Things are looking up in Seattle. Shortly after the closing of the Seattle Post-Intelligencer just five months ago, the surviving Seattle Times asked publicly if the city was about to become a “no-newspaper town.” Hardly. Since the P-I went under, circulation at the Times has shot up 30% to 260,000 daily readers. The paper has crept back into the black on a month-t0-month basis and is enjoying its best outlook in years.

One of the last family-owned major metros in the country, the Times has been weighed down for years by a joint operating agreement that required it to support the money-losing P-I. Fortunately for the Times, it managed circulation for both papers, so when the P-I went under, the Times simply switched subscribers to its circulation list and gave them the option to cancel. A remarkable 84% opted to stay with the Times.

But it gets better. The online remnant of the P-I is beating its numbers. Although SeattlePI.com has only one-eighth the editorial staff of the failed newspaper, it has focused its coverage and kept most of the reader traffic it had before the newspaper went under. Hearst won’t say if SeattlePI.com is making money, but it does say that audience and revenues are ahead of projections.

In other good news, Cox Enterprises has pulled the Austin American-Statesman off the market, saying the bids it was receiving didn’t reflect the true value of the paper. The American-Statesman is one of 29 titles Cox put up for sale nearly a year ago. While there were many visitors and several bids, the offers were in the fire-sale range, said publisher Michael Vivio. “it just did not make sense to sell it for the prices offered.” The story quotes newspaper analyst Ed Atorino speculating that “there are signs that the newspaper industry may have bottomed out. ‘We see hopes for better conditions by the end of 2010,’ Atorino said. ‘It’s been very difficult, and now, maybe, the worst is over.’”

A Reader Revenue Model That Works

Amid the wreckage of the media industry, there is at least one publisher who’s charging readers for content and making a lot of money at it. He’s Christopher Kimball, the intense, non-nonsense publisher of Cook’s Illustrated and Cook’s Country magazines. The flagship Cook’s Illustrated has nearly a million subscribers who pay between $25 and $35 a year for six issues. There’s no advertising. The business is reportedly insanely profitable.

Kimball’s recipe is to give readers exactly what they want: no-fail recipes vetted with exhaustive trial and error in kitchens outfitted with the best gadgetry money can by. You won’t find exotic dishes in the Cook’s magazines. What you’ll find is instructions on how to make the perfect pancake, combined with exhaustive background information on details such as the role of baking powder in the process.

The Boston Globe profile says Cook’s Illustrated enjoys an almost unheard-of 78% renewal rate. Kimball charge for website access and finds readers through intensive direct-mail campaigns and a successful spinoff cooking show called America’s Test Kitchen. Though he’s a multi-millionaire, Kimball can usually be found on weekends at his Vermont farm, testing new recipes. He’s a rigid perfectionist who believes advertising is an unholy alliance that does a disservice to readers. So far, he’s confounding the critics.

Miscellany

The 23^rd annual Veronis Suhler Stevenson media survey is out (TG; we’ve been on pins and needles) and  finds that for the first time last year, consumers spent more time with media they paid for – like books and cable TV – than with primiarly ad-supported media. The study also forecasts somewhat counter-intuitively that media/communications will be the third fastest-growing industry in the US over the next five years, trailing only mining and construction. The growth won’t come from traditional media, though. Rather, it will be driven by new areas like paid product placement, e-mail marketing, in-game advertisements, mobile advertising and video downloads.

The New York Daily News is hiring a social media manager.  It’s joins crosstown rivals New York Times and New York Post in recently putting some bucks behind the explosion of interest in Facebook and the link. The Daily News has a long way to go: it’s roster of Twitter followers is about 1/10^th that of the Post’s.

The Boston Globe interviews New York Times Co. chairman Arthur Sulzberger and CEO Janet Robinson. They say the threat to shut down the Globe unless major union concessions were made was not a bluff. They also don’t plan to sell the paper to the highest bidder. They want someone who’s going to continue a history of quality journalism. And they think the Times Co. has been a splendid custodian of the Globe’s reputation. Sheesh.

We stumbled across a new search engine: Yebol that “utilizes a combination of patented algorithms paired with human knowledge to build a Web directory for each query and each user.” We’re not so sure what that means, but the search results pages are very cool.

