the Street” column, Peers notes past failures by investors who tried to wrest control of the Times company from the controlling Ochs/Sulzberger family. He also brings up Slim’s $2 billion bet on failed retailer CompUSA as an example of the billionaire’s fallibility. Finally, he points to the lofty price/earnings ration of the NYT Co. – more than 20 right now – as reason to “see Thursday’s pop in Times stock as a selling opportunity.”

Tech Publisher Bucked Trend, Cashed in With Print

In the publishing market for technology enthusiasts, print has almost evaporated. That’s what makes O’Reilly Media’s Make magazine so remarkable. Make was launched well after the destruction of the technology print media had already begun. The publishers thought there was value that print brought to their target audience of tinkerers that couldn’t be reproduced on a Web page. Not that the Internet isn’t important. In fact, most of Make‘s circulation development has been done on line. The publication also hosts a series of popular fairs where readers show off their inventions. But in a market that has largely turned up its nose at print, Make is a notable – and profitable – exception.

In this podcast, publisher and editor Dale Dougherty tells of the counter-intuitive wisdom that led to the creation of the Make brand. The speech is only 17 minutes long, but it will remind you of the value that print still brings to the publishing equation when applied sensibly.

Rx for Newspaper Websites

Mark Potts has a set of idea for fixing newspaper websites that are well worth reading. Potts recently wrapped up an engagement with Philly.com in which he says staff attempted to break the mold with some success. What is the mold of newspaper websites? Too much information crammed into too little space and surrounded by blinking banners ads. This is a legacy of the print mentality, Potts writes. Why do newspapers still organize everything by news/features/sports/metro/arts when they don’t have to be tied to such rigid structure on the Web? And what’s with all the banner ads, which are the least effective form of online advertising? Why not do more with targeted text ads and search? Again, the legacy mentality favors display ads, he says.

Potts recommends that publishers take more risks and look at the example of the online pure-plays for inspiration. Web publishers think nothing about launching mobile services, for instance, and if the gamble doesn’t pay off, they just shrug. Newspaper publishers, on the other hand, research any new initiative to death and then finally launch something that’s uninspired and late. Classified ads are dead, Potts says. Deal with it. And newspaper sites still aren’t local enough. Aggregate and outsource content to readers. Lively debate ensues in the comments section.

Easy Come, Easy Go

Novato, Calif.’s hometown newspaper since 1922 is no more. The Advance shut down last week, citing the usual factors: tough economy, stiff online competition, spiraling costs. The paper hadn’t made a profit in nine years. An unbylined announcement ticks off a list of investments and innovations the Advance undertook in an effort to stay afloat – adding staff, sectionalizing and boosting circulation among others – but the efforts were fruitless. The paper’s demise apparently wasn’t for lack of quality. It won the California Newspaper Publishers Association’s highest award four consecutive years through 2006.

Meanwhile, the state with the toughest economy in the nation saw the launch of a new title. The successful Florida Weekly will come to Naples on Oct. 2. The lifestyle-oriented tabloid covers news, arts and entertainment, dining, regional business, and real estate. The original Florida Weekly of Ft. Myers has a readership of 50,000, according to Editor & Publisher. Naples Florida Weekly will be distributed through more than 500 newsstands and by mail.

Miscellany

Tragedy in San Francisco: the long-suffering Chronicle yesterday published obituaries for several of its Sunday comics. Among the deceased are Mister Boffo, the Fusco Brothers, Brevity, Tokyopop and Sherman’s Lagoon. Dilbert is also moving. The decision was guided by more than 13,000 responses to a poll conducted this summer. “We know that readers feel strongly about comics,” an unnamed Chron editor writes. Indeed they do.

The Bowling Green Daily News is an afternoon daily that has adopted a “print first” strategy. Its audience isn’t terribly Internet-savvy and the afternoon publishing schedule limits its timeliness. What’s more, the paper is still growing revenue. The managing editor sees no reason to favor a website because print pays the bills. Moreover, the capital investment required to launch a competing website and put a staff in place is prohibitive, he says. He is on drugs.

The Sacramento Bee is cutting staff by 7% on top of an earlier round of cuts in June. This time, a buyout offer enticed 87 people to leave the company, including 23 newsroom employees. The editorial department had been largely spared from the June round of cuts, but the reduction took a bigger toll, with the features department along losing 11 people. Bee executives said they didn’t know if more cutbacks would be needed.

