Masnick

Mark Glaser invites two big thinkers on opposite sides of the micropayment debate – Techdirt’s Mike Masnick and The New York Times‘ David Carr – to spar with each other and try to reach some common ground. The result is what you’d expect when you put two talented writers into competition with each other: Great wordplay and eventual meeting in the middle.

Both combatants agree that putting paywalls in front of existing content is suicidal, although Carr believes that citizens will shell out once they realize that the alternative is cacophony. Masnick wins the award for best imagery: Paywalls are “putting up a tollbooth on a 50-lane highway where the other 49 lanes have no tollbooth,” he writes. He sees no merit in paywalls whatsoever, while Carr believes they can work in some scenarios.

Carr

Carr suggests that micropayments should be looked upon “as payments for news applications instead.” In fact, the Times’ media columnist never suggests that charging readers for what they now get for free is a viable strategy. But since the status quo is no longer viable, shouldn’t publishers experiment aggressively with hybrid models?

In the end, that’s where the debaters end up. Both agree that blended paid and ad-supported models have the greatest chance of success. And if you re-read the first part of the two part series, you see that both basically suggested that approach at the outset. So maybe the “debate” was a bit of a fabrication to begin with, but at least it got our attention. And isn’t that the goal after all?

Media Employment Trend Not All Bleak

Over at BusinessWeek, Michael Mandel is looking at employment in US information industries. Using Bureau of Labor Statistics figures, he finds evidence that “someone is hiring out there,” but it isn’t newspapers, which have seen employment fall by about 40% since 1990. Mandel’s analysis goes beyond newspaper employment to look at job trends in broadcast, Internet and “other information services.” What’s interesting is the growth in the “other” category. It’s the only segment of the market that’s above Internet bubble employment levels (although the actual numbers are quite small). Mandel promises more analysis in future posts.

Jeff Jarvis takes issue with Mandel’s whole premise, calling it “measuring the wrong economy: the old, centralized, big economy. In both cases, he misses new value elsewhere in the small economy of entrepreneurs and the noneconomy of volunteers.” In Jarvis’s view, media isn’t dying so much as restructuring itself in a “post-industry” model characterized by vastly more efficient means of production, a distributed workforce and a decentralized approach to nearly everything. Innovation hasn’t left the building, he says, it has merely left the buildings where priesthoods dwell. To see the new media economy taking shape, you have to look at Wikipedia and eBay for guidance, not The New York Times and Macy’s.

Miscellany

It’s a two-horse race to own the Boston Globe, and one horse just got stronger. Former Globe executive Stephen Taylor has been joined by his cousin Benjamin in a bid for the Globe and its sister Worcester Telegram that’s estimated at $35 million plus the assumption of $59 million in pension obligations. Benjamin Taylor was the last member of the Taylor family to serve as publisher; he was ousted by owner New York Times Co. in 1999. The Taylors are squared off against Platinum Equity Partners, a Beverly Hills-based investment firm that successfully purchased the San Diego Union-Tribune earlier this year and that is bidding on several other newspapers around the country. A third potential bidder headed by private-equity executive Stephen Pagliuca has dropped out of the race, with Pagliuca instead electing to run for Sen. Edward Kennedy’s vacant Senate seat.

Members of the Boston Globe chapter of the Newspaper Guild have launched a petition drive to oust the chapter’s seven-member executive committee. Disgruntled union members seem to think they got a raw deal because negotiators at first rejected management’s call for pay cuts, only to later accept an even worse deal after the New York Times Co. drew a line in the sand.

We’ve been hearing anecdotally for some time that community newspapers are faring better than their big-city brethren. Now the organization called Suburban Newspapers of America has the numbers to back it up. Ad revenue at community papers was off 12.4% in the second quarter compared to a year ago. In contrast, major metros saw declines of 29%. Community papers are also seeing earlier slowing of the rate of decline, which indicates that the worst may be over, at least for now.