Ken Doctor is one of those rare breed of editors who understands the business side of newspapering. After spending nearly 25 years as an editor at papers ranging from alternative weeklies to the St. Paul Pioneer Press, he moved to Knight Ridder corporate to help lead the company’s push into new media. Doctor ultimately worked on editorial, strategy and content services for Knight Ridder Digital, ran its online content division for five years, a position that had him managing a P&L  and scouting out new sources of revenue. He’s currently an Affiliate Analyst With Outsell, a research and advisory firm focused on the publishing, information, and education industries.

Doctor is fundamentally optimistic about the reinvention of the industry to come, but he worries about the estimated 800,000 stories that Americans won’t read this year because reporters around to write them. In this interview, he assesses the various rescue strategies that have been floated, the struggles publishers are having with reinvention and the silver lining behind the nearly 15,00 newspaper layoffs of the last two years.

Paul Gillin spoke to Ken Doctor on August 5th. Here are highlights of the 33-minute conversation.

Listen to the interview (33:23) (right click to download)

“If you look very closely, the small-town newspaper’s business model does and always has resembled a miniature version of the direction the big-city papers will eventually reach.”

That’s one of several gems in this splendidly written essay by ME Sprengelmeyer (right), a former Washington correspondent for the Rocky Mountain News and now the proud publisher and editor of the Guadalupe County Communicator, “the sixth-smallest weekly in the 36th most populous state.”

Writing on the blog of John Temple, former editor and publisher of the Rocky, Sprengelmeyer explains how his 18-month track across the US chasing the presidential candidates had the secondary objective of helping him find a new home in small-town journalism.

What he found was a century-old model that looks much like the future of big market dailies. ” They have tiny staffs – only what the day-to-day cash flow can sustain. They aren’t afraid of reader-generated content. They outsource many functions, such as printing and distribution…they keep their communities addicted to the print product because they…do not give away a whole lot of material for free.”

Most don’t make much money — in fact, some lose money — but that’s usually because they aren’t particularly well run. Big media organizations don’t bother with small markets and even if they cared, the cost of opening bureaus in thousands of small towns would cripple them.

Sprengelmeyerwrites about the “caravan of great journalists” who showed up to help him relaunch his paper. They spent the weekend strategizing, mapping the local area and redesigning the product. Then they left. “I cried some more,” Sprengelmeyer writes, “because then I was alone again, facing my first week on the job with the scariest boss in the world: myself.”

The account is an inspiring story of personal discovery and reinvention. It may make you cry, too.

The Times Regrets All the Errors

The New York Times published a jaw-dropping correction from its July 17 “appraisal” of Walter Cronkite’s career. Among the eight errors in the story where Wikipediable factoids such as the date of Martin Luther King Jr.’s assassination. Ombudsman Clark Hoyt files an explanation with this blunt assessment: “A television critic with a history of errors wrote hastily and failed to double-check her work…editors who should have been vigilant were not.” The critic, Alessandra Stanley, is apparently much admired for her intellectual coverage of television, but is so careless with facts that in 2005, “she was assigned a single copy editor responsible for checking her facts.” Those were the days…

According to Columbia Journalism Review, Stanley’s latest miscues have vaulted her into the top five most corrected journalists on the Times staff again and guaranteed her more special attention. Hoyt’s play-by-play is a fascinating glimpse into the operations of a journalistic institution and the mishaps that can bedevil even the most rigorous quality process.

It’s also a commentary upon editors’ willingness to overlook screw-ups because of perceived countervailing virtues. Be sure to read Mark Potts’ remarks upon the Times incident, in which he relates a few war stories of careless reporters he’s known. “I edited a reporter who had little or no concept of how to use commas; another who would submit long stories with gaps labeled ‘insert transitions here;’ and a third who infamously spelled a type of citrus fruit as ‘greatfruit,’” he writes. His account will make you alternately laugh and groan.

Daylife Draws Big-Media Attention

The New York Observer profiles Daylife, a startup that is partnering with media companies — and increasingly with commercial clients — to build cells of thematic content. With a small staff of 26, the New York City-based venture has already signed up the Washington Post, NPR and USA Today as clients. It takes a different approach to reporting the news. Editors are skilled not only at identifying important stories but also assembling webpages on the fly that combine all sorts of widgetized information.

