New media enterprises are rising out of the ashes of their collapsed predecessors.

Sportswriter Sam Adams is one of several INDenver Times staff who introduce the new site on video

A group of 30 former Rocky Mountain News staffers has launched INDenverTimes, a professional-looking news site that aims to cover local news, sports, business, arts and entertainment, along with “a Denver perspective on national news.” The venture will take a novel approach to subscriptions when it begins charging for premium access in two weeks. Paid subscribers will get “access to the INsider Channel where you can have a direct, real time conversations with our editors and writers…from 10 am to 5 pm every weekday.” The channel will also go live if breaking news happens at other times of the day.

In its first month, the operation recorded 70,000 unique visitors and more than 311,000 page views, or about as much traffic as a top-500 blog. Funded by entrepreneurs Kevin Preblud, Brad Gray and Ben Ray “three Denver entrepreneurs” (we’re trying to get their names), the venture has a hybrid revenue model and has recruited an impressive list of writers and business-side executives. The site also looks clean and well-organized. Believe it or not, this venture is running on WordPress, the same content management system that powers this blog. They’re just doing a lot more with it.

Also, some former Seattle Post-Intelligencer staffers have launched a nonprofit online newspaper with regional coverage. Seattle PostGlobe is basically a multi-author blog that covers news, sports, lifestyles and opinion. It’s very early-stage and looks it, but we’ll keep an eye on this bootstrapped operation as it gets its sea legs.

Street Brawl in Boston

The Boston Globe, evidently tired of all the razzing it was getting about its threatened shutdown, fires a return volley at crosstown rival Boston Herald. Weekday circulation at the Herald is off 38% in the last decade and the newsroom staff has been cut by half. Yadda yadda. What’s really interesting about this story is a comment posted by Tom Mashberg, the Herald Sunday editor who’s quoted in the piece. Mashberg reprints part of an e-mail sent to him by reporter Keith O’Brien in which O’Brien outlines plans to include Mashberg’s comments about the Globe‘s perilous situation that don’t appear in the story. He also notes that the fact that the Herald is actually profitable isn’t mentioned, either, despite a lengthy discussion about what the Herald is doing to survive. “Looks like the editors got hold of this and turned it into a hatchet job,” he says.

Jules Crittendon, a Herald editor, minces no words telling what he thinks of the Globe story and the Globe in general. “One Herald reporter is worth something like 5 to 10 Globies, for all their inflated sense of self-worth,” he writes. And he’s just getting started. Crittendon rips the Globe for a self-important attitude, lazy reporters, layers of redundant management, endless story lengths and on an on. If you hate the Globe to begin with, his blog entry will warm your heart.

The Globe‘s negotiations with its unions continue to be rancorous. The Newspaper Guild now says it will negotiate concessions related directly to cost cuts, but won’t talk about issues like the elimination of lifetime job guarantees for about 190 veterans and the end of seniority rules in layoffs. The Guild is also calling for negotiations to be performed in public and says it wants to deal directly with any potential acquirer on the cost-cut issue. The union’s defiance is a marked contrast to the relatively quick work the San Francisco Chronicle‘s unions made of Hearst’s demands to cut costs. By the way, Globe managers are feeling some of the pain, too. Bonuses have been eliminated for this year, affecting more than 200 people, including the publisher.

Government Bailout for News Infrstructure

Mark Cooper suggests a hybrid approach to saving quality journalism: a “media stimulus package” that could give new localized news services a platform upon which to build profitable businesses. ” Just as IT health and education funds seek to build a new infrastructure for public service in their areas, IT media funding can build infrastructure in the journalism space,” writes Cooper, who is a fellow at the  Donald McGannon Communication Research Center at Fordham University.

Summarizing his argument on Huffington Post (a fuller discussion is here) Cooper notes that major metro dailies are being hit hardest by changes in reader and advertiser behavior because they need to be all things to all people. Although most major metros have discarded much of their national and international coverage, they’re still forced to do too much with too few resources. Shoring up these doomed businesses isn’t the answer, Cooper says. Instead, we should look to the existing media models “that are closest to the emerging citizen-media, like public governmental and educational cable channels on the TV side and low-power FM on the radio side.” These media have long been under-funded, but they have the best chance of molding their models to the new participatory journalism. As long as the US is pouring $1.6 trillion into broken banks, how about a few billion to lay the foundation for a new media infrastructure?

Uh-Oh. It’s Earnings Time

Gannett kicked off the earnings parade, which looks to be more of a funeral procession this year, announcing a60% drop in profit on an 18% slide in revenue. Bad as the numbers were, Gannett’s operating profits actually beat analysts’ expectations by a penny. They also weren’t as bad as the 30% declines expected by some analystsquoted in The New York Times last week.  Those analysts mostly agree that this is a 100-year flood for the industry with the combination of recessionary pressures, catastrophic business problems in some key advertising segments and rising paper and fuel costs sending many publishers into the red. They also agree that more papers are likely to close this year. The revenue plunge isn’t hurting small newspapers and broadcast outlets quite as hard, but even they are expecting double-digit declines.

And it isn’t just newspapers. “Magazines collectively recorded a 25.9 percent plunge in ad pages in the first quarter, with revenue falling 20.2 percent,” says Seeking Alpha’s Jeff Bercovici. ZenithOptimedia is projecting the worst declines in ad spending since it started keeping statistics in 1980: overall US spending down 8.7% with newspapers down 12% and magazines down 11%.

Miscellany

In a sign of the times, the world’s largest maker of newsprint has filed for bankruptcy protection. Abitibi-Bowater, which was formed from a 2007 merger, is struggling to pay $8.78 billion in debt. Even though the Canadian company controls 45% of the North American-based newsprint market, a steep drop in demand has slammed its business. The company has already cut paper production 25% this year. Its 25 pulp and paper mills and 30 wood products plants will continue to operate for now, but some are likely to close as part of the restructuring.