Gannett Blog reports on an innovative idea by the Pensacola News Journal: it’s distributing newsstand copies with a distinctive front page. The idea is to attract the generally younger group of readers that buys newspapers on impulse. Single-copy sales are about 18% of the Pensacola paper’s circulation, according to Gannett Blog. Commenters generally approve of the idea.

The Fort Worth Star-Telegram plans to sell its 88-year-old headquarters building at the northwest corner of Seventh and Taylor streets. Its 184,000 sq. ft. are simply more than the shrinking newspapers needs, the publisher says.

The Rushville (Inc.) Republican joins the ranks of newspapers that are cutting out Monday editions. The move will save enough money to enable the paper to avoid layoffs, at least for now.

And Finally…

While strolling through Pet Rock 2008, the annual festival in east-central Massachusetts that brings hundreds of dog owners together in a celebration of their pooches, we were struck by the old cliche that dog owners and their pets frequently look alike. We started snapping examples where we thought this  was true. While the cliche is by no means universally valid, there are some striking similarities in some cases. Just for fun, here are a few examples. Do you have any of your own? Send us a link to the online photos or post them in the comments section and we’ll add them to our Flickr slideshow.

The Newark Star-Ledger quit the Associated Press cold turkey – but just for one day. New Jersey’s largest daily, which is hemorrhaging money, tried publishing en entire issue on Wednesday without any AP copy, relying instead upon feeds from a variety of alternative services.

Was it a protest against the news cooperative’s new rate structure or a test to see if there is life after AP? The paper isn’t saying. However, what the AP is saying publicly amounts to giving the newspaper industry the finger.

Responding to inquiries about the Star-Ledger boycott, AP spokesman Paul Colford sent Editor & Publisher a vapid statement that concluded that the service’s new pricing plan, called Member Choice, “was in fact developed as a response to member requests for simpler content and pricing options.” In other words, if members don’t like the new rate structure, it’s their own fault.

The new plan offers a lower-cost core service of national, state and international news. Subscribers can then buy add-on subscription or individual stories instead of paying by volume of news delivered, which was the old pricing plan. AP says 90% of its customers save money under the new structure.

It’s surprising, though, that the lucky majority is so silent while several party poopers threaten loudly to quit. Why aren’t the many customers that are so pleased with the new plan shouting them down? Maybe Paul Colford should hit the phones a little harder.

Or perhaps the AP’s real attitude is summed up in comments by its Executive Editor, Kathleen Carroll, to a group of newspaper editors, In an E&P article generously titled “We Can Work It Out,” Carroll is quoted as saying “We certainly hope that the basic fundamentals of the economy and the marketplace will firm up enough so that the pressure is off some of the people who own the AP.”

In other words, we’re not changing a thing. If business doesn’t get better, then have a nice life.

Like co-dependent substance abusers, the question for the AP and its members is who needs the other more. Alan Mutter published a cogent analysis last month concluding that the AP would have a hard time getting by without its largest members.  Many newspapers are experimenting with innovative arrangements for sharing stories that end-run the wire, perhaps in preparation for an AP-less existence. Meanwhile, there are reports that the AP is shoring up its broadcast and Internet businesses in case its newspaper members start quitting en masse.

One of the big problems facing newspapers is that information is becoming free. It’s not surprising that they might be wondering why they still need to pay the AP so much to get it.

NAA Goes Web 2.0

Perhaps financially challenged newspaper executives can commiserate by throwing sheep at each other. The Newspaper Association of America will launch NAA.org Community this fall. It’s a social network that will provide forums, personal profiles, user ratings, keyword tags, photo- and video-sharing and RSS feeds. Users will also be able to share files and send private messages within the community. The stage site is here. The home page also says you can use the site’s Community Blogs list to “find blogs about the newspaper industry, written by leading experts.” We don’t expect to make the list.

Dated Newspaper Story Triggers Airline Stock Plunge

A Google search bot triggered a 75% plunge in shares of United Airlines over the weekend when it assigned a Sept. 6, 2008 date to a six-year-old story about United Airlines’ bankruptcy filing. Although the stock had recovered all but 10% of its value by midweek, officials at the South Florida Sun Sentinel, parent Tribune Co. and Google were trying to sort out the mess and pointing a few fingers.