The big difference between the Daylife approach and that of conventional media, explains founder Upendra Shardanand, is that Daylife assumes that news is a living and evolving organism, not a shrink-wrapped package. Investors include the odd pairing of The New York Times and Craig Newmark, whose Craigslist is considered the great Satan by many in the newspaper industry. Headlined “The Aggregator That Newspapers Like,” the story merits at least a quick read from publishers seeking reinvention, because these guys are doing something right.

Miscellany

Newspaper websites attracted more than 70 million visitors in June, who collectively spent 2.7 billion minutes browsing 3.5 billion pages, according to the Newspaper Association of America (NAA).  The figures are part of a new measurement methodology developed by Nielsen that measures a larger sample size and reports more granular information, according to an NAA press release.

The trade group has been on a campaign recently to stress the value of newspaper advertising.  It released a report last month showing that six in 10 US adults use newspapers to help make purchase decisions and that newspaper ads are more valuable than ads in any other medium.

The NAA’s timing may not be so great. Online ad spending declined 5% in the second quarter and the situation isn’t expected to improve much until the middle of next year, according to two reports released today. In the US, the rate of decline was 7%, or slightly above the global average. Classified ads fell 17% and display ads were down 12%. A J.P. Morgan report issued this morning said that search advertising, which has been one of the few bright spots in the market over the last year, dropped 2% in the second quarter, mainly due to poor results at Yahoo and AOL. Results were also dragged down by a 31% decline in ad sales at Monster.com.

Google has quietly quadrupled the number of articles in its News Archive Search service. The oldest newspaper digitized to date is this June 2, 1753 edition of the Halifax Gazette. Google hopes to make money by selling targeted advertising against the archives, a market that has traditionally been the source of some revenue for publishers themselves.

Two groups of former Los Angeles Times journalists have organized themselves into contract editorial groups selling journalism and photography. They’re called the Journalism Shop and Pro Photography Network.

The Boston Globe is said to be considering an option to become a nonprofit organization as a way to bail itself out of its current financial woes. Columnist Howie Carr of the rival Herald pens this vicious satire of the idea, calling his crosstown rivals “the bowtied bumkissers.” If you’re a disciple of editorial savagery, there is no more skilled practitioner than Carr.

The Fresno Bee will begin charging 29 cents a week for its TV supplement.

If you like the Amazon Kindle, you’re going to want to keep an eye on a new product from Britain’s Plastic Logic, which is due to launch early next year. The razor-thin reader will reportedly sell for around $300 and will have a flexible screen that makes it easy to carry. It’s also larger than the Kindle, which should warm the hearts of newspaper executives who don’t want to give up their broadsheet format. Here’s a video:

Mark Glaser takes a look at Demotix, the citizen photo agency we told you about in April. Demotix is the second notable startup to take a crack at monetizing citizen photojournalism, following on the heels of Scoopt, a site that brokered the work of amateur journalists to major media organizations and split the revenue with the photographers. Scoopt was acquired by Getty Images and shut down early this year.

Demotix scored a coup with its exclusive photo, taken by local resident Bill Carter, of the arrest of Harvard University professor Henry Louis Gates.

Glaser quotes Scoopt co-founder Kyle MacRae commenting on the futility of trying to break through the media establishment and create a name for oneself. “”It’s hard to get sufficient awareness to stand even the remotest chance that the next punter to witness a newsworthy incident will have heard of Demotix, and know how to submit a photo or video quickly,” he says. Another former Scoopt editor is quoted as saying, “There are no universally accepted destinations for newsworthy citizen media.”

The rather pessimistic tone of this article strikes us as premature. One heard many of the same quotes about the online bookselling, auction or search engine businesses in the mid-1990s. For example, at one time there are more than 500 online auction sites.  Today, there is one.  Early markets are freewheeling and chaotic. The more promising the market, the more entrants compete for the prize.  This is healthy.