Employment levels in American newsrooms are now lower than they’ve been in more than 25 years, the American Society of Newspaper Editors reports.  The industry shed a record 5,900 jobs last year, more than double the previous record of 2,400 eliminated in 2007. Erica Smith pegs the number much higher at nearly 16,000 reported layoffs in 2008. Employment levels are now comparable to those from the early 1980s. The good news (we guess): there was a 21% rise in online-only journalists last year, to 2,300. Incidentally, the American newsroom remains mostly white: Minorities make up 13.4% of the workforce and 450 newspapers employ no minorities at all.

More people still rely on newspapers for their news than on the Internet, according to a Harris Interactive survey commissioned by Parade Publications and published by the Newspaper Project. The study of 1,004 US adults also found that 90% of Americans rely on printed or online newspapers for their news and that newspapers are the only medium used more for local than for national news. The research confirms what most people already know: newspapers are important news sources. It doesn’t cast any light on the real problem, though, which is how to create a business model for them that works.

Sam Zell now admits that his highly leveraged 2007 purchase of Tribune Co. was a mistake. For some reason, several news outlets thought this was newsworthy. Zell is always good for a quote, though: Commenting on the prospect of finding a merger partner for his bankrupt company, Zell said, “That’s like asking someone in another business if they want to get vaccinated with a live virus.”

The Orlando Sentinel laid off 50 people last week and didn’t announce it, according to an anonymous comment on this Chicago Tribune story. The person is right that there was no announcement, but we couldn’t confirm the layoffs.

The New York Times is cutting and consolidating some sections in order to save money. Gone are Escapes, a travel guide published on Fridays, as well as Sunday sections that only go to readers in the New York metropolitan area. They’ll be combined into a new Sunday section featuring regional information. Fashion coverage is axed from the weekly magazine and the guide to each day’s newspaper will be consolidated into a single page.

And Finally…

A reader in upstate New York reports on this example of an over-eager, and ultimately failed, Albany Times Union promotion:

I only wanted Sunday’s paper but then they started delivering Thursday and Saturday for free.

When I tried to stop the free Thursday and Saturday papers, they offered me the whole rest of the week for free. I said no, I only wanted Sunday. They said okay and for a while I only got Sunday deliveries, but then I started getting Thursday and Saturday again. I figured it had something to do with local ads on those days but it still annoyed me.

I was so frustrated that I decided to stop delivery altogether. That’s when I was told “You don’t want to put your paper carrier out of a job do you?”  And then they offered me a totally free subscription seven days a week for three months. I didn’t accept it. I just wanted them to stop delivering free papers that I didn’t have time to read and was just throwing out.

So the irony of the whole thing is that because they kept sending me free papers, they lost me as a customer.”

“Gannett Co., the largest U.S. newspaper publisher by circulation, reports earnings on Thursday, kicking off what is expected to be the ugliest quarter in recent memory for the industry,” says The Wall Street Journal in a blunt assessment of the coming earnings season. USA Today is expected to take it on the chin when Gannett announces its results. Forthcoming numbers from the Audit Bureau of Circulations are expected to show a six-month decline of about 100,000 in USA Today‘s 2.3-million circulation, largely as a result of lower occupancy in hotels.  Free hotel distribution accounts for more than half of the paper’s 2.3 million circulation.

Adding to USA Today‘s woes is Marriott’s decision to make room delivery of newspapers optional. Citing environmental concerns, the hotel chain said it will now offer guests a choice of papers or no paper at all, if they so choose.  Declining readership was also a factor in the decision, which will reduce daily circulation by about 50,000 across the US.  One quarter of travelers didn’t even crack open the newspaper that was delivered to their doorstep, a spokeswoman said.

Ugly Spat Over LA Times‘ Front-Page Ad

An internal battle of the Los Angeles Times over the publisher’s decision to run a front-page ad resembling news story highlights growing tension between editors and publishers as the industry revenue woes deepen.  The ad ran last Thursday below the fold in a position and typeface that some people believe could be mistaken for a news story (left). Charles Apple has an image of the entire front page. In an interview with TheWrap, LA Times executive editor John Arthur called the ad “horrible” and “a mistake.” However, the VP for entertainment advertising at the paper said Arthur’s boss, editor Russ Stanton, “approved both advertorial units.”

Not so, says Stanton, who told the Times’ own reporter that the ad ran over his objections. “There is not an editor in this nation — including me — who really wants to see something like that on the front page of his or her publication,” Stanton said. Publisher Eddy Hartenstein said he made the decision to run the ad because of the perilous financial situation at the newspaper. “I’m just trying to keep the lights on here, folks,” he told an angry newsroom last week.

Barriers to front-page advertising have been falling recently as publishers struggle to get creative. The New York Timesshattered tradition in January with a front-page strip ad for CBS and the Boston Globe followed suit just two weeks later.

Miscellany

Newspaper executives like to point out that their total readership — including the Web — is bigger than ever.  However, online ad revenue is still growing more slowly than the market as a whole, according to Alan Mutter.  The most alarming recent statistic: “Interactive revenues for newspapers dropped by 1.8% in 2008 to $3.1 billion at the same time overall online ad sales in the United States surged 10.4% to a record $23.4 billion,” Mutter writes. What’s more, newspapers’ online ad revenues today are 13.3% of the overall market, the lowest share ever.  Mutter suggests that the culprit is newspapers’ practice of up-selling print advertisers with discounted online campaigns, a strategy that grows weaker as print sales decline.  Publishers need to develop sites that look more like the Web and less like digital versions of their print products, he advises.

The Chicago Tribune is cutting another 20% of its already depleted newsroom staff. The paper didn’t say how many employees are left in the newsroom, but there were about 440 as of the most recent layoffs in February. The paper is also reorganizing some production groups, merging copy editing, page design, graphics, imaging and some photo editing into a single department.

Writing on Slate, Jack Shafer takes on joint operating agreements as the great sucking sound that weakened the newspaper industry.  “The tragedy of the joint operating agreements is that instead of making the stronger paper stronger, the arrangement tends to weaken it,” he says, pointing to the San Francisco Chronicle as the poster child example. “Had the Chronicle and the Examiner been forced to compete on the business side in 1965 instead of to collaborate, a clear victor would have a fighting chance at surviving in today’s environment.” Instead, the Chronicle was forced to support the weaker Examiner to the point that both papers were worse off.