No one was saying why the story popped up on the Sun-Sentinel website at about 1 a.m. Sunday in the first place. Whatever, the reason, the Google News search bot quickly picked it up. Because the story lacked a time stamp, Google News automatically assigned that day’s date to it (note to Google: you might want to revisit this policy), and that’s when all hell broke loose. A few minutes later, traffic from Google began to pour in. It remained heavy all day Sunday, making the story one of the most viewed on the Sun-Sentinel site. On Monday morning, an investor forwarded the story to Bloomberg News, which posted it to its subscribers. Bloomberg quickly issued a retraction, but the damage had been done.

The question hanging over the whole fiasco: who are investors going to name in the class action suit?

Say It Ain’t Zell!

Is Sam Zell gearing up to buy the San Diego UnionNews-Tribune? That’s the word on the street, according to this E&P account. With Tribune Co. barely able to meet its existing debt obligations, it seems doubtful that Sam Zell would want to make an acquisition, but hey, you have to admit that the name fits well.

And Finally…

Esquire

Esquire‘s 75th-anniversary issue has hit the newsstands, and 100,000 copies of the 725,000-circ monthly are using some eyebrow-raising technology to add a digital feel. A 10-inch-square-inch display on the cover of the issue flashes the theme “The 21st Century Begins Now” with a collage of illuminated images.  On the inside cover, a two-page spread by Ford also has a 10-square-inch display with shifting colors to illustrate the car in motion at night.

The stunt can’t have been cheap. Media Bistro says it involved Chinese electronics that came by refrigerated truck via Dallas to a Mexican manufacturing facility, which assembled the conductive ink engines that energize the display. The cover show is powered by batteries that were themselves printed in conductive ink. The displays were developed by E-Ink Corp.

The Politico will partner with several newspapers to deliver political news in exchange for ad placements. The Politico will also sell ads to national advertisers that will be placed in partner newspapers and sites in return for a share of revenue. Early partners include the Atlanta Journal-Constitution, Philadelphia Inquirer, Denver Post, and the Cleveland Plain Dealer. 

People who complain that the implosion of the newspaper industry will create a vacuum in American democracy should perhaps take a harder look at The Politico. Launched just a little over 18 months ago as a specialized print/online/broadcast hybrid focused exclusively on politics, The Politico is reportedly profitable and has become a must-read for political junkies. Those folks are pretty desirable to advertisers. The company claims that it has more high-income and highly educated readers than Forbes.com or WSJ.com. 

Lindsey McPherson of American Journalism Review takes a look at The Politco’s success. The venture has succeeded in attracting top journalists who are, by most accounts, turning out first-class work. While The Politico makes most of its revenue from a print edition distributed on an unusual schedule (three days a week, but only when Congress is in session), its business model is clearly to grow in all media in which it operates. The site features a mish-mash of articles, blogs, video and slide shows. While that kind of stuff is pretty typical fare for all newspaper sites these days, The Politico is different. Its tight focus on politics gives it a kind of nudge-nudge insider feel that adds edginess to its videos and thematic slide shows. You get the feeling that these guys know the inside scoop. 

The Politico’s mission statement is a matter-of-fact explanation of why the collapse of newspapers has created a need for ventures like this. Born amid the early rounds of newspaper layoffs, the company promotes its journalists as brands, even encouraging them to peddle their work elsewhere. “Today, many of the reporters having the most impact are those whose work carries a unique signature, who add a distinct voice to the public conversation,” the mission statement says. “Their work, in other words, matters more than where they work.” The AJR article quotes several top reporters from major newspapers praising The Politico.

Game-changer

One of the most common complaints we hear about the death spiral of American newspapers is that it will leave an information gap. Citizens will no longer have the benefit of big Washington bureaus to investigate the government and keep government honest. While it’s true that decimated Capitol Hill news staffs will no longer send 100 journalists to cover the same Presidential press conference, there’s reason to take note of new models like The Politico’s.

Perhaps what will emerge is highly specialized news organizations that publish in whatever media make sense and that do one thing very well. Sites like Talking Points Memo and The Smoking Gun are already demonstrating that this model can work. These organizations will provide the same watchdog function as newspapers, but they won’t be distracted by the need to cover high school sports as well as Congressional committee meetings. As long as they attract the right audiences, the ad dollars will emerge to support them.

The idea of branding journalists ahead of media organizations is particularly noteworthy. We’re often asked what the future holds for professional journalists. Will there even be journalism jobs in the future? The answer is a resounding yes, but the new realities of the more competitive market will force journalists to be faster on their feet and more responsive. The cushy staff jobs are going away, and good riddance to them. There will still be a need and a market for good reporters, but the people who succeed will be the ones who work in a variety of media for a variety of bosses, moving quickly between assignments and selling to the highest bidder. They will be adept at promoting themselves as the brand rather than their employers. A few prominent journalists have done this in the past. In the future, nearly all will need to work this way. The Politico recognizes this and that’s why it may be an early glimpse at the future of news media.

