Bill Densmore has drafted a 55-page white paper outlining some ideas for sustaining journalism in the free-mass-media age that should be of interest to anyone who worries about the future of trusted media.

We say “trust” because that is at the essence of Densmore’s argument in “From Paper to Persona:” the vast profusion of online information has created a trust crisis that represents a business opportunity. People have no incentive to pay for information any more, but they may be willing to pay for information they can believe. The risk is that the collaborative effort needed to solve this problem may be so massive that no one will attempt to undertake it.

Densmore’s “nut graph” is the following:

Free information is so devalued and so frequently untrustworthy that the public is now looking for alternatives that save time, promise reliability and are always available from multiple platforms.

Sound familiar? Have you recently sought medical advice online? The most common complaint we hear about the Web in general these days is that you can’t trust anything you read. While Wikipedia, Snopes and IMDB are pretty accurate, they aren’t going to tell you much about the possible negative effects of drug interactions or the real risks of radon in the average home.

Not to mention whether Osama bin Laden is alive or dead, a conspiracy theory topic that already shows signs of reaching Elvis Presleyan proportions. Not only has news become a commodity, it has also become so politically polarized that partisan echo chambers continually corrupt whatever the reliable channels of news may tell us.

Densmore proposes that this chaos may be quelled by consortia created – with or without public funding – that “uniformly exchange payments for the sharing of text, video, music, game plays, entertainment, advertising views, etc., across the Internet… Consumer users should have a choice of providers – agents – for accessing services, with one account and one ID providing simple access to multiple resources.” Sort of like iTunes, except a lot broader in scope.

This is going to be a tough pill for many conventional media veterans to swallow, however. It requires that they migrate from “the most-trusted information source” to and “information valet,” which Densmore describes as “a combination of curator, adviser, authenticator and retailer of personalized news, entertainment and service information from anywhere.”

The proposal makes sense, but the problem is that news people aren’t trained to be valets; they’re educated in the school of hard knocks and worn shoe leather, where scoops were trophies and one would no more cooperate with a competitor than evict one’s mother from her apartment. But as this blog has been arguing for three years – and Densmore argues much more eloquently – all that stuff has got to change.

Sustaining journalism requires rethinking the very notion of advertising, and of news as a service…Aggregate for advertisers and sponsors audience measurement and selected demographic data…track, aggregate, sort and share revenues, including payments to users for the use of their “persona.” The user should be in control of the data use and flow concerning them.

In other words, trade the two assets consumers have to offer – money and personal information – for a service they increasingly crave: truth. The answer isn’t all-or-nothing notions like paywalls; it’s creating something with perceived value and flexible options for paying for it.

Can Densmore’s vision work? It has to. The two billion people in the world who are now connected to the Internet have already moved beyond the notion that information is a scarce commodity, even if a lot of news publishers still haven’t. The information-consuming public understands that today’s problem is not lack of knowledge but lack of trust. News organizations are actually in a pretty good position to deliver on the trust equation, but they have to discard the notion of propriety and exclusivity.

In Densmore’s words:

The Next Newsroom could be a service organization — like a law or accounting firm — and it will be paid accordingly. For now, it will be extremely difficult to convince people to pay for such a service. But as the years go by, it will be seen as an absolutely indispensible way to get through the day. People will become as reliant on their “newshare” as on their doctor, lawyer, accountant, teacher or business colleague, or for 1their water, gas heating or phone service, all of which are services for which we pay on a project or metered basis.

Good point.

Nieman Journalism Lab scored a coup in landing the eloquent and insightful Ken Doctor as a weekly columnist focusing on the economics of news. His analysis of the cost of journalism at California Watch is well worth reading if you want to understand why nonprofit investigative ventures are so popular right now (ProPublica just nabbed its second Pulitzer).

California Watch’s “On Shaky Ground,” an account of the dangerous vulnerability of many California schools to collapse in the event of an earthquake, is “old-fashioned, shoe-leather, box-opening, follow-the-string journalism, and it is well done,” Doctor says. It also cost over a half million dollars to report, an amount that would have caused most newspaper publishers to gulp even before the industry entered its string of 21 consecutive quarterly revenue declines.

But a half million is a relative bargain when you consider the number of media organizations that benefited from it. Pieces of the series ran in six major dailies and were picked up statewide by ABC-affiliate broadcasters. Top public radio stations in the Bay Area and Los Angeles ran with it, and a number of ethnic and online outlets (including more than 125 Patch sites) also picked up the coverage. Many localized the content by snipping local maps or extracting information about their area from the voluminous database of school-by-school information that the project produced.

Doctor notes that California Watch is building a new kind of syndication business around investigative journalism, which is the branch of news that has been hardest hit by budget cuts over the last three years. This is not a reincarnation of the Associated Press model, which mainly delivered breaking news. Bloggers, citizen media and Twitter have diminished the value of that function considerably. What citizen journalism can’t do it spend 20 months developing a story, which is what California Watch did.

California Watch is still “feeling its way along,” in Doctor’s words. Syndication revenue won’t support its current $2.7 million annual budget, so donations are grants are still essential to its livelihood. But look at what donors get for their money: About 70% of that $2.7 million goes to support the project’s 14 journalists. By comparison, a typical daily newspaper’s editorial costs are about 20% of overall expenses. These nonprofit models are vastly more efficient than the newspaper investigative teams they’re replacing.

And when you spread those costs among a lot of subscribers who pay a few thousand bucks a year to get access to the reports, it’s really not that expensive. “An owner…can hardly reject the offer of paying one-hundredth of the cost for space-filling, audience-interesting content,” Doctor writes. Particularly when compared to the value of a single child’s life who might have been saved (hearings are already under way).