The Gannett-owned Observer & Eccentric Newspapers will cease publication of five print and Web editions of the Eccentric chain in suburban Detroit on May 31. Gone are the Birmingham, West Bloomfield, Troy and Rochester editions of the Eccentric. Two other newspapers will be merged into the South Oakland Eccentric, serving nearby communities. The consolidation will result in the loss of 44 jobs.

The Huffington Post has published a terse set of editorial guidelines, demonstrating that the standards being applied to citizens journalists don’t differ all that much from those practiced by mainstream media.

And Finally…

Is that a penguin on the telly? Well, a few penguins, actually, but click the image to see the truly awesome spectacle of what happens when penguins congregate. This is one of the photos on Incredimazing, a website devoted to collecting bizarre images submitted by people like you and me. If you want to scramble your brain, check out the M.C. Escher car.

News University kicks off another another series of journalism training courses this week with the first in its  Social Networks webinar series. I’m pleased to present the first event, Social Networks: The New Architecture of the Web, on Tuesday, Apr. 14, 2009. The series is developed with the Knight Digital Media Center, a partnership of the USC Annenberg School for Communication and the University of California Berkeley Graduate School of Journalism, funded by the John S. and James L. Knight Foundation. I’ll be partnering with JD Lasica on other programs in the series.

This webinar-based program is intended to brief  news editors on the emerging tools and tactics of social media as they wrestle with thhe challenges of creating reader communities. We’ll look at both the content and revenue sides. My second presentation, in fact, is Social Networks: New Revenue for News Organizations, on June 16, 2009.

The cost of each webinar is a modest $24.95. In addition to the webinars, there will be assignments and group projects that can help you better understand how to build social networks and deliver new products and revenue. Come join us!

Eric Alterman (right) lays waste to the value of political endorsements, which news organizations would have to sacrifice if they took public money. Who cares? asks Alterman, calling endorsements a “near total anachronism” in a world in which readers have so much choice of information.  Endorsements haven’t been meaningful in a long time, say Alterman, journalism scholar Kathleen Hall Jamieson’s conclusions in a 2004 study that “The direct effect of editorials does not appear to be significant…” So why is this such a hot potato in the public funding issue? The loss of the power to endorse candidates is often cited as the primary barrier to a public-funding solution for dying newspapers. In fact, endorsements work against news organizations, Alterman argues. “What endorsements do…is convince readers that the news they receive is being colored by bias expressed on its editorial pages.” And that perceived bias is a much bigger threat than endorsements that the public largely ignore. Alterman admits, reluctantly, that public funding may be the only approach that keeps journalism in the public interest alive. So get over the issue of taking sides in political debates.

Salon.com offers similar hope in profiles of several nonprofit organizations that are struggling to get by. It profiles Voice of San Diego, MinnPost.com and ProPublica, which are three startups producing quality journalism on a shoestring budget.  Each has a somewhat different revenue model, with ProPublica existing largely at the behest of philanthropic funding while Voice of San Diego and MinnPost.com have hybrid models that include advertising, reader subscriptions and foundation support.  All three operations have had some notable successes, but the journalists who work there admit that the working conditions are demanding.

Joel Kramer, the editor and CEO of MinnPost, works without a salary and one of his reporters, Jay Weiner, traded in an $80,000-a-year job with a pension, health insurance, vacations and overtime at the Minneapolis Star Tribune for a post that pays about $700 for a 60-hour work week, with no benefits. Weiner’s motivations are altruistic. “I am so happy to not be at the newspaper,” he says. “We’re growing, there is freedom, we’re all involved in a product that we really want to make as good as possible.”

It’s exhilarating stuff, but even the leaders of these fledgling organizations admit that a publicly funded model is not the solution for big newspapers. “”Tell people to send us money,” says Kramer, in a plea that’s only half in jest.

Bostonians Confront a Globe-less Future

With its liberal bias and nudge-nudge political insiderism, the Boston Globe has long been a lightning rod for criticism in New England. But with the region now facing the prospect of losing its largest daily newspaper, people of all political stripes are rushing to its side. Bloggers rallied last week to think up ideas to rescue the paper, which the New York Times Co. has threatened to close in a few weeks if the unions don’t make dramatic concessions.

More than 20 prominent Boston bloggers rallied last week to voice their support for the Globe (we can’t find an organizing body, but Beth Israel Deaconess CEO Paul Levy lists the participants), debating ideas ranging from public funding to subscription fees. Everyone seems to agree that local ownership is a necessity, particularly since so many local institutions have been swallowed by out-of-town owners in recent years.

The problem is that no one knows of any local investors who are willing to put up the money. There were rumors of a consortium organizing to buy the Globe back from the Times Co. a few years ago, but that talk ended when the newspaper industry tanked.

The Times Co.’s demands are rankling Globe unions. Management has reportedly asked Teamsters Local 1, which represents about 250 full- and part-time mailers, for $5 million in concessions, or about $20,000 per person. Demands include a 25 percent wage cut, near-virtual elimination of company healthcare contribution, elimination of sick and holiday pay and the end of lifetime job guarantees enjoyed by about 145 mailers. This is on top of concessions by the mailers two years ago that cut average pay by about $10,000.

Meanwhile, Globe writers are doing a little rallying of their own. Columnist Scot Lehigh asked  readers last Wednesday to weigh in about the paper’s future and hundreds of them did, most with positive comments, he says. In fact, “I was surprised by how many subscribers said they’d pay more – some substantially more – for home delivery if it would help save the paper,” Lehigh says. They may soon get their wish. The Globe hiked its newsstand price by up to 40% last week. Many people also said they’d be willing to pay a fee to use Boston.com, the Globe’s successful Web venture.  Lehigh thinks that’s a great idea: “It’s time we gave them the chance,” he concludes.

It’s a nice thought, but a subscription scheme would probably go the way of Times Select before too long. The problem is, as Alan Mutter phrased it in our recent interview, “Giving away all this content for free was the original sin.” Boston.com is the sixth largest newspaper website on the Internet, which is an accomplishment, since the newspaper is only the 14^th largest in the US. Imposing a pay wall would send traffic down 90%. The Globe would then have a lot of explaining to do to advertisers. The flight of ad dollars would probably more than cancel out the reader revenue.