Googling the Morgue

Continuing on its campaign to digitize the known body of human knowledge so that it can sell ads against it, Google announced a campaign to scan and index pre-digital age newspapers. The company has partnered with about 100 newspapers to digitize their archives. The venture will use technology developed for Google’s two-year-old book scanning project that figures out what articles are about and serves other relevant content – as well as ads – against them. Google used the 1969 moon walk as an example of the kind of pre-Internet content it will make available to the world. We just hope it doesn’t fail to include this classic from The Onion.

Newspaper In Your Pocket – Almost

Plastic Logic display

E-ink continues to evolve to the applause of a newspaper industry desperately seeking an alternative to costly newsprint. Plastic Logic used the Demo conference to introduce its electronic newspaper reader.  The device is slim, lightweight and big enough to display a full page of a newspaper. The Plastic Logic Reader uses a flexible plastic display that’s about the size of a standard sheet of paper, or 2.5 times as large as Amazon’s Kindle.  The big advantage is the slim profile and light weight. The reader comes the closest of any electronic device to being truly portable. However, it hasn’t yet achieved the Holy Grail of the e-ink industry: a display you can roll up and stash in your pocket. That’s coming, officials say, but it’ll be at least a couple of more years. E-Ink Corp. has been working toward this goal for more than a decade and its research is now bearing some commercial fruit. You can see a demo video on Plastic Logic’s home page.

And Finally…

Ink-stained wretches who complain that industry layoffs hit working stiffs the hardest can perhaps take some satisfaction in Gannett’s announcement of consolidation moves that will eliminate 100 management positions around the company. Circulation, finance and some other functions that are common across Gannett properties will be merged into regional groups, with some managers getting promotions and others getting the door. The cuts are in addition to the 1,000 people just laid off.

The chart (from Alan Mutter) says it all. The U.S. newspaper industry experienced its ninth consecutive quarter of falling print revenue, according to the Newspaper Association of America. Worse is that the rate of decline is accelerating and online revenue is now dropping, too. Although the second quarter decline was only 2.4%, it’s a stark contrast to the 20%+ growth rates the rest of the industry is experiencing.

Classified advertising is a disaster. Look at these numbers: Real estate ad revenue down 36% to $619 million; recruitment advertising down 40% to $600 million; automotive classifieds down 23% to $580 million. The lifeblood of newspaper profitability has historically been classified advertising and the blood is gushing away.

This has a ripple effect on online ads, which had previously been the industry’s sole bright spot. MediaPost puts its finger on the problem: “Unfortunately, most of the growth in [newspaper] online revenues was due to ‘up-sells’ from print classified listings. As the volume of print listings declines at an ever-faster pace, that means there are fewer opportunities for online ‘up-sells.'”

TechCrunch chips in: “Advertisers trained to buy bundled ads are more likely to drop the entire bundle when making budget cuts.”

Inflation-adjusted newspaper revenues

These trends continue to have all the makings of a classic death spiral: accelerating revenue declines create alarm among traditional customers who start fleeing in droves out of fear of being associated with a dying business. Print revenue declines have accelerated each quarter for the last two years, with the most profitable parts of the business taking the biggest hits. For example, automotive advertising, which totaled $5.2 billion in 2003, is now on track to do less than $2.5 billion in business this year. That’s more than a 50% fall without accounting for inflation.

If you do account for inflation, it gets worse. As the above chart by Tim Windsor shows, inflation-adjusted newspaper revenues are now below 1982 levels (click here for a readable version). The right side of that chart looks like a cliff, which is what the newspaper industry is hurtling toward.

There are simply no bright spots left. Between a recession, Internet competition and dramatically increased newsprint costs, this is a perfect storm. Quoting TechCrunch: “At this rate, there won’t be an industry left by the end of next year.”

Or, as one comment on Mutter’s blog put it, “The best news recently at our paper: the cleaning staff determined that the mold growing under the Coke machine is not hazardous.”

Here’s a cost-saving idea: pay your best employees to leave the company. Sound dumb? More than 20 newspaper companies have done just that during the past year.