Doctor’s analysis raises an important point about the evolving economics of information. In a world in which raw data has become a nearly valueless commodity, value is derived from filtering and contextualizing information for specific audiences. The small California weekly that could never dream of spending a half million dollars on an investigative project can spend a few hundred dollars to buy the work of a dedicated investigative team and then extract the information that’s relevant to its readers.

This is a much more efficient way to deliver news, but taking advantage of it requires discarding treasured assumptions like the not-invented-here syndrome and the belief that scope and scale define importance. It’s good news for local publishers. In the traditional model, only a handful of California papers could have tackled a project the size of On Shaky Ground. Now nearly everyone can share the wealth.

The Long, Slow Bleed

Lest anyone think the lack of major metro daily closures over the last couple of years is a sign of strength in the newspaper industry, consider recent earnings reports. Ad revenues at Gannett, McClatchy, Media General and Journal Communications were all off between 6% and 11% in the first quarter, and there’s no sign of a turnaround. Alan Mutter’s analysis makes an important point about why newspaper advertising isn’t sharing in the sputtering recovery.

The more advertisers of all types experiment with Web, mobile and social advertising, the more they will come to appreciate the power of the digital media to tightly target qualified prospects while granularly measuring the costs and effectiveness of their campaigns.

In sales jargon, the buying process is a funnel, with a large number of uninformed prospects at the mouth and a few qualified buyers at the tip. As consumers increasingly research their purchase decisions online, the need for merchants to advertise their availability declines. They get more leverage from intercepting buyers during the decision-making process. The deeper into that process buyers get, the better the prospect of converting them to customers. And incidentally, vendors only have to pay for actions like clicks and leads, not vague measures  like circulation.

The reason newspaper closures have largely stopped is that the industry’s near-death experience in 2008 – 2009 focused publishers on slashing costs, raising subscription prices and squeezing as much blood as possible out of the stone of an aging and shrinking circulation base. That is not a prescription for growth. We continue to stand by our 2006 prediction that major metro daily print newspapers will all but disappear by 2025. In fact, we think it’ll happen sooner than that. It’s just that death will come from cancer, not heart attack.

Miscellany

The Las Vegas Review-Journal is expanding its business model beyond pure advertising. according to a press release,  a partnership with parent company Stephens Media LLC’s digital arm will enable the Review-Journal to launch a service to  provide local businesses:

…full website, branding and logo design; hosting and customer support for websites and related digital services; email marketing; mobile marketing; training to provide local businesses easy tools to maintain and update their own sites and analyze web traffic; search engine optimization and search engine marketing; customer reputation management with daily reporting; social media presence and tracking tools for digital and traditional marketing efforts to ensure monitoring of ROI.

Hmmm, why didn’t we think of that?

Desperation often drives innovation, and the miserable state of the Las Vegas economy no doubt played a role in this quest for new revenue sources. We think it’s a smart move; most small businesses have no idea how to market themselves online and a local newspaper is a trusted partner that’s in a great position to give them a hand.

AOL’s Patch network of hyperlocal news sites intends to recruit 8,000 bloggers over the next few days. It’s asking each of its 800 sites to sign up 10 community members to blog. No word on whether the contributors will be paid, but given that Arianna Huffington is now running the show, we think we know the answer to that one.

And Finally…

Reports emerged in the Twittersphere early this week that the world’s last manufacturer of mechanical typewriters was closing down its India production plant. A lot of people, including us, were taken in by this. But there’s good news for the old-timers who still appreciate the clatter of metal on paper. Atlantic Wire reports that several factories in China, Japan and Indonesia are still manufacturing typewriters. Even if production shuts down, there’s a pretty good used market. For old time’s sake, we bought an IBM Selectric, which used retail for $450 in the 1970s, for a buck at a yard sale a couple of years back. We’re still not sure what to do with it.

We were so choked with joy to finally read details of The New York Times‘ paywall plan, which was announced yesterday, that we didn’t quite know what to say. So we’ll let others do the talking:
“This is how it will work, and what it means for you:

• On NYTimes.com, you can view 20 articles each month at no charge, [after which] we will ask you to become a digital subscriber.
• On our smartphone and tablet apps, the Top News section will remain free of charge. For all other sections, we will ask you to become a digital subscriber.
• The Times is offering three digital subscription packages that allow you to choose from a variety of devices.
• All home delivery subscribers will receive free access to NYTimes.com and to all content on our apps.
• Readers who come to Times articles through links will be able to read those articles, even if they have reached their monthly reading limit.
• The home page at NYTimes.com and all section fronts will remain free.”

Arthur Ochs Sulzberger Jr.

“On day one, at least, opinion on the web seems widely negative—although, perhaps it’s just that the angriest people are the ones that we tend to hear from first? The Guardian, whose management has long defended the free-for-all model, is conducting a poll on its website, asking readers about the Times online, ‘Will you become a subscriber?’ I guess I shouldn’t have been so surprised that the ‘No, I’ll read my 20 free articles and move on’ would get a whopping 93 percent, with only 7 percent (as of this writing) voting for ‘Yes, its news and opinion are a must-have.’”

Columbia Journalism Review

“It’s a high price, a gamble, and a big hedge…against print subscribers migrating too quickly to the tablet. Since it is not charging print subs, it’s going to be an uphill battle to get non-print people to pay a minimum of $195 a year for something that was free, and it eschews conventional wisdom that $9.95 a month is a consumer limit on many digital items. The lack of an annual offer is glaring, and makes it far less friendly to expense accounts for business readers.”

Ken Doctor on Nieman

“An apparent (and likely very purposeful) loophole in The New York Times paywall plans: At least two of the newspaper’s home delivery subscription packages—which also come with unlimited access to the NYTimes.com website and apps—are cheaper than the “all digital access” subscription package.”

PaidContent.org

“This won’t work.”