And then there’s the demographic elephant in the corner. Speaking to a class of University of Massachusetts students and administrators last week, we asked how many had read a printed newspaper within the last 48 hours. Out of approximately 45 people in attendance, five hands went up. Four of them belonged to people over the age of 35.

Hyper-Local Startups Gaining Traction

Neighborhood-based online news startups are proliferating, says The New York Times in a story that profiles three of them. Among the new entrants are EveryBlock, Outside.in, Placeblogger and Patch. Funding models range from angel investment to foundation grants but each startup agrees that geographic relevance is core to the news.

EveryBlock uses human editors to gather links to news stories and combine them with material posted by the burgeoning number of neighborhood bloogers. Patch pays journalists in each town it covers to attend school board meetings and interview people in coffee shops. Outside.in scans articles and blog posts for geographical cues and organizes the content by community.

They’re hoping to tap into a local online ad market that Kelsey Group estimates will double to $32 billion by 2013. Small business advertising needs are still being served predominantly by the Yellow Pages, making this the great frontier of online advertising.

The story questions whether the collapse of local newspapers will also kill off these startups, but EveryBlock’s Adrian Holovaty says, “In many cities, the local blog scene is so rich and deep that even if a newspaper goes away, there would be still be plenty of stuff for us to publish.”

Miscellany

The publisher of the Palm Beach Post won’t win many friends in the blogosphere with statements like, “The only information on the Internet worth reading for hard news is produced by news agencies like ours.” But that’s not surprising, considering his newspaper is “your ticket to democracy… Seventy-five cents a day is a small price to pay for freedom.” Or hyperbole.

The New York Times Company shocked the newspaper industry last week with its threats close the Boston Globe on May 1 unless Globe unions give back $20 million in concessions.  There’s new evidence that the May 1 date is a bluff and that closing down the Globe could cost the Times more than keeping it in business.

The Newspaper Guild is taking an initially defiant stance on the Times’ request that the union shoulder half of the $20 million in targeted cost savings. “We’re willing to consider some concessions but not the draconian amount they put forth,” said union president Daniel Totten, in an apparent call of the Times’ bluff. He also characterized the Times’s demand for freedom to lay off people without regards to seniority as “a nonstarter.” Globe reporter Scott Allen, who has a lifetime employment guarantee, commented “Now, nobody thinks that if we make these concessions, there won’t be more cuts in a few months.” Yes, Scott, we think you can count on that when the paper is losing $85 million a year.

The very act of closing the paper would trigger huge expenses in itself. The Boston Herald analyzed public records and found that union members could be entitled to up to 50 weeks of severance pay and that underfunded pension liabilities could swell the total cost to more than $100 million.  Contractual obligations also make the Globe a tough property to sell, since few buyers would want to assume open-ended liabilities like the lifetime employment pledges to 435 employees.  The only way to cancel the guarantees, apparently, is to close down the paper.

If the Times Co. plans to carry forward with its threats, it has yet to tell the government. The Worker Adjustment and Retraining Notification (WARN) act requires most employers with more than 100 employees to give 60 days’ notice of plant closings and mass layoffs.  The Times Co. hasn’t yet filed a WARN notice, although it could still shutter the paper and pay employees for 60 days thereafter.

The Globe is raising its newsstand prices by as much as 60% in a gamble that readers will help pick up some of the bill for keeping the paper afloat. Residents outside of Boston will now pay $4 for a Sunday paper, compared to the current $2.50.

The Globe‘s crosstown rival Herald, which can barely disguise its glee in covering this story, also reports that four Guild leaders and six governing board executives are among those with lifetime job guarantees. Those guarantees are one of the biggest obstacles to selling the paper and are a primary negotiating point between the Times Co and the Globe unions.  The guarantees are causing friction within Newspaper Guild ranks, as some members believe that the leadership will be unwilling to negotiate in good faith out of fear of losing their jobs.

The Herald’s rapacious columnist, Howie Carr (left), skewers his blue-blooded competition for a series of past errors provoked by lapses in judgment.  Too bad there are no hyperlinks; it would’ve been nice to read the background on this stuff.

Meanwhile, the Globe itself notes a trend: newspaper owners are increasingly using the threat of closure to extract concessions from their unions. Hearst’s success in gaining significant givebacks from the union in order to keep the San Francisco Chronicle afloat may have prompted the Times Co. to threaten the Globe with oblivion. Also, Members of the Pacific Northwest Newspaper Guild in Seattle were scheduled to vote this week on accepting a wage freeze and two weeks of unpaid furloughs in exchange for keeping the Seattle Times afloat. A similar holdup is going on in Maine. Could it be that newspaper owners are merely posturing in order to gain concessions from the unions? Nah, they both have the higher goal of quality journalism in mind.

Is AP Worst Content Thief?

A new blog called The Future Of Newspapers features a guest column by veteran Denver sports writer Dave Krieger that poses a curious question: How can the Associated Press proposed to champion the intellectual property rights of newspapers when the AP is itself the worst violator of those rights? Krieger notes that readers don’t make a distinction between the source of information and where they consume it. News from the Denver Post that appears on ESPN.com is presumed to be from ESPN.

“Why should any newspaper in the Internet age be a member of an organization that takes that paper’s original material, rewrites it and distributes it around the world without attribution or compensation? In fact, an organization that charges the newspaper for the privilege?” The AP had some utility when newspapers were expected to provide national and international coverage, but obligation is gone now.  For most metro dailies, the AP is nothing more than a subscription service that pirates their content and distributes it free on the Internet.  He has a point.

Miscellany

Executives might want to look at what’s going on at the Virginian-Pilot, where management reports that the financial outlook is brightening even as it lays off another 40 employees.  The company has cut nearly 20% of its workforce in the past year and reduced its newsroom staff by 30% since early 2007, but it has also taken some initiatives to diversify and grow revenue. These include targeted websites, expansion of entertainment coverage and contracts to deliver national newspapers in its region. While print revenue continues to fall, management said online revenue is growing. The newspaper turned a profit in the first quarter and March was its best month in a year.