Buyouts are a popular alternative to layoffs because they’re voluntary and they avoid a lot of anguish. From a management perspective, though, buyouts are a terrible idea. They reward the employees who are the most ambitious and whose skills are the most marketable. The people who apply for buyouts tend to be the people who are confident they can find work elsewhere. In most cases, these are precisely the people a company should want to keep.

A layoff is a far more effective management tool than a buyout. It’s a way to slim down the organization from the excesses brought on by past prosperity. During good times, organizations tend to grow fat and inefficient. Growth masks a lot of problems and no one wants to cut staff when they don’t have to. As a result, organizations are inclined to hold on to marginal performers and sustain questionable jobs because the alternative is too painful. Nearly every company does this. It’s human nature to tolerate a certain level of inefficiency in order to avoid the emotional turmoil of depriving someone of his livelihood.

Invariably, a slowdown comes and companies have to cut back. This hurts, but it’s also an opportunity to make adjustments to the organizational structure to prepare for new growth. It’s a way to get rid of under-performing employees and unnecessary jobs while also redoubling the commitment to top performers. Good companies reward their best people even during difficult times. Across-the-board cutbacks make no sense because they penalize your best people. Why would you want to do that?

A buyout takes bad management to a new level. In effect, the company is saying, “You’ve taken initiative to develop skills that are in demand in our industry. We’ve paid you to do this. Now please go away. And take this bonus with you.”

Buyouts are very popular with ambitious employees who are seeking new opportunity. Who can blame them? Wouldn’t you rather get paid to look for a new job than do it in your spare time? People actually slept in the lobby of the San Diego Union-Tribune this week in order to take advantage of a limited buyout offer. Those are motivated folks. Could management possibly find a more productive way to harness that ambition?

Sorry if this sounds calculating and insensitive, but businesses aren’t charities. They need to run as efficiently as they can, particularly at a time like this. Buyouts are simply a way of dodging unpleasantness by paying good people to leave the company. They’re bad management.

Miscellany

They’re piling on the ailing San Francisco Chronicle. Clint Reilly digs up some past dirt about the early days of Hearst ownership. Of course, this happened eight years ago, so keep it in perspective. One passage did strike a chord, though: “I repeatedly witnessed bizarre behavior at newspapers that no other business would ever allow. Some reporters and columnists were frequently drunk or on drugs on the job. Such conduct was not simply tolerated, it was condoned. These third-rate Hunter Thompsons screwed up appointments and scrambled facts but were never called to account for their mistakes, incivility or disruptive behavior.” Sound familiar to anyone?

The Wall Street Journal is redoubling its commitment to print with plans to launch WSJ. magazine this weekend. The coming-out party gave new Journal managing editor Robert Thomson the chance to take a shot at the rival New York Times and to use the word “eschatological” in a sentence.

Here’s a little good news for magazine publishers: rich people are actually reading more magazines. Research by Ipsos Mendelsohn shows that folks making more than $100,000 a year said they read 15.3 publications on average compared to 15.1 in 2003. People who make more than $250,000 read an average of 24 print publications. Favorite titles: People, National Geographic, Sports Illustrated, Time, Newsweek and Southern Living. Four in five rich folks also shop at Wal-Mart.

Is the Raleigh News & Observer really seeking to cut 40% of its staff? That’s what this short item in Editor & Publisher appears to say. If so, this would be the paper’s third round of job cuts in the past year. Oh, and it’s a buyout.

The Minneapolis Star Tribune has canceled its Associated Press subscription, and it probably won’t be the last paper to do so. The Strib is one of several papers that have complained loudly about the AP’s pricing policies, which they say constitute an onerous tax at a time when member newspapers are already bleeding red ink. Now it’s given the wire service the required two-year notice of its intention to cancel.

More papers are likely to follow. In Ohio, a group of dailies has banded together to share stories, a move driven in part by a desire to cut dependence on the AP. Many papers rely on the wire service to deliver national and international coverage, but with the recent push to go “hyper-local,” the need for such information is declining. Readers already get most of that stuff online anyway, and with its liberal syndication agreements with various online portals, the AP is actually competing with its member companies.

If newspapers begin opting out of their AP subscriptions, it could have interesting ripple effects for the AP and its members. Alan Mutter has noted that the AP gets two-thirds of its stories from member papers. If it loses those sources, then the wire service will have to invest in its own staff to make up for the shortfall. That means the AP has to make a choice between cutting its license fees or losing members and the content that drives its other licensing arrangements. However, as David Brauer notes, “If AP gets less cash and copy from the Strib and cuts its local presence, Minnesota’s news ecosystem could take a big hit. The wire service’s copy fleshes out local papers big and small; a diminished AP weakens a key line of defense for cash-strapped newsrooms.”