First-Movers Don’t Win

The demise of Scoopt, which may actually have been killed by Getty as a defensive move, is entirely in line with the way technology-driven markets develop.  In fact, first movers rarely win.  They are either too early to market or make too many mistakes to reach the finish line.  Most of the most successful mainstream technology brands today were second or third attempts at their markets.  The iPod was about the 10th entry in the portable digital music field.

Whether or not Demotix is successful is not the issue.  The real question is whether citizen photojournalism has a future.  Our opinion is that citizen photojournalism will be so successful that conventional photo agencies will be struggling with irrelevance within a few years.

This is because cost and technology barriers have fallen.  The quality of the average $300 digital camera today rivals that of high-end professional equipment that cost thousands of dollars a few years ago.  What’s more, the cost of taking a digital photo is effectively zero, meaning that access to equipment and capital is no longer a barrier to entry.

Professional photographers were paid to optimize the use of a scarce commodity, even if individual photo negatives have low value. Photojournalists carried several thousand dollars worth of camera bodies around their neck along with a collection of expensive lenses and boxes and boxes of film. Their skill was knowing the exact moment and angle for a photo.

Today, photography is basically free. People snap away to their heart’s content because it costs them nothing. The chance that a non-professional will take the right photo at the right time is orders of magnitude higher than it’s ever been. Photographers don’t need expensive dark rooms or processing anymore.  Photoshop can make even terrible photographs acceptable.

Quality Conundrum

But what about quality? Surely, the work of professionals will continue to command a premium.  Perhaps, but the premium will shrink over time, at least in the case of photojournalism. Some of history’s most famous news photos are grainy black-and-white images shot under poor lighting conditions.  They’re famous because they captured a moment in time, not because they’re beautiful.  The democratization of photography makes it inevitable that future memorable images will be increasingly captured by nonprofessionals.

Amateur photographers don’t attach high value to their work because they haven’t been taught to do so.  If they can make a few bucks off a picture, so much the better.  Someone will figure out how to make this process a no-brainer and will make a lot of money from it.  Once enough amateurs are profiting from their photos, word of mouth will take care of building the brand.

The market for professional photojournalism is primed for collapse. Plunging technology cost has eaten away at barriers to entry and given even novice shutterbugs a chance to compete. Whether Demotix or somebody else profits from this development is irrelevant. Someone will hit the market at the right time with the right service.  The fact that this company may be unknown today is an important.  Remember that a decade ago, very few people had heard of Google, either.

Like it? Use it. It's free under a Creative Commons license. Photo by Steve Jurvetson

Guardian News and Media is said to be mulling the possibility of closing the Observer, which is the world’s oldest Sunday newspaper. Staffers at the 218-year-old companion to The Guardian daily recently discovered a secret mockup of a weekly news magazine bearing the Observer’s name. Last Friday, the parent company reported that Guardian News and Media lost £36.8 million ($60.8 million) compared with a loss of £26.4 million ($44 million) the previous year. Closure or downsizing of The Observer would be undertaken to shore up the finances of the daily. The Financial Times report stresses that no decision has reached, only that closure is one option on the table.

A lot of good ideas are being incubated to reinvent the publishing revenue model. We’re going to begin profiling some of these ventures under the label “Revenue 2.0.” If you’d like to be considered, send us a description of your product or service along with contact information. Please don’t send ideas; there are plenty of those. We’re looking for going concerns.

Pete Groverman can’t believe it’s so difficult to buy a newspaper ad.

“If you want to place an ad in every newspaper in Philadelphia, you have to either contact each paper directly or hire an agency or a broker to do it for you,” he says. “It takes about two weeks and it’s a pain in the neck.”

The 26-year-old Philadelphia entrepreneur thinks he has a better way.  Groverman and a small crew of bootstrap-funded dreamers have developed Tapinko, a sort of eBay for advertising. “It’s the online marketplace for offline ad space,” he says.

Like eBay, Tapinko helps buyers and sellers find each other but doesn’t disrupt the normal sales process.  Prospective advertisers can log into the service and find a list of outlets for their ad.  They select the opportunities that interest them and submit their request to the system.  On the other end, advertisers field and respond to individual inquiries, either selling at posted rates or negotiating side deals. Tapinko takes a small commission from the publisher for each successful sale.  The service also includes a variety of tools for tracking and managing ad campaigns.