Cory Doctorow on BoingBoing

“I suspect twenty free stories is too high, particularly when combined with the porous backdoor from social media. But it’s better to start off high and then gradually adjust it as the data comes in and you see what the effect is. And that’s a key thing to remember here: This is just a start.”

Columbia Journalism Review

“Nobody disputes the assertion that the Times cannot survive without increasing its revenues. Because I need the Times in my life—to read and to bitch about—I have no problem with the paper ejecting as many free-riders as necessary and soaking as many of the habituated (you’re looking at one) to make the paper prosper. So as we pick the mortar from the paywall and heave the loose bricks over the top at the Times noggins, keep this in mind: The pricing scheme and process by which the paper evicts its millions of squatters doesn’t have to be perfect, it just has to increase revenues appreciably.”

Jack Shafer on Slate

“There’s a great big hole in that wall that the Times doesn’t mention in its FAQ or press release. According to sources close to the situation, the 20-story limit can be breached if you access the site from multiple devices, and/or if you delete your cookies. In other words, suppose you hit the wall on your PC. Then move to your laptop, where you’ll get another 20 stories. Delete your cookies on any computer, and the clock goes back to zero.”

Bill Grueskin on PaidContent.org

“We believe at least 500,000 people (or more than 10 percent of those heavy users) may be willing to pay up—and here’s how we get to that number…”

PaidContent.org

“Let’s say that realistically the NYT is going after a universe of no more than 800,000 people that it’s going to ask to subscribe. And let’s be generous and say that 15% of them do so, paying an average of $200 per year apiece. That’s extra revenues of $24 million per year. [That] is a minuscule amount for the New York Times company as a whole; it’s dwarfed not only by total revenues but even by those total digital advertising revenues of more than $300 million a year. This is what counts as a major strategic move within the NYT?”

Felix Salmon on Retuers

“We asked some of our favorite media thinkers…to weigh in on the model’s pricing, packaging, and more. (Also asked: Are you going to subscribe?) Here are reactions from Steven Brill, Steve Buttry, David Cohn, Anil Dash, Jason Fry, Dan Kennedy, Martin Langeveld, Megan McCarthy, Geneva Overholser, Jonathan Stray, and Amy Webb. And please do share your own thoughts and reactions, as well.”

Nieman Journalism Lab

Poynter’s Julie Moos aggregates some of the best tweets from journalists and people in Canada, where the paywall will be tested first.

“The New York Times communications staff emailed out this slide deck to media writing about their new paywall plan. (And trust me, we’ve been writing about it.) The deck lays out the basics of the plan, but also gives an idea of the pitch is meant to read to advertisers and investors, not just readers.”

Nieman Journalism Lab

“How about this, New York Times: You bring back the ‘On Language’ column, and I’ll take out a digital subscription.”

John McIntyre

Readers who come to Times articles through Twitter will be able to read those articles, even if they have reached their monthly reading limit. A new Twitter account has been set up with the apparent intention of making most or all of the nytimes.com website available this way: @FreeNYT Everywhere

“[The plan is encouraging] for two main reasons: firstly, it recognizes the importance of distribution in online publishing. If you erect an arbitrary paywall, many people will not bother to link to you because they don’t want to frustrate their friends….Secondly, it recognizes that they need to balance quality with quantity. Online advertising has yet to settle into any sort of pattern, but metrics of engagement are rising in importance, and one of those metrics is how much traffic comes from recommendations, i.e. social media.”

Online Journalism Blog

“From my office in Cambridge, I created a new dummy nytimes.com account and logged onto a Canadian proxy — a server that allows you to appear to a website to be coming from somewhere you aren’t. Then I went a-click-click-clickin’ all over nytimes.com, hoping to run into the 20 article limit. When I hit No. 20, this popped up in the lower-left corner of my browser window:”

Joshua Benton on Nieman

...but apparently not TBD's future.

Wow, that was fast.

Just six months after it was launched as the most ambitious hyperlocal news operation in the US, Washington’s TBD has cut expenses deeply and narrowed  its mission to arts and entertainment. One third of the staff – or 12 employees – were let go this week. The apparent chaos at TBD is evidenced by the fact that general manager Bill Lord, who came on board just two weeks ago, said layoffs were only one of several options being contemplated at that time. Owner Allbritton Communications cited low traffic figures as the cause of the cutbacks. Considering that TBD racked up 6 million page views in January, it must have needed a lot of traffic to cover expenses.

The breathtaking speed with which Allbritton reined in the TBD venture shouldn’t be lost on other hyperlocal publishers. Alan Mutter sums up the difficulties that all such organizations face:

• Small audiences are difficult to monetize in the first place;
• Finding and converting advertisers to reach small audiences is expensive;
• Advertisers are reluctant to spend a lot of money on online ads in general, particularly when the audiences are small.

Mutter calls AOL’s Patch.com, which now encompasses more than 800 hyperlocal sites, the next litmus test for the concept. AOL is reportedly spending $50 million on the venture, but the tone of Mutter’s analysis is that that money is probably wasted.

Keep reading, though,  if you want a different perspective. Nearly every one of the 20 or so people who weigh in on Mutter’s post disagree with him, some vehemently. They argue that hyperlocal news does work if publishers don’t get too greedy. Comment writers include several people who are successfully running the kind of small operations for which Mutter see so little hope.

“Hyperlocal is just a way of expressing the need for news that is more local, closer to the neighborhood or town level, than the metro daily ever could be,” notes  Jay Rosen. “And of course it corresponds to a class of advertiser that was priced out of and ill served by the metro daily and TV stations.”

Adds Oscar Martinez (left) of NeighborsGo, a successful hyperlocal venture by the Dallas Morning News, “If nothing else, [the Patch.com] effort should be applauded because the competition will remind newspapers that there IS money on the table and, more important, there’s still time to go after it.”  We interviewed Martinez more than 2 1/2 years ago, and his hyperlocal operation is still alive and kicking.