A federal judge has cleared the way for the Minneapolis Star Tribune to emerge from bankruptcy next week. The newspaper that McClatchy Corp. paid $1.2 billion for in 1998 is now essentially worthless, its fate being in the hands of a committee of secured creditors who will choose a new publisher to replace Chis Harte, who’s stepping down. New board members include former Wall Street Journal publisher L. Gordon Crovitz and GateHouse Media head Michael E. Reed.

Red-faced board members at The New York Times Co. have had to withdrawn compensation awarded to Chairman Arthur Sulzberger Jr. and CEO Janet Robinson because stock option grants and bonus compensation exceeded company policy. Sulzberger and Robinson will have to give back some stock options and agree to a $3 million cap on bonus compensation if they exceed all their goals, compared to the $3.5 million originally promised.

Robert Niles has an inspiring essay on Online Journalism Review about Eight things that journalism students should demand from their journalism schools. We particularly like #8: “Passion, not excuses.” If you’re associated with a J-school, ask if this description applies to your faculty: “Instructors [who] complain about the state of the news business, griping how much better it used to be and how awful bloggers/forums/websites are.” Pining for the old days isn’t going to help anyone build a career in the new journalism economy. Niles asks for teachers who are fired up about the new model of journalism and who can inspire passion in their students. He also suggests that students use the new tools of publishing to build a base of followers before the job-seek. “Who ya gonna hire?” he asks. “The student with potential… or the student who’s already got 50,000 unique readers a month?”

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.

The Newspaper Association of America made no attempt to draw attention to its release of the first quarter financial results for America’s newspapers — and with good reason.  Sales skidded an unprecedented 29.4%, driven by disasterous results in classified advertising amid the weakest economy in 60 years.  Alan Mutter notes that if this trend continues, the US newspaper industry could close out 2009 with total sales of less than $30 billion — a 40% drop in just four years.

The wreckage is across the board — even online sales were off more than 13% — but the worst-hit sectors were cyclical ones: Employment classified advertising down 67.4%; Real estate classifieds off 45.6% and automotive classifieds down 43.4%.  All in all, classified ad sales were down 42.3% for the quarter. “In records published by the NAA that date to 1950, there is no precedent for the sort of decline suffered in the first three months of this year,” Mutter writes.

Slate’s Jack Shafer has a historical review of the factors that got the newspaper industry into this fix.  Publishers knew by the 1970s that they were toast, he says.  Demographic factors were to blame.  The flight of professionals out of the cities and into the suburbs challenge the economic model of the big dailies, and their halfhearted attempts to regain momentum mostly failed.  Some executives took consolation in the fact that their circulation was growing despite the reality that the gains badly lack lagged overall population growth.  The game was really over long before the story began to show up in the financial results.

More Fodder for Pay-Wall Debate

In the continuing debate over whether newspapers should charge for content, Martin Langeveld contributes perspective from Albert Sun, a University of Pennsylvania math and economics student with an interest in journalism.

Speaking at a recent conference put on by the Donald W. Reynolds Journalism Institute  at the Missouri School of Journalism, Sun suggested that newspapers shouldn’t be too monolithic in their approach to pricing.  Rather, they should take inspiration from the airline industry, which charges different prices for the same seats depending on traveler needs.

In the same manner, newspapers should look at their product as a collection of boutique services, each with different price tiers depending upon perceived value.  For example, a casual reader may pay nothing for a weather forecast, but a weather bug might part with $10 a month for detailed technical reports and historical records. Langeveld writes:

Establishing a single price point for online content…might work for a time but is not revenue-maximizing in the long run.  The right way entails the exploitation of a variety of niches all along the curve – and therein lies the problem, since the culture of newspapers is still mainly that of a monolithic, one-size-fits-all daily product, whether in print or online.

In another post, Langeveld flags a quote from Denver Post publisher and MediaNews Group CEO  Dean Singleton in an interview with the Colorado Statesman:

We will be moving away from giving away most of our content online. We will be redoing our online to appeal certainly to a younger audience than the print does, but we’ll have less and less newspaper-generated content and more and more information listings and user-generated content.

Devalued Journalists Fight Back

Two stories caught our eye this week about journalists attempting to skewer the current trend toward devaluing their profession.