Tapinko launched into the college market and has signed up more than 125 college newspapers.  Emboldened by early success, the seven-person startup are now seeking alliances with mainstream publications.  In May, they signed their biggest deal to date, a partnership with Greater Media Newspapers of Freehold, New Jersey. Advertisers will be able to buy space in Greater Media’s 12 newspapers via the Tapinko service.

Where Google Went Wrong

Tapinko’s approach is reminiscent of Google Print Ads, a service that the search giant shuttered early this year.  Groverman believes Google’s mistake was in messing with the existing process. “Google Print Ads was a Priceline approach where buyers named their own price and Google owned the brand,” he says. “Newspaper sales reps had no incentive to recommend the service.”

In contrast, Tapinko merely serves as a connector. Buyers still do business with individual publications at individual rates.  Ad reps still collect their commissions. “We’re piggybacking on the way advertising has been sold for hundreds of years,” he says.

And it turns out clients don’t have to be traditional publishers.  Among Tapinko’s list of media outlets is a young woman who offers to display a client’s bumper sticker on her car for a monthly fee of $75.  Another man will display a company’s logo as a tattoo for free as long as the advertiser pays for the tattoo.

The fledgling venture was recently accepted into the Philadelphia-based Dreamit Ventures startup foundry and is now seeking venture capital.

Miscellany

As expected, Sun Newspapers is pulling the plug on half its Ohio weeklies this week, consolidating 22 titles into 11 and laying off one third of its staff. The move is part of a sweeping plan to reduce the company’s workforce by 115 people that was announced last month. It’s unclear whether other shoes have yet to drop, since the 17 jobs eliminated in the consolidation are a tiny fraction of the planned total. The company announced plans to eliminate 45 editorial positions last month.

About 30 staffers at the Milwaukee Journal Sentinel just took a very generous buyout offer. The offer was so attractive, in fact, that many of the departing journalists are Sentinel lifers. Get this: the buyout offers two weeks’ pay for each year of service with an additional 10 weeks added on for people with more than 15 years. So It’s probably not surprising that people like broadcast media columnist Tim Cuprisin (23 years), theater critic Damien Jaques (37 years), books editor Geeta Sharma-Jensen (20 years), education reporter Alan Borsuk (37 years), pop music writer Dave Tianen (21 years) and music/dance writer Tom Strini (27 years) are exiting the scene. Jaques and Borsuk will each draw checks through early 2011, which isn’t a bad deal at all.

Has the newspaper advertising market contracted enough and publishers adjusted their business models enough to make subscription revenue a meaningful contributor to the business? Recent financial results indicate that the industry may be at an inflection point that could form the basis for meaningful change.

Ken Doctor has been analyzing the changing shape of the newspaper industry on his Content Bridges blog, which should be on every newspaper executive’s reading list. We shared a panel with Doctor a few months ago when he said that the industry would probably bottom out in the second quarter and enjoy a 12- to 18-month reprieve before  business began to slide again. So far, he’s right on the money.

Analyzing the latest round of financial figures emanating from publishers, Doctor sees clear signs of a bottom. Not a soft landing, mind you, but evidence that the gut-wrenching death spiral has begun to flatten out. He notes that the latest results showing continuing year-over-year revenue declines of 25% to 30% would have been cause for panic a year ago, but we’re so used to the bad news now that we can actually see a silver lining in the slowing rate of descent.

The encouraging news, Doctor notes, is that publishers are beginning to speak of light at the end of the tunnel while actually beginning to pay down the debt that has been threatening to crush them. McClatchy trimmed $100 million worth of debt this quarter and the New York Times Co. (NYT) has reduced its debt by nearly 25% this year. If these companies are to have any chance of growing again, they must get out from under this burden, so this progress, while not remarkable, is a start.

Assuming we’re reaching some kind of stability, what happens next? Most likely, we’ll see some experimentation with alternatives to the ad-heavy revenue model. In last week’s earnings call, NYT CEO Janet Robinson all but confirmed that the Gray Lady will set up a pay wall in the near future. Even though Times Select was a short-lived disaster, enough new models for monetizing subscriptions have emerged that the Times may be ready for another go.