Our take: Mutter’s analysis is accurate, but publishers continue to debate the wrong thing. The issue isn’t whether there’s enough advertising out to fund a lot of successful hyperlocal ventures; there probably isn’t. The solution is in finding other ways to monetize small businesses in the area. We laid out our proposal two years ago, but with the exception of Sacramento Press, a hyperlocal venture that is truly flourishing, we haven’t seen a whole lot of interest.

Promoting Newsroom Innovation

Lauren Rabaino picks up on a Twitter chat with Jay Rosen in which the professor said newsrooms need to radically revamp their culture. Rabaino points to a few examples of how tech startups break the mold in interacting with the customers and investors. While her use of the word “awesome” is a bit excessive, her examples aren’t.  Why are biographies on news sites so boring? Probably because newspaper cultures have traditionally buried the identities of all but their most prominent columnists. In contrast, tech startups use bio pages to point out that there are real people behind the products. Why not humanize the staff that brings you the news? Chances are they’re members of the community, anyway.

There’s also an interesting idea about bringing webcams into the workplace, something that text-messaging startup Tatango has reportedly done for its investors (although we can find no evidence of it on Tatango’s website). We’re not sure if webcams in the newsroom would be very interesting to look at, but the idea of opening up news meetings to the public has always intrigued us. Yes, competitors would be free to watch the action, too, but might the involvement of the community in the news gathering process also give the open newsroom a competitive edge? We’ve always thought that when it comes to reporting the news, more participation is better than less. Some traditionalists still resist that idea.

In a similar vein, Editor & Publisher has an essay by Neil Greer, CEO and co-founder of ImpactEngine.com, about how to motivate people to innovate. We think the recommendations are mostly management common sense, but they’re valid anyway.. T

Miscellany

The Selma (AL) Times-Journal will put up a paywall next Tuesday, becoming the latest in a trickle of small papers to charge for access. It’ll cost you $48/year or $4.95/month to get the news, and PayPal is accepted. Print subscribers will get in for free, but only after paying the online fee and then asking for a rebate. The story about the paywall is bylined by Times-Journal news editor Rick Couch, who temporarily abandons journalistic impartiality in failing to explore the controversy around paywalls or the possibility that this could actually be a bad idea.

The University of Colorado should eliminate its standalone journalism major in favor of an integrated information science or digital communications program, according to the chancellor of the Boulder campus. If approved, the shutdown of the current journalism school could happen as early as  next year. Chancellor Phil DiStefano isn’t calling for journalism education to fade from this earth. Rather, he thinks it should be incorporated more holistically into a liberal arts education and perhaps become a minor concentration. Boulder’s Daily Camera presents both sides of the debate, including anxious statements from the current journalism faculty who will be moved, like displaced persons, to other corners of the campus.

The Detroit Media Partnership is borrowing an idea from the fast-food industry and offering a $5,000 prize to the person or group who can come up with the best idea “for helping The Detroit News and the Detroit Free Press increase their audiences or better serve the community.” Management is taking suggestions now and will hold a public vote in early April. Finalists will pitch their ideas to a panel of judges that includes Domino’s Pizza Inc. CEO Patrick Doyle, whose policy of responding to customer complaints about his company’s crappy product is credited with turning Domino’s around.

Detroit’s second most famous business – rapper Eminem – shook up the local journalism world a bit by snubbing hundreds of media supplicants and granting a rare interview to East Hills Middle School eighth-grader Annie Reed. Reed, who had pursued the interview at the urging of her newspaper instructor,  talked to the 38-year-old rapper for about 10 minutes. The word “cool” was apparently used several times. The Detroit Free Press story is more about how Reed got the audience with Eminem than about what was said on the phone. It’s an uplifting tale and the photo is great. Lose Yourself.

“Launch glitches” will keep Rupert Murdoch’s tablet-only Daily free for at least several more weeks, according to Publisher Greg Clayman. Users have been reporting frequent crashes and freezes, which Clayman said is not surprising for a digital news publication that sometimes exceeds 100 pages per day. While people we know who have tried the Daily mainly dismiss it as gossipy fluff, Clayman says subscriptions are running ahead of plan, although he wouldn’t be more specific

The quarterly earnings season is upon us, and newspaper publishers are reporting better results, but not on the print side. The Washington Post Co. earned $11.59 a share in the quarter, which is nearly $3 dollars better than analyst consensus estimates.  However, print advertising revenue dropped 12%, continuing the ugly trend of the last five years. The good news: online revenues were up substantially.

A.H. Belo Corp., which publishes the Dallas Morning News and Providence Journal, among others, lost $119.5 million, or $5.65 per share, during the final quarter of 2010. That’s way down from earnings of $5.6 million, or 27 cents per share, in the same period the previous year. However, a large charge to cover pension expenses responsible for much of the drop. Revenue was down about 4%.

Gannett reported a fourth-quarter profit increase of 30%, largely due to cost-cutting and strength in its broadcast division. However, advertising revenue on the publishing side dropped nearly 6% and circulation revenue was down 4%.

And Finally…

Thanks to Legends and Rumors for calling out this correction from The New York Times, which we publish in its entirety:

An article on Jan. 16 about drilling for oil off the coast of Angola erroneously reported a story about cows falling from planes, as an example of risks in any engineering endeavor. No cows, smuggled or otherwise, ever fell from a plane into a Japanese fishing rig. The story is an urban legend, and versions of it have been reported in Scotland, Germany, Russia and other locations.

With its $315 million sale to America Online, Huffington Post now has to be considered one of the U.S.’s most highly valued news operations, so it’s only natural that observers should begin to wonder when it’s going to start paying its contributors a meaningful wage.

The debate is fueled by HuffPo’s unusual content model, which is based upon a large volume of articles contributed free by unpaid bloggers, as well as syndication and aggregation services that effectively used other people’s content to sell advertising.