Three Connecticut alternative publications – the Hartford Advocate, New Haven Advocate and Fairfield County Weekly – outsourced all of the editorial content for last week’s issue to freelance journalists in India. But instead of burying the move, the papers actively promoted debate with a provocative headline: “Sorry, we’ve Been Outsourced. This Issue Made In India.” And to drive home the absurdity of the whole affair, the editors assigned Indian journalists to principally cover local news, entertainment and culture.

The move had elements of a publicity stunt playing off of American capitalism’s current love affair with all things Indian. However, editors made a sincere effort to see the project through, producing nine stories about local affairs written by reporters half a world away. They wrote about their experience:

If our owners want to replace us with Indians, all we can say is good luck! If they find locating, hiring and keeping after these writers half the challenge we did, they might think twice about replacing us. Far from giving us a week off, it took practically the entire editorial staff to assign, edit, manage and assemble this project.

The myth that Indian reporters work for peanuts was belied by one Indian veteran who asked for $1 a word, which is less than what the publishers pay in the US. The experiment also had its lighthearted moments such as when one overseas journalist shared a vindaloo recipe with the publicist for a mind-reading act.

Michelle Rafter writes about the questionable editorial oversight practices at content aggregators. These Web-based organizations, which principally republish material from contributors in exchange for a share of the revenue, have been labeled in some quarters as the future of journalism.  If so, then the experience of Los Angeles freelancer L. J. Williamson indicates that they have a long way to go.

Williamson wrote a series of articles for Examiner.com, a string of localized aggregation sites targeting major cities.  She noticed that her stories were passing through to the site with little or no editing.  Editors seemed far more interested in traffic-driving strategies.  So Williamson began concocting increasingly outrageous topics full of  “exaggerations and half-truths. I also wrote a series of preposterous articles on topics like why peanuts should be banned, why panic was a totally appropriate response to the swine flu outbreak, and why schoolchildren were likely to die if they were allowed to play dangerous games such as tag,” she wrote in an e-mail to Mediabistro.com’s Daily FishbowlLA. “And no one at Examiner noticed or cared what I said or did for quite some time.”

Williamson was finally outed by lawyers for one party that was victimized by her reports.  She was “fired” from a job that had never paid her and had to settle for the satisfaction of telling her story to the world.

Miscellany

The Wall Street Journal says a private equity firm, HM Capital, is close to a deal to acquire Blethen Maine Newspapers, which owns the Portland Press Herald/Maine Sunday Telegram, and two smaller newspapers. The small chain has been on the block for more than a year, during which time it has become an albatross around the neck of the Seattle Times, which owns Blethen.

The Nieman Foundation has suspended its annual conference on narrative journalism, dealing another blow to the already dwindling support for long-form storytelling.

The long-form clearly isn’t dead at Denver-based 5280 magazine.  It has an Investigation Of The Circumstances Leading Up To The Closure Of The Rocky Mountain News that runs to nearly 10,000 words.  We haven’t had a chance to read it yet, but feel free to knock yourself out and send us a summary.

Writing on True/Slant, Ethan Porter says Matt Drudge’s popularity is waning. A Drudge Report story last week about a potentially incendiary quote from House Speaker Nancy Pelosi went nowhere, he says.  Could Drudge’s conservative politics be losing favor in a recession wracked world? Dare we be so hopeful?

McClatchy Watch catches the Miami Herald in the act of promoting circulation with an offer of a free subscription to a magazine that hasn’t been published in two years.

There’s plenty of buzz in the blogosphere about an under-the-radar meeting that took place last week between top newspaper executives to discuss issues of common concern, including the possibility of charging for online access to news.  Speculation centers upon whether the participants, which included McClatchy’s Gary Pruitt, Dallas Morning News Publisher Jim Moroney, Lee Enterprises’ Mary Junck and E.W. Scripps Mark Contreras, allowed the discussion to stray into the terms under which their organizations could erect pay walls in front of content.