Another factor is that circulation revenue is actually showing more stability than advertising revenue during this downturn. Check out the analyses by Ryan Chittum on CJR documenting that last week’s McClatchy results showed 5% growth in circulation revenue. He also makes the remarkable observation that, following a 1.5% increase in circ revenue in the second quarter, NYT Media group now derives almost as much money from circulation as from advertising:

“In the second quarter, the Times brought in $185 million in advertising revenue, while it reaped $166 million from its subscribers. Three years ago, those numbers were $316 million and $156 million respectively. The ad-to-circ revenue ratio at The New York Times has gone from two-to-one to one-to-one. Stunning.”

True that. Part of the reason the ratio has changed, of course, is that advertising revenues have fallen so far. But if, as Ken Doctor points out, publishers are learning to run much tighter operations, then the possibility of a balanced circ/ad revenue model becomes more real.

That doesn’t mean an answer has been found. Writing in The Wall Street Journal, itself a testament to the viability of reader revenues, Brett Arends points out that NYT bonds are currently yielding 11%, which is in junk bond territory. In other words, investors still think there’s a high likelihood that the Times Co. will default on its debt. Like many other observers, Arends sees no hope in online advertising revenue as salvation:

“The Times’ websites had about 52 million online readers in the first quarter. Internet revenues? Just $78 million. That’s 50 cents per reader per month. That’s not even a box of tic tacs. Company operating costs during the same period: $654 million. Payroll alone was $145 million.”

Ugly? Yes. But it’s at least an acknowledgement that online sales won’t solve the problem. Online ad inventory is continually expanding and CPMs have declined steadily for the last five years. There’s no reason to believe that trend will reverse itself, so publishers have to take a more serious look at reader revenues. A number of new models have emerged recently, including Alan Mutter’s ViewPass and Martin Langeveld’s CircLabs. Meanwhile, some half-serious schemes to regulate the proliferation of free content through licensing or legal means have also begun to spring up. Jeffrey Neuburger outlines a few of these on MediaShift; we don’t think any of these proposals holds water on its own, but they are collectively an indication that all is not yet lost in the battle to derive value from intellectual property.

To paraphrase Ken Doctor, publishers may finally be due for a breather. They have a chance to take stock of their new organizations and see if there’s a chance to grow the businesses again, or they can go back to trying to wring historic profits out of their operations. If they choose the latter, they will find themselves once again caught in the death spiral so eloquently described in this recent brief essay by Seth Godin. Let’s hope the past two years has at least taught them the dangers of staying with the status quo.

The New York Times Co. swung to an unexpected profit in the second quarter, although the turnaround had nothing to do with an improving business. Revenue at the company plunged 30%, which was even worse than the decline in the first quarter. The Times Co.’s success in reducing costs was the hero; expenses in the quarter were $450 million lower than a year ago. However, total revenues clocked in at $584 million, which was $19 million less than analysts expected.  The news did nothing to lift shares of the company’s stock, probably because analysts weren’t impressed by the sales performance. Even online revenues were down 22% because of weak recruitment advertising sales. The good news: The company has cut its debt from $1.3 billion to about $1 billion and is expected to slash that burden further with the expected sale of the New England News Group and the company’s share in the Boston Red Sox.

Sale of the New England News Group? Editor & Publisher‘s Jennifer Saba listened to the earnings call and heard evidence that the Times Co. may not be in such a hurry to sell the Globe after all. Cost cuts combined with circulation revenue increases have apparently put the enterprise on more stable ground.

McClatchy results were similar to the Times’, with ad revenue falling 30.2% and overall revenue tumbling 25.4% from a year earlier. Still, McClatchy managed to post a 43% increase in income on the back of stringent cost-cutting. Employment classifieds were off a gut-wrenching 62.5% as overall classified revenue fell 41% to $80 million from $135 million a year earlier. McClatchy CEO Gary Pruitt said digital advertising was up as a proportion of total ad revenues, but that’s only because total revenues were down so much.

Miscellany

Of all the tributes paid to Walter Cronkite over the last week, nothing topped this recollection from the Christian Science Monitor’s John Yemma. The story epitomizes Cronkite’s quiet greatness.