Boston University’s newspaper asks three journalists-turned -academics if university partnerships could be a solution to newspapers’ financial troubles.  They agree that university endowments could be an important source of support for failing journalist enterprises and that universities have a duty to support worthy cultural and public service institutions.  However, educational institutions are not known for acting quickly and trustees would probably balk at taking on financial liabilities as daunting a complex as those that the industry faces.

Rosa Brooks fires a parting shot in her swan song as a Los Angeles Times columnist. She’s going to the Pentagon as advisor to the undersecretary of Defense for policy, but she fears that the evisceration of her industry will leave the American public wanting. She “can’t imagine anything more dangerous than a society in which the news industry has more or less collapsed.” Brooks believes that the government must step up to the plate and subsidize journalism, which isn’t the same as subsidizing media. The problem with existing subsidies is that they “have actually contributed to the decline of high-quality journalism by enabling monopolies, freezing out smaller and locally controlled media outlets and encouraging large corporations to treat the news as just another product,” she writes. The issue isn’t how to save the media, but how to save quality.

The Reno (Nev.) Gazette-Journal is laying off 35 people, or about 10 percent of its workforce, and closing a weekly paper in Carson City. These are in addition to 61 other positions eliminated since December.  Do the math, and the paper has cut almost 25% of its workforce in the last four months.

Veteran newsman Ric Cox has launched a blog called “Save Our Tribune” that’s dedicated to “rescuing Chicago’s leading newspaper.”  In one of his initial posts, he suggests ways that the Tribune can make online subscriptions palatable to users who are accustomed to getting news for free.

And Finally…

Some residents of Omaha, Neb. have created a satirical website to celebrate “Totally bogus news from the mid-heartland.”  The principal target of its barbs is the Omaha World Herald, “which has laid off employees twice (usually after throwing an extravagant party for an ex-publisher), cut back circulation, and now runs obits where it used to run op-eds,” according to a promotional message. One of the early posts notes the possibility that the state may create a precedent in capital punishment due to a typographical error. “The state might be replacing the electric chair with ‘lethal infection’ rather than the intended ‘lethal injection,'” the editors write, noting that some members of the Senate Judiciary Committee actually like the idea. One of them “added an elegant provision permitting the use of a piece of rusty barbed wire to begin the process and inject the pathogens,” says the site.

McClatchy Co. CEO Gary Pruitt addressed the Newspaper Association of America’s annual convention on Monday. Here are his remarks, courtesy of the NAA.
Each year at McClatchy’s shareholders meeting, we conclude with a video highlighting the work of our photojournalists over the past year. I pick a song that I think speaks to the year and we set the photographs to the music. This year, I wasn’t sure which song to choose. I like the Rolling Stones, and they have several songs that fit our current economic environment:

• “I Can’t Get No Satisfaction,” of course. But also consider …
• “You Can’t Always Get What You Want”
• “19th Nervous Breakdown”
• “Shattered” and
• “Gimme Shelter”

But I really don’t feel fatalistic. I speak to you this morning with a strong sense of resolve and hope. We have a serious fight on our hands, but I believe we are up to it. So I thought it more appropriate to select a battle song for this year’s video – the “Battle Hymn of the Republic” to be specific – as we fight to ensure that truth does indeed go marching on. See what you think …. (Plays DVD)

Public Service Mandate

I came to newspapers not as a journalist or a businessman but as a First Amendment lawyer from Berkeley, California. So as you might expect, I’m passionate about free speech and a free press. I believe in the idea – and the ideal – that newspapers should provide high quality public service journalism so that the public can fully participate in democracy. This is not just some abstract concept. There is emerging empirical evidence to support the important relationship between democracy and the press.
A study published in The Journal of Law, Economics and Organization in 2003 looked at the per capita circulation of newspapers in different countries around the world and among the states in our own country. The study found that the lower the circulation, the greater the political corruption. Of course, the First Amendment isn’t a business model. Making the case that we’re important to society – proving it, even – does not guarantee our success. It just means the stakes are high. It is up to us to devise a business model that will sustain quality, public service journalism.
Our critics and the naysayers aren’t going to do it. This is the challenge before us. So while there were easier times to lead newspapers, there has never been a more important time.
Future generations will judge how we do. Or, as Abraham Lincoln said so eloquently in 1862 during an even more historic fight: “We can not escape history … The fiery trial through which we pass will light us down in honor or dishonor to the latest generation.”

Competitive History

I think history has much to teach us. As Mark Twain said, “History may not repeat itself but it does rhyme a lot.” Newspapering, for much of its history, was a fiercely competitive, rough-and-tumble, dog-eat-dog, low-margin business.
Consider The Sacramento Bee. In the first 30 years of its life, from 1857 to 1887, 80 newspapers came and went in the Sacramento market. That was a tough business. The number of daily newspapers in the United States peaked in the early part of the 20th century. There have never been more newspapers before or since.
Not coincidentally, that same time period witnessed the birth of a new medium — commercial radio. First radio and then television emerged, taking share from existing media, namely newspapers. Many people predicted newspapers would go out of business – and many did. So many, in fact, that by the second half of the 20th century, all but the largest cities in the United States had only one daily newspaper. And then a funny thing happened. Those successful, scrappy, surviving newspapers got rich because there was no other print or classified advertising competition. It’s a noteworthy paradox that the development of radio and TV ultimately led to the enrichment of newspapers.
For the first time in the history of newspapers, profit margins exploded and newspapering became an easy and lucrative business. Warren Buffett once said: “You want to invest in a business that even your stupid cousin could run, because one day he will.” That was the newspaper business in the second half of the 20th century. As newspapers’ profit margins grew, so did their cost structures. Ah, but we were so much older then; we’re younger than that now.