The Newspaper Association of America (NAA) says price was never discussed during the meeting, and that’s good, since federal antitrust laws are pretty specific about such things.  There’s no law against competitors discussing common issues, but setting prices is a no-no.

Conventional wisdom says that newspaper price-fixing would be dead on arrival, but some people argue that the Supreme Court’s 2007 decision in Bell Atlantic Corp. v. Twombly set a precedent under which an aggregator representing multiple properties could get away with charging fees for access. Slate’s Jack Shafer weighs the possibilities and concludes that collusion would be an exceedingly risky move under an administration that has promised to be tough on businesses.

Pat Thornton sees the devil in the details. People aren’t going to pay for to read the police blotter and it’s going to be even tougher to sell them on having to buy services that used to be free, he says. “You can’t charge for something that has been free for years without drastically improving it,” argues Thornton. Given that news organizations have been cutting resources left and right, it’s pretty difficult to argue that the product is getting any better.

There actually is precedent for Web publishers charging for services that were once free.  In the heady days of the dot-com bubble, nearly everything was gratis on the web.  After market realities forced businesses to create sustainable models, photo- and video-sharing sites that were once free began to charge membership fees.  Some businesses and specialty publishers also began linking Web access to paid print subscriptions, a model that persists to this day at publications like Advertising Age.

Perception of Value

Thornton has got it right that perceived value is the crux of the issue.  Consumers understand that technology isn’t free and accept that publishers must charge for niceties like unlimited storage.  They also appreciate that unique, unduplicated services are worth a subscription fee if the information is vital to their job or avocation.

We personally like the model of Geocaching.com, the website that serves the addictions of millions of avid gamers who search for treasures stashed in outdoor locations around the world.  A basic subscription to the site is free, but services that significantly enhance the pleasure of playing the game demand a $30 annual subscription.

Geocaching.com enjoys the advantage of being a near-monopoly in its market.  There’s nothing wrong with that, though.  The publisher has succeeded in providing a comprehensive database of information that its constituents can’t get anywhere else.

We continue to believe it’s highly unlikely that publishers will succeed in establishing an industry-wide paid content model.  Anyone who fails to join the consortium could potentially disrupt the whole deal, and too many alternative sources of free information already exist.  CNN, for example, will never join such a group.  Instead, it will benefit from the vast traffic that will stream to its website when the pay walls go up.

Individual publishers may succeed in charging for content, but they’ll do it with content that serves a vital interest or need in their communities.  There are plenty of possibilities, but they will be exploited by innovative people at the local level, not mandated from the top by a few executives who are motivated more by self-preservation than serving the interests of their audience.

Is Twitter a blessing or a curse for newsrooms?  Editors are struggling with that issue in light of a recent episode in which a New York Times reporter tweeted news of the company’s discussions with Google from a supposedly confidential meeting. The Times raised eyebrows yesterday by appointing Jennifer Preston, the former editor of its regional sections, as the paper’s first social media editor.  The job involves coordinating the newsroom’s use of social media, but it can also be seen as an effort to rein in reporters from sharing news before it’s been fully baked. Similar positions have recently been created by BusinessWeek, the Los Angeles Times and the Toronto Globe and Mail.

Journalism professor Edward Wasserman tells how Matt Drudge supposedly broke the story of President Clinton’s affair with a White House intern more than a decade ago.  In fact, Drudge didn’t break the story but rather related the fact that Newsweek was sitting on it.  The information had been leaked to Drudge by a disgruntled Newsweek staffer, making it possibly the first example of reporters using social media channels to take publishing into their own hands.

Wasserman says the real risk of Twitter is that it will incline journalists to spend more time in front of their computer screens and less time pounding their beats.  What the issue really comes down to is control.  Editors are struggling with the conflicting priorities.  On the one hand, they understand that tools like Twitter help satisfy readers’ needs for immediacy and transparency.  On the other, they have trouble accepting the idea that reporters can now take their stories directly to the public without an editor’s approval. The Wall Street Journal recently issued guidelines for appropriate uses of social media by its staff, including the requirement that reporters gain approval before “friending” confidential sources.