Meanwhile, Slate’s Jack Shafer takes a contrarian view, arguing that Cronkite’s legacy of trust emanated from a single survey of dubious quality combined with FCC regulations that required news broadcasters to remain impartial. Trust isn’t all it’s cracked up to be, says Shafer, noting that PBS’ critically acclaimed News Hour is actually losing viewers to the partisan and popular news programming of the cable channels.

Ken Doctor says Yahoo’s new deal with AT&T is bad news for the beleaguered newspaper industry. The partnership means AT&T’s 5,000 yellowpages.com ad sales people will now be out in the field selling small and mid-sized businesses on the glory of the Yahoo ad network. Until now, that role was filled almost exclusively by reps in the Yahoo’s 800-member newspaper network. Doctor says newspapers are finally getting religion about the merits of small-business advertising, a market that is estimated to exceed $25 billion annually. With national account display advertising falling like a stone, newspapers have to make a more compelling play for the local dry cleaner. Many of them are doing that, but the addition of 5,000 new competitors selling the same product can’t be much help.

The Ann Arbor News published its last daily edition last week, ending 174 years of continuous operation. The new Ann Arbor News will be a twice-weekly print newspaper with a continuously updated website.

The Associated Press will cut fees to print nad broadcast subscribers  by $45 million next year on top of $30 million in fee reductions already enacted this year. Total revenues are believed to have declined more than 6% this year and another big drop is forecast for 2010. A reduction of about 10% of its workforce is ongoing through the end of this year.

JD Lasica riffs on a meeting that we also attended last week with representatives of 10 mid-sized newspapers. The assembled editors and publishers were challenged to come up with ideas for reinventing their organizations and, while Lasica believes they still could have gone farther, he’s heartened by their innovation and positive thinking. One problem many participants complained about, however, is that they will go back to their managers and be challenged to show 25% first-year returns for their ideas. Some executives still just don’t get it.

One popular new model for paying for journalism leaves funding up to the journalists. That’s not going to fly in the long term, argues Karthika Muthukumaraswamy on the Online Journalism Blog. Bootstrap operations like Spot.Us do have promise in that they enable enterprising journalists to fund work that wouldn’t otherwise get done.

The problem is that philanthropic and publicly funded organizations like it and Pro Publica are becoming a crutch for cash-strapped mainstream news organizations that no longer have the means to pay for hard-to-get information. Their solution is to push the funding back on the reporters, who then have to scrape by on subsistence income in order to pursue their stories. The model doesn’t scale, she argues, and it won’t work for journalists who have families and  mortgages.

Robert Picard would beg to differ. “The primary value that is created today comes from the basic underlying value of the labor of journalists. Unfortunately, that value is now near zero,” he writes in the Christian Science Monitor. Publishing’s traditional high barriers to entry used to place a premium on publishing space and therefore on journalism. No more. Today, technology is “de-skilling” journalists and making everyone a publisher. That means journalists need to redefine their value, and it won’t come from arguing that their work occupies some kind of moral high ground.

One approach might be to specialize. “The Boston Globe, for example, could become the national leader in education and health reporting because of the multitude of higher education and medical institutions in its coverage area,” writes Picard, an oft-published professor of media economics at Sweden’s Jonkoping University. “Similarly, the Dallas Morning News could provide specialized coverage of oil and energy.” Whatever the solution, it doesn’t mean just Twittering and blogging, but really connecting with an audience’s most sacred needs.

Value Prop

Much as we hate to say it, Picard has a point. There’s a lot of focus on tools right now, as if video cameras and iPods have some kind of intrinsic journalistic value. Those are merely tools, and using new tools to do the same old thing doesn’t change the value of the product. Unfortunately, Muthukumaraswamy also has a point. If the value of journalism has been debased to the point that journalists need to go door-to-door to buy food, then a lot less good journalism will get done.

That doesn’t mean that the traditional model of fat union contracts and generous travel budgets are a good alternative. Today, they’re not even an option. Journalism must become more efficient to survive, and the new models for doing that are still under development.

What do you think? Will journalism be better in a world in which journalists themselves are responsible for funding their work?