New Disruption

The Golden Age of newspapering wasn’t to last. With the maturation of the Internet over the past decade, a new medium has emerged, a virulent competitor again taking advertising share from all existing media, especially share of classified advertising. The Internet’s impact has been particularly disruptive at large metro papers with their higher cost structures and greater dependence on classified advertising.
Some of our critics seem to think newspapers were blindsided by the Internet’s potential impact. But we deserve credit for the considerable progress we’ve made online. The U.S. newspaper industry generated $3 billion in digital revenue last year. At McClatchy, 15% of our advertising revenue today comes from online.
McClatchy, a company founded before the advent of electric lights, will generate nearly $200 million dollars in digital revenue this year at a higher profit margin than our print business. Our digital revenue and online audience grew by double digits last year and, we operate the leading local internet business in each of our daily newspaper markets.
None of which is to say this transition is easy or that we haven’t made mistakes along the way. Secular transitions are always disruptive and painful for all media — what Austrian economist Joseph Schumpeter called “the creative destruction of capitalism.”

Working On It

My point is that newspaper companies, to varying degrees, were working their way through it, difficult as it was. The game-changer was the arrival of the deepest and most painful recession in generations. It’s the combination of the secular shift and the cyclical downturn that has created a very real crisis for newspapers.
Many of our critics conflate the secular and the cyclical. They see the revenue declines brought about by the recession as proof we can’t weather the secular transition. This leads to the wrong, but increasingly popular conclusion, that there’s no viable future for newspaper companies.

Absolutely we’ve got a future. But just what does it look like and how do we hurry up and get there? Alan Kay, the visionary computer scientist, once said, “The best way to predict the future is to invent it.” That’s where we are today. It’s up to us to invent that future.
There is no silver bullet. There are no easy answers. And, sadly, as we have seen already, not every newspaper will make it. But here is what I see going forward:

Reinvention

Print remains viable now and into the future. Most newspapers today are profitable even in the depths of this crippling recession. More than 100 million adults in the United States read a printed newspaper every day – more than watched the Super Bowl. As troubled as the U.S. economy is, if 100 million consumers want and use something, that product usually doesn’t go away.
Sixty-one percent of 18 to 34-year-olds read a newspaper in an average week. So much for the notion that younger people don’t read newspapers.
Despite all these positives, newspapers alone are not enough. Our future depends on becoming successful hybrid media companies – fully engaged and vested in digital publishing and digital platforms as we have been historically with print. This isn’t breaking news. In the month of January, 44 percent of all U.S. internet users visited a newspaper website. And audience growth at newspaper websites is outpacing overall U.S. internet audience growth.
So we’ve been moving in this digital direction for some time – but we need to accelerate the pace and sharpen our focus. We need to establish our brands and offer our services on many different platforms. We need to leverage social media, mobile technology and the web’s interactivity as our communities and customers change how they acquire and share information.
This economic downturn makes it difficult to take risks, but we need to experiment smartly and partner where it makes sense. We need to learn from our mistakes, adjust and move on. Let’s listen to our audience and our advertisers – not conventional wisdom.

Transform the Business

The same technology that challenges us on the revenue side offers savings on the expense side through centralization, collaboration and outsourcing. We must continue to shed those legacy, 20th century, monopoly cost structures that weigh us down, limit our flexibility, jeopardize our health.
Think of the newspaper company of the future as an athlete – lean, fit and trim, yet muscular where we need to be. We need to ensure strength in our newsrooms and advertising sales staffs – our two most powerful assets, our core competencies and our social responsibility. Even today, with all the downsizing across our industry, we have the largest newsgathering operations in our markets by far. No other local media outlet is as well equipped to produce and deliver the high value, premium local content that’s growing our total audience in print and online. And we know that audience growth remains the best predictor of long-term success for any medium.
While we’ve done a good job growing audience, we need to do a better job of leveraging our sales forces. We must empower our sales staffs to sell our full portfolio of print and digital products – giving them the right tools, training and incentives. Also, think of the possibilities of harnessing that large, local sales staff to sell on behalf of others and share revenues. The untapped potential of local digital advertising in each of our markets is why internet giants like Yahoo and Google seek partnerships with newspapers. We need to mine that local digital revenue stream. We can’t afford to fumble the opportunity.
Lastly, we need to accept the reality that we’re in a tougher, more competitive business, now and forever. Ours is a business that’s still viable and vital – just with a smaller margin for profits and a smaller margin for error. Let’s appreciate how lucky we are to work in the media business in this critical time of transition. Our actions count. No unbearable lightness of being here. The ball is in our hands and the game is on the line.

I’d like to leave you this morning with a bit of inspiration from Bob Dylan and his song “Silvio.” Although written more than 20 years ago now, I think Dylan’s lyrics speak to the newspaper industry today:

Stake my future on a hell of a past
Looks like tomorrow is coming on fast
Ain’t complaining ’bout what I got
Seen better times, but who has not?

Editor & Publisher looks at the list of solutions being proposed to the newspaper industry’s troubles and adds a new one into the mix: the Low-Profit Limited Liability Company, or L3C. An L3C “is a corporation that qualifies as a charity under IRS rules but runs as a for-profit business,” Mark Fitzgerald explains, and it’s gathering momentum as a rescue strategy among various chapters of the Newspaper Guild.

That’s right: The Newspaper Guild may get into the business of running newspapers, if only to save its membership from annihilation. An L3C is allowed to take investments from charities and nonprofits because it has a “social benefit.” This new kind of nonprofit is now permitted in several states and the Guild “is lobbying for federal legislation – expected to be introduced later this spring – that would explicitly include newspapers among businesses that have a ‘social benefit.'”  

Apparently, the thinking is that a lot of newspapers are going to come on the market selling at pennies on the dollar this year and this new tax structure would allow owners to spread out ownership among a great many entities, including businesses like printing press makers and auto dealers who have a vested interest in maintaining the business. Foundations would also be able to treat their donations as investments that could earn a return.

Another school of thought is to tear down antitrust rules that prevent newspapers from cooperating on fixing prices, E&P says. This could be a solution to the “content wants to be free” problem: If newspaper owners can legally collude to set prices and licensing fees for their content, then they can conceivably reverse the tide and charge for their product.

One thread is clear throughout the feature, though: No one is seriously arguing that newspapers should be publicly supported like National Public Radio. The consensus among owners and even Guild officials is that these businesses must stand on their own.

BTW, this story was just put online on April 1 after first appearing in E&P‘s print edition in March.