Arianna Huffington’s “blogger network is an amazing achievement; she’s persuaded untold numbers of people to write for nothing, to have their names on the page as compensation for their labor,” writes Dan Gillmor on MediaActive. That model fits perfectly with the one that’s emerging at AOL as it places new-media bets with sites like TechCrunch and the Patch constellation of local news sites. “There’s a common thread in many of the content initiatives: paying low (or no) money to the people providing the content,” Gillmor writes.

But is that wrong? After all, no one is forcing bloggers to write for HuffPo for free, and the site’s terms & conditions state that contributors aren’t entitled to any compensation. Writing on Columbia Journalism Review, Lauren Kirchner notes that unpaid labor can actually be illegal in some circumstances. People have even been forced to accept payment when they didn’t want it because their volunteer work was deemed to be an unfair competitive advantage for the organization that benefited from their labors.

Even arrangements similar to HuffPo’s have been successfully contested in the past. Kirchner points to a suit filed against AOL years ago by a group of unpaid community managers who alleged that their efforts contributed to the company’s bottom line. The suit never reached trial and AOL finally settled for a reported $15 million, denying the world a clear precedent.

It’s unlikely that Huffington will change the practices that have contributed to its meteoric rise any time soon. But pressure from prominent voices like Gillmor could make executives uneasy. “The Huffington Post’s business model is perfectly legal. But is it right?” Kirchner asks.

Maybe not, but right in what context? We believe the debate over Huffington’s pay scale is a straw man for the bigger issue of content devaluation brought on by the Internet. Nate Silver contributes a fascinating analysis in this respect. He dissects the Huffington Post’s revenue model and determines that free content generates just a tiny percentage of the business. “The median blog post, with several hundred views, was worth only $3 or $4,” he writes. Even blockbuster articles contribute less than $200 to the site’s revenues.

Silver’s analysis makes a number of assumptions, due to the lack of publicly available information, but the number that caught our eye was his estimate that HuffPo publishes about 100 articles per day. If you figure that nets out to 30,000 articles per year and revenues of $30 million, then the average article is worth about $1,000 to the site. Assuming that HuffPo pays a 20% royalty to the author, then the average writer would expect to receive no more than $200 per piece. Silver’s methodology, which is based on traffic, estimates the actual value at much less than that. Under any scenario, unsolicited content is worth no more than a few bucks.

Huffington Post is only the most visible example of the new economics of news in which writers can expect to receive much less payment for work than they did in the heyday of mainstream media. Forcing the business to pay more to its writers doesn’t change those economics. Operations like Demand Media are standing at the ready to pay a nickel a word. The market will continue to find its low-water mark.

The good news — if there is any — is that this dynamic isn’t new. Back in the pre-Internet days, The New York Times was able to get away with paying freelancers a pittance for their work because it was The New York Times. The value of the  byline was enough to reward contributors, even if the actual paycheck was only beer money.

We believe that there is an explosion of demand about to come from corporations that are embracing the new tactics of “content marketing.” These businesses must increasingly compete on the value of their content rather than the size of their advertising budget, and they will need to hire professionals to help them. This may be small consolation to many journalists, but at least it offers the possibility of a living wage that enables them to practice independent journalism, if only in their spare time.

Second-half magazine circulation continued to tumble in 2010, with Hearst down 6% and Condé Nast off 10%. The biggest culprit is declining newsstand sales as consumers increasingly turn to their smart phones for information. Paid subscriptions were actually up 3.2%. Magazines continue to cut distribution and increase subscription prices in order to prop up profitability.

An interesting side note to this story  is that Sports Illustrated will stop selling print-only subscriptions. Instead of paying $39 to receive the magazine, people will now have to pay $48 to get a bundled print, web and Android app edition . Why no iPad version? The publisher and Apple are still trying to work that out, but nothing is expected soon.

More shenanigans in the Tribune Co.’s Chapter 11 mess. It just gets uglier and uglier.

And Finally…

If you think “crowdsourcing” is destroying the economy, then don’t read this…

• “Princecharming” will type up a poem about anything you want and send it to you, signed, in the mail.
• “Nick0000” will turn a black-and-white image into a color image (left).
• “Berthold” will proofread 800 words of English or German.
• “sugars68” will write a unique original article for any keyword, with delivery in 24 hours.

What do these stunts have in common? They’re all things people will do for $5. At Fiverr.com you can find people to provide products and services ranging from the ordinary (deliver parenting advice) to the bizarre (design your name from energy drink tabs) for a lousy sawbuck.

Fiverr is a real e-commerce site. If you want to take someone up on an offer, click a button, pay by PayPal or credit card and wait for the results. Buyers can rate the quality of the transaction and sellers can accumulate feedback scores, just like on eBay. You can even post a request for people who will fulfill your desire. All for five bucks. Amazing.