The battle over concessions by Boston Globe union is over and management won. Was there ever any doubt? By a decisive 366-to-179 vote, the Boston Newspaper Guild voted to accept a package of pay cuts, benefit reductions and other concessions that is harsher than the one the union rejected last month. Owner New York Times Co. responded to the earlier contract rejection by unilaterally slashing wages 23%. That forced the union to dance a jig and recommend a revised package that had even deeper benefits reductions. Despite considerable grousing in the ranks, Guild members ultimately decided they’d better accept the current deal before things get any worse. Still, widespread layoffs are expected.

Meanwhile, Boston Business Journal editor George Donnelly reports that the Globe’s cross-town rival Herald just closed its fiscal year with a $2 million profit. It seems the publisher started cutting costs and working with the union long ago, while the Globe shoveled money into a pit. So who’s more likely to survive if the recession continues? Ask staffers at the Seattle Times, who believed that the Post-Intelligencer was the weaker of the two local dailies before Hearst abruptly pulled the plug.

Miscellany

Congressional Quarterly, which has been on the market for much of this year, has been acquired by rival Roll Call, which is part of the Economist Group. This can’t come as happy news to CQ employees, who now face the awkward task of merging with an organization that would have been happy to put them out of business. Still, they could do worse than work for The Economist. “The new CQ-Roll Call Group will have the largest and most experienced newsroom covering Washington,” said Laurie Battaglia, managing director and executive vice president of Roll Call Group. Mike Mills, editorial director at Roll Call, will call the shots at the combined entity.

Steve Yelvington has a well-balanced reality check on the future of journalism. The decline of print isn’t the end of journalism, he argues, but it will require a shape-shift. While Yelvington does succumb to some finger-pointing (“Newspapers could have invented search, directories and social networking. Few even tried.”), he ultimately puts the challenge of reinventing journalism at the door of journalists: “How long and how well newspapers and professional journalists persist in our future will be determined in part by how well they identify new ways to play socially valuable roles.”

Cox Enterprises continues to divest its newspaper holdings. It just sold three North Carolina dailies and 10 weeklies to John Kent Cooke, a media, sports and real estate magnate. Cooke’s son will run the North Carolina operation.

Mark Potts analyzes Rupert Murdoch’s plans to knock off The New York Times with The Wall Street Journal, dubbing it a “scorched earth strategy.” Murdoch appears content to let the Times Co. implode under the weight of its own debt while gradually moving the WSJ into its mainstream news stronghold. “There’s been some speculation that Murdoch’s real endgame is to buy the Times on the cheap, but why bother? If he makes the Journal the dominant national paper as the Times withers, he’ll emerge the winner,” writes Potts. It’s a good point. Murdoch biographer Michael Wolff has said that the Australian media magnate “sits around all day and thinks about buying The New York Times,” but why bother when market forces may make that expense unnecessary?

Darrell Laurant writes: “I run something called The Writers’ Bridge that is unique in the freelance universe. Not only do we match ideas with markets, but we generate lots of ideas for writers. We handle each member individually, and we’re good at hand-holding. My biggest frustration is the inability to recruit journalists, a group I see as the guts of this endeavour. I am currently a columnist/feature writer for a mid-size daily in Lynchburg, and I think I have something to offer. It costs $10 a month, but I’m willing to offer two months free to anyone who’s been laid off, just to check us out. After that, it’s $10 a month.” Let us know if it helps, OK?

Ahwatukee Foothills News staff writer Krystin Wiggs writes about being victimized by an elaborate hoax concocted by a young man who claimed to be a gifted and successful chef. The man, Vinayak Gorur, convinced Wiggs that he had won scholarships to culinary school and landed a sous chef job at a top restaurant at the tender age of 21. Gorur even enlisted an accomplice to masquerade as head chef at the restaurant for a phone interview. The guy even duped his parents. Wiggs is sick, angry and apologetic about the whole thing, but her story will resonate with any reporter who had gone through the usual motions of reporting a seemingly benign human interest story. How often do we go the extra mile to verify a story when everyone appears to be so genuine?

And Finally…

Slate has a clever video mashup of what media coverage of the moon landing might look like today. Many of the quotes are clipped from the last presidential election, but work just fine. Best scene: Wolf Blitzer interviewing a Neil Armstrong avatar.

For sheer satirical hilarity, though, we can’t beat this clip from The Onion.