The Times says that Preston won’t be a Twitter cop, but the coordinating function can involve shutting down social media just as easily as enabling it.  In the end, editors will lose this battle.  Media organizations have to get used to the idea of writing their first draft of history without level of fact-checking and oversight to which they are accustomed. That’s because if they don’t do it, somebody else will.  This isn’t a comfortable idea, or even a good one, but it’s where the media world is headed.

Time-Spent-Reading Numbers Baffle

The latest Nielsen online reports about the amount of time people spend on newspaper websites has been released, and again the results are all over the map.  A sampling of the monthly time-spent-reading figures comparing April 2008 to April 2009 (percentages approximate):

• Wall Street Journal down 40%
• Chicago Tribune up 20%
• San Francisco Chronicle up 35%
• Atlanta Journal Constitution up 90%
• Seattle Times down 60%

And on and on.

Editor & Publisher tries to sort all this out.  It talks to the assistant managing editor for digital at the Minneapolis Star Tribune, whose readers spend an average of 40 minutes per month on the site. Terry Sauer tells E & P that the high numbers may be due to the placement of homepage links on individual articles, but he admits it lots of other papers do this as well.

Maybe the real issue is that time-spent-reading is a poor indicator of affinity.  With more and more people using tabbed browsers, it’s possible to leave a webpage open for hours without looking at it.  Also, heavy spikes of traffic prompted by local news events may actually drive down time-spent numbers because visitors come and leave so quickly.  Finally, a one-month snapshot in time is virtually meaningless.  Nielsen would do better to measure affinity in increments of at least six months.

Pressmen Feel the Pain

Newspaper cutbacks are falling apart on the shoulders of pressmen, the true ink-stained wretches of the industry.  Some big papers have cut back their pressroom staffs by 50% or more. Last year, the Boston Herald outsourced its print operations and cut 130 production jobs. The Boston Globe then said it would close its Billerica plant and lay off as many as 200 employees. The pressroom that printed the Seattle Post-Intelligencer and still print the Seattle Times has been whittled back from 62 to 27 employees.

Against that backdrop, unions representing mailers and printers at the Globe this morning agreed to concessions with the New York Times Company that chop more than $7 million in salaries and benefits.  The pressmen’s meeting was described as “angry.” Unions representing editorial staff and drivers are scheduled to vote on concessions next month.

The Joy of Bankruptcy

Editor & Publisher has an excellent piece on the wonders and dangers of bankruptcy.  The story is timely because many newspaper companies must face the music this year.  Some people think the newspaper business is losing money, but that’s actually not true.  Most major dailies still make an operating profit but their ownership is burdened with crushing debt acquired during the ill-conceived consolidation binge of a few years ago.

On the plus side, bankruptcy is a way to freeze debt payments, cancel long-term contracts and renegotiate debt, often to much lower levels.  The negatives: Less flexibility to invest in anything beyond keeping the lights on, difficulty finding suppliers and the possibility that a judge could decide that the company isn’t worth saving.

That last item is the most ominous one for the industry.  E & P notes that judges will permit a company to exit bankruptcy only if they believe that the company has a reasonable chance of surviving.  If the judge doesn’t buy that prospect, he or she can simply shut down the operation.  That hasn’t happened yet, but with organizations like Tribune Co., Sun-Times Media Group, Journal Register Co., Philadelphia Media Holdings and the Minneapolis Star Tribune already in bankruptcy and several other companies facing the prospect, the picture could take shape quickly.

Standard & Poor’s Ratings Services on Friday slashed its rating on McClatchy Co. deep into junk-bond territory after the company offered to buy back $1.15 billion in debt at just 20 cents on the dollar. McClatchy is now rated a CC borrower, which is just three steps away from a default rating.

Miscellany

Jim Hopkins, who started Gannett Blog nearly two years ago, will put it in hibernation at the end of September. Hopkins says he never intended to publish the blog longer than two or three years to begin with and that his decision was hastened by the increasingly negative tone of the roughly 4,000 comments he receives each month.  The news will no doubt come as a huge relief to Gannett executives, since the blog had become a major soapbox for disgruntled employees.