With its $315 million sale to America Online, Huffington Post now has to be considered one of the U.S.’s most highly valued news operations, so it’s only natural that observers should begin to wonder when it’s going to start paying its contributors a meaningful wage.
The debate is fueled by HuffPo’s unusual content model, which is based upon a large volume of articles contributed free by unpaid bloggers, as well as syndication and aggregation services that effectively used other people’s content to sell advertising.
Arianna Huffington’s “blogger network is an amazing achievement; she’s persuaded untold numbers of people to write for nothing, to have their names on the page as compensation for their labor,” writes Dan Gillmor on MediaActive. That model fits perfectly with the one that’s emerging at AOL as it places new-media bets with sites like TechCrunch and the Patch constellation of local news sites. “There’s a common thread in many of the content initiatives: paying low (or no) money to the people providing the content,” Gillmor writes.
But is that wrong? After all, no one is forcing bloggers to write for HuffPo for free, and the site’s terms & conditions state that contributors aren’t entitled to any compensation. Writing on Columbia Journalism Review, Lauren Kirchner notes that unpaid labor can actually be illegal in some circumstances. People have even been forced to accept payment when they didn’t want it because their volunteer work was deemed to be an unfair competitive advantage for the organization that benefited from their labors.
Even arrangements similar to HuffPo’s have been successfully contested in the past. Kirchner points to a suit filed against AOL years ago by a group of unpaid community managers who alleged that their efforts contributed to the company’s bottom line. The suit never reached trial and AOL finally settled for a reported $15 million, denying the world a clear precedent.
It’s unlikely that Huffington will change the practices that have contributed to its meteoric rise any time soon. But pressure from prominent voices like Gillmor could make executives uneasy. “The Huffington Post’s business model is perfectly legal. But is it right?” Kirchner asks.
Maybe not, but right in what context? We believe the debate over Huffington’s pay scale is a straw man for the bigger issue of content devaluation brought on by the Internet. Nate Silver contributes a fascinating analysis in this respect. He dissects the Huffington Post’s revenue model and determines that free content generates just a tiny percentage of the business. “The median blog post, with several hundred views, was worth only $3 or $4,” he writes. Even blockbuster articles contribute less than $200 to the site’s revenues.
Silver’s analysis makes a number of assumptions, due to the lack of publicly available information, but the number that caught our eye was his estimate that HuffPo publishes about 100 articles per day. If you figure that nets out to 30,000 articles per year and revenues of $30 million, then the average article is worth about $1,000 to the site. Assuming that HuffPo pays a 20% royalty to the author, then the average writer would expect to receive no more than $200 per piece. Silver’s methodology, which is based on traffic, estimates the actual value at much less than that. Under any scenario, unsolicited content is worth no more than a few bucks.
Huffington Post is only the most visible example of the new economics of news in which writers can expect to receive much less payment for work than they did in the heyday of mainstream media. Forcing the business to pay more to its writers doesn’t change those economics. Operations like Demand Media are standing at the ready to pay a nickel a word. The market will continue to find its low-water mark.
The good news — if there is any — is that this dynamic isn’t new. Back in the pre-Internet days, The New York Times was able to get away with paying freelancers a pittance for their work because it was The New York Times. The value of the  byline was enough to reward contributors, even if the actual paycheck was only beer money.
We believe that there is an explosion of demand about to come from corporations that are embracing the new tactics of “content marketing.” These businesses must increasingly compete on the value of their content rather than the size of their advertising budget, and they will need to hire professionals to help them. This may be small consolation to many journalists, but at least it offers the possibility of a living wage that enables them to practice independent journalism, if only in their spare time.

Second-half magazine circulation continued to tumble in 2010, with Hearst down 6% and Condé Nast off 10%. The biggest culprit is declining newsstand sales as consumers increasingly turn to their smart phones for information. Paid subscriptions were actually up 3.2%. Magazines continue to cut distribution and increase subscription prices in order to prop up profitability.
An interesting side note to this story  is that Sports Illustrated will stop selling print-only subscriptions. Instead of paying $39 to receive the magazine, people will now have to pay $48 to get a bundled print, web and Android app edition . Why no iPad version? The publisher and Apple are still trying to work that out, but nothing is expected soon.

More shenanigans in the Tribune Co.’s Chapter 11 mess. It just gets uglier and uglier.

And Finally…

If you think “crowdsourcing” is destroying the economy, then don’t read this…

• “Princecharming” will type up a poem about anything you want and send it to you, signed, in the mail.
• “Nick0000” will turn a black-and-white image into a color image (left).
• “Berthold” will proofread 800 words of English or German.
• “sugars68” will write a unique original article for any keyword, with delivery in 24 hours.

What do these stunts have in common? They’re all things people will do for $5. At Fiverr.com you can find people to provide products and services ranging from the ordinary (deliver parenting advice) to the bizarre (design your name from energy drink tabs) for a lousy sawbuck.
Fiverr is a real e-commerce site. If you want to take someone up on an offer, click a button, pay by PayPal or credit card and wait for the results. Buyers can rate the quality of the transaction and sellers can accumulate feedback scores, just like on eBay. You can even post a request for people who will fulfill your desire. All for five bucks. Amazing.

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

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

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

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

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

Shaky Daily

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

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

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

The Times They Are Delaying

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

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

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

And Finally…

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

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

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

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

With Dean Singleton being promoted out of an operational role and into irrelevance at MediaNews Group, some industry-watchers are speculating that this could be a turning point for newspapers – and maybe a positive one.

Singleton transformed MediaNews from an unknown regional holding company into the country’s sixth largest newspaper publisher, with weekday circulation of 2.4 million. His able sidekick was the company’s president, Joseph Lodovic, whose financial wizardry enabled much of MediaNews’s growth. When the company entered bankruptcy last year, Singleton and Lodovic engineered a debt-reduction plan that still left them with a significant stake in the company, a rare outcome in a Chapter 11 filing.

Both are now out. Singleton has been promoted into a powerless strategic role and Lodovic has retired. Martin Langeveld, who worked at MediaNews for 13 years, offers a shrewd analysis of the ownership picture of the U.S. newspaper industry. It is now dominated by bankers, hedge funds, investment bankers and others who could care less about public service or journalism. But that’s not necessarily bad.

Langeveld looks at the industry’s ownership map. The majority of newspaper holding companies in the U.S. have experienced one or more bankruptcies over the last five years, leaving control in the hands of creditors and shareholders. Langeveld presents a chart showing who is now in charge at companies like MediaNews, the Philadelphia Media Network, Journal Register Co., Freedom Communications, Tribune Co. and others. It turns out to be a small circle of friends, led by Alden Global Capital, which has stakes in no less than six media companies that are emerging or have emerged from bankruptcy.