Sun-Times Parent is Bankrupt

Sun-Times Media Group, Inc. (STMG), which operates 59 newspapers and websites, including the Chicago Sun-Times, filed for bankruptcy on Tuesday. The company has been under severe financial and competitive pressure and was weakened by a fraud scandal that landed two previous executives in jail. Chairman and interim CEO Jeremy Halbreich said the company is looking at possible asset sales and new investments, and that it has sufficient resources to work through the bankruptcy process.

The Toronto Globe and Mail looks deeper into STMG’s financial situation and the ripple effect of the 2007 fraud convictions. Last year, the company lost $344-million on revenue of $324-million, as advertising revenue fell 18 per cent in the fourth quarter and is expected to drop 30 per cent in 2009. What’s more, STMG is contractually obligated to pay the former executives’ legal costs, which total $118 million so far. To top it all off, it may face a $510 million tax obligation as a consequence of illegal deductions those executives took.

Dour Pew Report Nevertheless Offers Hope

“This is the sixth edition of our annual report on the State of the News Media in the United States. It is also the bleakest,” reads the introduction to The Project for Excellence in Journalism’s annual State of the News Media report. It certainly delivers on that promise. We haven’t read all 180,000 words, nor are we likely to, but you can start with the executive summary if you want to dive in yourself.

The media overall had a terrible year in 2008 with the newspaper and magazine segments being hit the hardest and the cable TV industry providing the single bright spot. Cable networks actually increased their newsroom investments by an average of 7% during the year, with CNN adding bureaus in 10 cities. This modest growth wasn’t nearly enough to make up for the huge cost cuts in other media, though. By the end of 2008, all three TV networks had pulled their embedded reporters from Iraq. Newspaper circulations continued to decline; Sunday readership is off 17% since 2001.

The biggest disaster was in news magazines, with only one in four Americans reporting they’ve read one the day before. Time, which invented the genre, may be the only one left pretty soon, the report says.

Public trust in media dropped, but historical data shows that this trend is erratic. Interestingly, a vast majority of Americans (70%) believe the media favored Barack Obama in the most recent election. Even a majority of Democrats believe that.

Newspapers are in “free fall,” the report concludes, although “We still do not subscribe to the theory that the death of the industry is imminent. The industry over all in 2008 remained profitable,” turned in revenues of $38 billion and employed 45,000 professionals gathering and editing the news. There is reason to believe that traditional walls between online and print are falling and that newspapers are figuring out how to monetize targeted audience segments. They also appear to be much more open to working with aggregators and partners.

Still, the long-term outlook continues to be dim because of the economy, debt pressure and the unwillingness of investors to spend money in mature markets. The value that papers provide, though, is only increasing in importance. “In what traditionalists tend to dismiss as a cacophony of talking heads, celebrity infotainment, opinion-driven blogosphere exchanges and information overload, the integrity and sense-making of professionally done news should be more valuable than ever.”

The report also has an interesting section analyzing the practices and credibility of citizen media. It features an update of an earlier report that audited 64 citizen news sites. The new research should provide some comfort to established news organizations because it finds that, in general, they do a better job of incorporating citizen voices into their coverage than pure grassroots citizen operations. In particular, legacy news organizations are better at giving citizens a voice in published content and making it easy for readers to download and share information. In fact, the only area in which mainstream media’s citizen journalism ventures failed to outshine the grassroots sites was in linking to competitors’ content.

Finally, the report includes profiles of several new media ventures, ranging from NewHavenIndependent.org to MinnPost.com to GlobalPost.com.

Miscellany

The San Francisco Chronicle‘s buyout offer has 120 takers, which is more than was expected. As a result, the involuntary layoff total won’t be as high as many had feared. The newspaper management has been working with the union to restructure its contract. Even with the buyout, remaining employees will still see pay cuts and longer hours.

The Livingston County (Mich.) Daily Press & Argus has announced a “significant but unspecified number of layoffs” in its 95-employee workforce. Management would only say that the number was more than 10 and included Managing Editor Maria Stuart.

The Staunton (Va.) Daily News Leader will cut eight full-time employees and 15 part-timers from a workforce of unspecified size. Just one day earlier, the paper said it would outsource its printing operations to the Harrisonburg Daily News-Record. Laid-off employees include “press operators, mailroom workers and other employees charged with the production side of printing the paper every day.”

If you’re in Eugene, Oregon this afternoon, you can stop by the university at 4 p.m. and hear Boston Globe editor Martin Baron talk about the challenges facing newspapers, presumably including his own. The Globe laid off another 50 people last week.

The Guardian announced today that it will cease print publication after 188 years and go Twitter-only. All future content will be formatted to less than 140 characters and the newspaper has launched an ambitious effort to retweet its entire archive. 

“[Celebrated Guardian editor] CP Scott would have warmly endorsed this – his well-known observation ‘Comment is free but facts are sacred’ is only 36 characters long,” a spokesman said in a tweet that was itself only 135 characters long.”

The newspaper says it has found that many events that had previously required thousands of words to describe could be more efficiently communicated within the 140-character limit. For example, it has summarized its coverage of the JFK assassination as “JFK assassin8d @ Dallas, def. heard second gunshot from grassy knoll WTF?”

The Guardian‘s decision is a bold move, but tough times call for tough decisions.

Demotix is a new kind of citizen journalism site that acts as an intermediary for photojournalists. Its media clients can select images from the site’s feed and Demotix splits the revenue 50:50 with the photographer. Unlike the many citizen journalism ventures that pay on the order of a few dollars to contributors, Demotix prides itself on getting professional pay scales. Non-exclusive fees can run from $50 to $3,000, according to the company’s website.

“We are raising citizen-journalists to professional rates, because that’s what they are worth,” says Tim Saunders, Demotix’ North America Editor. “We see this as fundamental to our core aim of incentivizing quality citizen journalism and securing a viable income for talented freelancers.”

The London-based company principally serves up photos at the moment, but will expand into written journalism soon, according to CEO Turi Munthe (left). The business has signed on several high-profile newspapers and is hoping that its international scope will make it appealing to US journals that have had to lay off their international correspondents. Services like its concentrated coverage of the G20 Summit in London fill gaps left by the absence of foreign bureaus.