In short, the AP is engaged in a stare-down with its member newspapers. Will more defections like that of the Star Tribune force it to blink?

The industry’s dire financial situation has got newspapers thinking creatively about how to avoid cutting into bone. Editor & Publisher continues its recent reporting on this issue, focusing on creative content-sharing and partnership agreements that many papers are hatching to deliver quality information to readers while abandoning traditional rivalries. Adversity is the mother of invention, and some editors are reporting that by abandoning their “not invented here” bias, they’re minimizing the impact of layoffs and cost cuts.

Miscellany

Almost two-thirds of the top 30 newspaper websites had double-digit percentage increases in year-over-year unique traffic in July, according Nielsen Online. Ottaway Newspapers led the good news parade with a gain of 167%. The Los Angeles Times was up 66% and The Wall Street Journal Online advanced 94%. Editor & Publisher didn’t try to explain the dramatic improvements, but the combination of high gas prices driving more at-home “staycations” along with interest in the presidential campaign and Summer Olympics probably all played a role.

University of South Carolina journalism professor Ernest Wiggins was curious about how newspaper websites handle comments from readers, so he looked at 10 of the largest titles to see if there was any consensus. His findings: not really. All of the newspapers he reviewed post some language intended to keep discussions civil, and a minority actually screen contributions. Beyond that, practices range from the New York Daily News‘ genteel “Be nice” plea to the Los Angeles Times‘ draconian warning that “A VIOLATION OF THESE POSTING RULES MAY BE REFERRED TO LAW ENFORCEMENT AUTHORITIES.” He cites advice from two Poynter faculty as a rule of thumb: encourage comments, state the purpose of the forum but don’t threaten people.

Alan Mutter says the distressed financial condition of American newspapers could make them appealing buyout targets to foreign interests with a political agenda. He focuses, in particular, on Arab and Asian governments that are flush with cash in overseas investment funds and that could benefit from having bully pulpits in the US market. The Unification Church-owned Washington Times set the precedent by using a newspaper to champion its conservative political causes and there are no rules that would prevent other overseas buyers from doing the same thing. At current valuations, newspaper companies would be a rounding error for some of these funds, which boast assets of as much as $400 billion. If overseas interests bought big into the US market, it could lead us back to the early days of newspapering, when publications typically took strong positions on the issues and made no effort to deliver “just the facts” journalism, he says.

The Honolulu Advertiser is again moving to cut headcount, even as it pursues rocky negotiations with the Newspaper Guild. The company will eliminate 27 positions at its Pacific Media Publications community newspaper group and consolidate seven community newspapers into three. The company had earlier cut 54 jobs at the Advertiser. A Guild spokesman said the move “certainly does not reflect a move toward trying to get a contract.”

The Chicago Sun-Times is seeking more staff cuts on top of the 40 positions eliminated earlier this year as part of a $50 million expense reduction campaign. The editor didn’t specify a reduction target, but said the cuts are driven by the “awful” advertising climate. Two weeks ago, parent Sun-Times Media Group announced that it was outsourcing its inbound classified advertising operations after reporting a dismal $38 million loss in the second quarter.

Sam Zell says Tribune Co. will be able to cover its debts for at least the next seven years. Buried in a Bloomberg story about Zell’s forecasts for the real estate market is the tycoon’s comment that “We don’t have any real maturities that aren’t covered until 2015.” Zell also said he expects to sell the Chicago Cubs and Wrigley field later this year for “a lot” of money.

At Tribune Co.’s namesake newspaper, social media has come of age. Huffington Post’s Todd Andrlik writes that a four-person social media team has come up with strategies to monitor news reports on Twitter, establish communities on Facebook and generally improve its reader interaction. A recent page three story about a bomb threat at Daley Center bomb originated as a Twitter message to Colonel Tribune, the paper’s online avatar that’s a throwback to colorful onetime owner Col. Robert R. McCormick. Sharing content through social networks has also resulted in an immediate 8% uptick in site traffic.

CNN has joined with the free Metro papers in New York, Boston and Philadelphia to deliver columns by CNN correspondents in select Metro editions every Friday for 12 weeks. Their stories began appearing last Friday. The deal expands an existing agreement that provides 70 Metro editions with content produced by CNN exclusively for Metro.