Langeveld sees the possibility for a massive consolidation to take place now that so many interlocking directorates are mapping the future of these distressed companies. Which is a good news-bad news scenario. “Strategic geographic consolidations, if operationally led by someone of [Journal Register CDO John] Paton’s caliber, could be a potent force for the rejuvenation of the industry, including a renewed focus on…local journalism,” he writes. But there’s also the pessimistic view, which is that these firms simply get chopped up and sold off piecemeal.

The timing could be good for the dismemberment scenario. After crossing the Valley of Death in 2008 and 2009, most U.S. newspaper companies are once again on stable, if shaky footing and many are profitable again. The Los Angeles Times might even fetch a price of $1 billion, says Sharon Waxman of The Wrap, quoting industry analysts. That would be a shot in the arm to Tribune Co., which could barely even give away its newspaper properties when it was frantically bailing water in the days before it entered Chapter 11. It could also be good news for The New York Times Co., which couldn’t even get $25 million for its distressed New England properties two years ago, but which might be primed to take another run at selling off the Boston Globe.

So investors might choose to get while the getting is good, but they might also opt to stay in for the long haul. Ken Doctor sees the possibility of progress as investors consolidate control. “We’re seeing increasing impatience among the new owners with the old leadership,” he writes on PaidContent.org. “A growing conventional wisdom among them: Too many newspaper CEOs just aren’t moving fast enough to grasp the mostly digital, multi-platform future.” If investors do believe that media companies have a future – and the 2010 recovery in stock values provides at least a glimmer of hope – then they may bring in new management that has a clue about the new media world.

“At Freedom, the new owners brought in as CEO Michael Mitchell Stern, who came from DirecTV,” Doctor recounts. “In Philly, they brought in Greg Osberg as CEO and publisher; Osberg comes both from magazines and digital start-ups. The new Star Tribune owners brought in Mike Klingensmith, a Time Inc. alum. The new formula: out with the newspaper-only people and in with media people.”

Or, as John Paton recently said, “Stop listening to the newspaper people and start listening to the rest of the world.”

A Test for Tablets

The Daily for the iPad is set to launch any day now, and media watchers are abuzz over whether a tablet-only news product that is reportedly backed by $30 million of Rupert Murdoch’s money has a chance.

In case you missed it, The Daily is Murdoch’s bet that tablet owners will pay a buck a week to get a quality news service. He’s reportedly hired 100 journalists, including some well-recognized names, and set in for the long haul. It’s a bit retro, even while being progressive. For example, the text won’t have any hyperlinks and there will be no Web equivalent that readers can share. Apple is helping out by making The Daily a signature product on its new iTunes subscription service.

Ken Doctor hauls out the old spreadsheet and calculates the economics of the venture. He figures that if about .25% of tablet owners opt in for a yearly subscription, The Daily can clear $10 million in annual reader revenue. Can advertising make up the difference? That’s the question, and without any similar products to use for comparison, it’s anybody’s guess. Doctor’s view is that The Daily has a chance, but Murdoch is a risk-taker who has some history of spectacular failures. For Rupert, though, $30 million is pocket change. (Martin Langeveld also shares his thoughts on The Daily over on Quora).

Speaking of subscription fees, speculation over what The New York Times will charge for access to its web content is at a fever pitch. BusinessWeek says the fee will be less than the $19.99 a month the Times charges for its Kindle edition. This is a minor scoop at best, since a Times Co. executive said as much last month. We just wish the Times Co. would announce a pricing plan so we can get some sleep.

Big Pay for Big Names

Conventional wisdom in the journalism business is that new media ventures pay a lot less than the traditional outlets they replace. But that isn’t necessarily true, according to The Wire. The insider-y media site, citing unnamed sources, says that big-name journalists such as the Washington Post‘s Howard Kurtz are commanding six-figure salaries at some well-funded websites. Specifically, The Wire says Kurtz is getting a $600,000 salary at Daily Beast, while Tim O’Brien commands $400,000 a year at Huffington Post. “We may be entering a new golden age of journalism, in which the most-talented digital journalists can make way more than their print counterparts ever dreamed of,” writes Henry Blodget.

“Balderdash,” says the Beast. In a rejoinder to Blodget, Beast Executive Editor Edward Felsenthal says he was “flabbergasted to read the salary figures you tossed out for Howie Kurtz.” However, Felsenthal doesn’t provide any guidance on what the Beast is actually paying Kurtz, and HuffPo isn’t talking.

Meanwhile, Blodget takes the opportunity to add The Daily and Bloomberg LLC to the list of generous employers. Bloomberg, he notes, “has quietly become the second-richest and most powerful media organization in the world.”

Does this mean happy days are here again for journalist pay? Not likely. The majority of grunt-level former reporters still say they’re getting half of what they were making in mainstream media, or less. Demand Media, for example, reportedly pays about 10 cents a word for its articles, which are assigned based upon their performance in search results.

The Atlanta Journal-Constitution is profitable again, and “This ensures that we can continue to produce the quality journalism that you’ve told us is important to you,” crows Publisher Michael Joseph in a 1,000-word tribute to all that the paper is doing for its community. “Our improved financial picture is allowing us to again expand content offerings that are targeted toward what you’ve told us really matters in your lives.”

It will be interesting to see if area readers agree with this publisher’s optimism (comments are disabled on the essay), for the AJC has suffered some of the worst cutbacks of any major metro daily. In early 2009, the paper laid off 30% of its editorial staff, reducing its total size to less than half of what it was in 2006. Distribution to seven outlying counties was discontinued, coming on top of an earlier decision to cut all its regional editions. The AJC daily circulation fell 52% between 2002 and 2010, although some of that loss was self-inflicted due to distribution cutbacks.