Anyone can contribute to Demotix by simply setting up an account and uploading reports and photos. A staff of professional editors decides what goes out on the wire and pays a small fee to contributors just for being selected. If a client outlet publishes an item from the wire, Demotix negotiates a fee.

On the day we caught up with Munthe for a short interview last week, the office was a bit chaotic. Demotix had just won the Media Guardian Award in the Independent Media category, an honor that Munthe said is like the “media Oscars.” 

To listen to the interview, click below or right-click here and save to download.

Amid all the hand-wringing about the lack of new-media alternatives to newspapers, the online-only Huffington Post is setting up a small investigative unit to examine the nation’s economy. The news site is collaborating with The Atlantic Philanthropies and others to launch the Huffington Post Investigative Fund with an initial budget of $1.75 million and plans to hire 10 investigative journalists who will primarily coordinate work done by freelancers. “All of us increasingly have to look at different ways to save investigative journalism,” said founder Ariana Huffington (left). She added that the fund will probably hire laid-off newspaper journalists.

Everything the venture produces will be available free for any publication or website to publish. While the group’s initial focus will be on the economy, the founders intend to cover a wide range of topics over time. Content won’t reflect HuffPo’s left-leaning politics because the philanthropic funding requires a neutral perspective. Jay Rosen, who will advise the project, has more detail on his blog.

Critics find a hint of irony in Huffington’s journalism bailout plan. Joseph Tartakoff notes that “Some traditional media outlets have previously accused the HuffPo of stealing their content. The Chicago Reader, for instance, charged Huffington Post with ‘grand theft‘ after it reprinted one of the publication’s articles wholesale on its site.” HuffPo practices a new style of journalism with a small staff of reporters and links to other sources aggressively from its home page.

Jeff Jarvis likes the HuffPo idea and suggests that $1.75 million can go a lot farther than one might think. He evokes the “1% rule” of online communities, which is that 1% of the people create the content that the other 99% consume and discuss. “You need only a limited number of contributors to support great things in a gift economy. See: Wikipedia and NPR,” Jarvis writes.

John Yemma would probably agree. As his publication, the Christian Science Monitor, goes Web-mostly, the editor (right) has launched a blog that he hopes will be “a place to talk about the changes in media.” In his second entry, he compares the crowd-sourced Wikipedia model to the closed Encarta and Britannica products. “General knowledge…can’t withstand an effort that was developed specifically for the Internet and that harnesses gifted amateurs,” he writes. And he issues a warning to newspapers about putting content behind a pay wall, as Britannica and Encarta did. “The Web is its own universe with its own rules,” he writes. Such new-media thinking from a veteran print journalist indicates that the Monitor experiment will be an interesting one to watch.

Debating the Value of Newspapers to Democracy

Slate’s Jack Shafer takes a dim view of the idea that newspapers are essential to democracy. Before the current crisis, he writes, people mostly complained about the lousy job newspapers did of getting the facts straight and delivering balanced coverage. Now that the medium is failing, newspapers have been “reduced to a compulsory cheat sheet for democracy. All this lovey-dovey about how essential newspapers are to civic life and the political process makes me nostalgic for the days, not all that long ago, when everybody hated them.”

17th Century Newspaper

Shafer points out that when Thomas Jefferson said he preferred newspapers without government to government without newspapers, he wasn’t talking about the broadsheets we know today. Newspapers in Jefferson’s time were baldly partisan and often skewed the facts to suit their views. How did people figure out the truth when each journal had its own version of the truth? They triangulated, they checked other sources and they figured it out. This worked okay up until about 50 years ago, when newspapers decided to become the arbiters of truth. That’s convenient, but it doesn’t mean we can’t go back to a form that the founding fathers believed was essential to democracy.

The idea that many small contributions can out-produce a few big ones is nicely articulated by Timothy Lee on TechDirt. In order to understand how journalism can be reinvented, you need to discard the notion that only monolithic, vertically integrated organizations can cover the news. “The Internet makes possible a much more decentralized model, in which lots of different people, most of them volunteers, participate in the process of gathering and filtering the news,” he writes. “If millions of people each contribute small amounts of time to this kind of decentralized information-gathering, they can collectively do much of the work that used to be done by professional reporters and editors.”

If you’re geeky enough, you’ll recognize the open-source software model in this thinking. The most powerful force ever to come along in software development depends upon teams of loosely-organized developers each contributing a little bit of their time to building software that anyone can use for free. No, journalism isn’t software development, and there are certain practices of journalism that can’t be duplicated by a person sitting at a desk in India. However, Lee suggests that if the gadflies who already hang around city council meetings start reporting upon them on their blogs, then the community effect can take over to turn that amateur reportage into real journalism. You don’t need professional reporters for everything.

Jon Talton begs to differ. In an angry and resentful blog entry, he derides the idea that grass-roots efforts can ever replace the depth and credibility of what professional journalism organizations produce. Special interests, “will all have stronger voices for their agendas. Manias, rumors and groupthink will be more prevelant. In many localities, people will be particularly ill-informed about their government and major economic powers, pluralism will decrease and corruption will rise,” he writes. After that, we suppose, come the locusts.

Miscellany

Media General is cutting back again in Florida, saying there are no signs yet that the economy is picking up. Its Florida Communications Group cut 53 jobs, eliminated 12 vacant positions, closed two niche publications and added three more days of unpaid furlough to the 10 that employees were already required to take.

Back in the early days of the Web, some newspapers were criticized for withholding information from their websites until the stories had already appeared in print. Now that times have changed, the Minneapolis Star Tribune is being labeled a visionary for doing the same thing. The Strib has enjoyed good success online despite its small-market roots, so the paper is gambling that it can entice readers to become print subscribers by withholding some deep investigative reporting from the website. “The best of our deep, exclusive content will be available online later in the week, unless we have a compelling reason to post it sooner,” wrote editor Nancy Barnes in a letter to readers.

The Boston Herald laid off 12 people, or 6% of its workforce.

The Associated Press has a great list of “daily newspapers that have reduced publication days since last year.” In reality, many of the papers on the list were not technically dailies to begin with, but all publish at least five days a week.  It looks like Mondays, Tuesdays and Saturdays are the most popular days to cut.