The question is whether a newspaper with a staff of 230 journalists can produce the same quality of material as one with 500. We don’t want to dismiss out of hand the possibility that it can, but it won’t look anything like the paper it was a few years ago. In a desperate bid to survive amid its circulation free-fall, the AJC has completely upended its editorial model over the last five years, turning most of its attention to the suburbs and vacating its downtown offices in August in favor of cheaper space near the northern suburb of Dunwoody It has taken steps to address a perceived left-wing bias and chosen not to endorse candidates in recent elections. The AJC has partnered with local Cox TV and radio stations on tag-team reporting projects, attempted to partner with local weeklies to share content and even run occasional pieces from Demand Media, the crowdsourced editorial engine that assigns stories by keyword relevancy.

Can you cost cut your way back to success? The AJC will be on the leading edge of answering that question. There’s nothing like a near-death experience to focus the mind, and in slashing its costs, the paper has had to make some grueling decisions. Its experience is probably familiar to many in the industry, where the shift of the audience to the suburbs has challenged publishers to remain relevant at the local level its audience cares most about. It helps that the AJC has a near monopoly in its market, and that its website is the default destination for news about all things Atlanta. There’s nothing particularly special about its Web presence, but it was one of the first major dailies to release an iPad app.

Its free classifieds service is an acknowledgment that there is no more money in that business anymore. The question is where the revenues are going to come from? A lot of eyes in Atlanta will no doubt be on The New York Times as it attempts to launch a paid online subscription model in the first quarter. For a paper with the regional clout of the AJC, that may be just what the doctor ordered.

The New York Times asks if comedian Jon Stewart is the modern-day Edward R. Murrow, citing Stewart’s advocacy for legislation awarding health-care benefits to 9/11 responders that passed in the last hours of the 111th Congress. Stewart devoted his Dec. 16 show to the bill, which had received little coverage in mainstream media and was about to die with Congress’ adjournment. That show is widely credited with having resuscitated efforts to get the measure approved. Stewart says he isn’t a journalist, but the Times points to similar advocacy reporting by Murrow and Walter Cronkite that shifted public opinion about events in their time, and suggests that Stewart’s appeal to young audiences may kindle an interest in advocacy journalism by a new generation.

People passing by newsstands in Sacramento may do a double take when they hear the “talking news rack” deliver a 15 second recorded message each time a newspaper’s purchase. The news racks also have a scrolling LED that can display news, messages from the editor and even ads.

In the weeks before her death from the rare disorder of peripartum cardiomyopathy, Shana Swers documented her ordeal on Facebook. Reporter Ian Shapira was intrigued, and when the Washington Post assigned him to tell the story, he chose to anchor it in Swers’ own Facebook posts. The clips from Swers’ wall were annotated by Shapira, who did the traditional blocking and tackling of interviewing family members and medical experts, but the writer chose to sacrifice the journalist’s traditional privilege of owning the narrative. The piece is already being held up as one of the most innovative alternative news stories of the year. Mallary Jean Tenore provides more background on Poynter.

We won’t try to paraphrase the presentation that Journal Register Co. CEO John Paton gave to the INMA Transformation of News Summit last week because Paton stated everything so beautifully. So we’ll just give you a few quotes from the transcript that we highlighted. Paton gets it like no other news executive we’ve encountered.

“You don’t transform from broken. You don’t tinker or tweak. You start again – anew

“Doing more of the same with less results in the same done worse. It is prolonging the death of a broken business model rather than adapting to the realities of the present.

“Just about everything we are doing at JRC – and just about what every newspaper or legacy media company is doing – is focused on getting ON the Web. Very little is being done to position legacy media companies to be OF the Web.

“There is now an even bigger audience for our core product – news – than ever before.  And in the crowded marketplace that is the Web, it is the deep trust the audience has for print that is leading us and them online.

“To be in the news business now means you must run your business as digital first.  And that means print last. That is how this new world works.

“[The reason the industry isn’t changing faster is] fear, lack of knowledge and an aging managerial cadre that is cynically calculating how much they DON’T have to change before they get across the early retirement goal line. Stop listening to the newspaper people and start listening to the rest of the world.

“We are getting out of anything that does not fall into our core competencies of content creation and the selling of our audience to advertisers. Reduce it or stop it. Outsource it or sell it.

“We bought every reporter – and now some ad salespeople as well –a Flip video cam. They paid for themselves in about a month as we have gone from 100,000 video streams a month to about two million.

“One [JRC] group in Pennsylvania is trying to meet a challenge set by Jay Rosen [called] the ‘100% solution:’ Cover everything that happens on a particular subject in a particular area. Using the crowd, Twitter, smartphones plus Google Docs to manage it all, they are attempting to create real-time game coverage of high school sports. That’s every game in real time.

“Citizen Skip Harrison of Trenton New Jersey has an all-abiding interest in the New Jersey educational system. He is part of the Community Media Lab at our paper The Trentonian. We are training interested citizens to be journalists.

“We have successfully printed pages on a press using only free Web tools. The next time some rep comes to your shop brandishing a $20 million system, tell him the price just went down. Way down. Our capital expenditures have been reduced by half.

“In Torrington, CT at the Register Citizen, our young publisher Matt DeRienzo deputized his entire community to fact check all of his products online and in print…He issued an invitation to every reader, source and community member to hold them accountable and engage in correcting, improving or expanding the story. Matt’s innovative approach…has created an online audience 6.5 time greater than his print audience and he has taken what was a money-losing operation into a profitable one.

“As of Q3, year to date, the Journal Register Company[‘s financial performance] is handily outpacing the industry as compared to figures provided by the Newspaper Association of America. JRC’s ad performance has been three  times better than the industry. More importantly the company’s digital revenue has grown from negligible to 11% of ad revenue in November – in less than a year. With each passing day, that revenue is also less tied to the print buys. More than 60% of digital revenue this month is NOT tied to print sales. Our company which was bankrupt in 2009, is projected to have a profit margin of 15% this year.”