The St. Louis Post-Dispatch moved circulation functions to two other newspapers owned by Lee Enterprises, cutting 39 jobs in the process.

The Huntington, W.Va. Herald-Dispatch cut 15% of its workforce, or 24 positions.

Talking Points Memo, the Web startup that has drawn attention as a possible model for new journalism, unveiled a new design that looks a lot more like a newspaper. Alexander Shaw talks about the thinking behind the new look, which moves more news “above the fold.”

And Finally…

British workers in the media, publishing and entertainment industries are the heaviest drinkers, according to the Department of Health. A survey of 1,400 people by YouGov found that media people consume an average of 44 units (presumably, 1.5-ounce drinks) a week, or almost twice the recommended maximum. The finance, insurance and real estate sectors came in second at 29 units per week.

Metro International S.A. of Sweden will sell its US papers to a company run by its former CEO. The deal includes papers in New York, Philadelphia and Boston. They represent a combined circulation of 590,000 and 1.2 million readers. The company has been on a campaign to reduce expenses, and the US operations have been consistent money-losers. Metro International operates more than 81 editions in 22 countries. CFO Anders Kronborg says he “doesn’t see any growth in the [US] market this year or in 2010.”

Newspaper Blogger Shares Stage with Publicists

Science and technology columnist Dave Brooks of the Nashua Telegraph has come up with a novel approach to generating material for his GraniteGeek blog on the paper’s website: He’s handing over partial control to the University of New Hampshire news service. The publicity organization will “post items about science and social science research at the university…directly on GraniteGeek whenever it wants (probably once a week), and I have no control over it,” Brooks writes. “That’s something that would have been unthinkable not long ago.”

It’s not unthinkable any more, though. “Slightly to my surprise, reaction in the newsroom has been uniformly favorable,” Brooks wrote in an e-mail to us. “I knew the publisher and online editor would like it, since it drives traffic, but even a reporter who I suspected would balk – he’s an uber-traditionalist when it comes to media ethics – thought it was fine, that it ‘added to the discussion.”’ Entries from the news service are clearly labeled with their source. Staffers are also apparently willing to accept the philosophy that “standards are different for news blogs that for newsprint.”

Miscellany

Christian Science Monitor editor John Yemma, who was one of the first print veterans to pull the plug on paper, comments dispassionately on new research that shows that consumers now prefer to receive information online rather than in print. Yemma also cites recent comments by investor Warren Buffett that he wouldn’t buy a newspaper at any price as evidence that the decline of print is unstoppable. “The man famous for determining fundamental value in a stock before investing sees none in this industry, despite beaten down share prices,” Yemma writes. “…In a hundred thousand individual decisions, readers touch off the process of creative destruction. And increasingly readers seem to be deciding that daily print and ink are unnecessary.”

In announcing pay cuts, reductions in health-care plan support and another buyout offer, the Newark Star-Ledger revealed that it now expects its advertising revenue for the year to be 48 percent less than it was in 2006.

A commenter on McClatchy Watch who appears to have some knowledge of what company management is thinking, says there are no more plans for staff cuts at the company. McClatchy realizes it cut too deeply in the last round of layoffs and has to focus on revenue growth instead of more cost reduction to dig out of its hole. Refreshing philosophy, if true.

The founders of Elauwit Media, a community media company based in Haddonfield, N.J. write of the decline of major metro dailies with not a small amount of pride. Their business is growing nicely, thank you, from $100,000 in revenue in 2004 to $2.4 million in 2008. The secret: “Everybody Gets It. Everybody Reads It.” In other words, stop charging subscribers. “Huge regional daily newspapers would do better to stop requiring people to subscribe and instead deliver the paper to everybody in their target demographic…If big newspapers would charge the advertisers, not the readers, they could still turn things around.” Why didn’t we think of that?

The San Francisco Chronicle laid off “more than a dozen top reporters” last week, according to a story on the local CBS website. There are few specifics, but given that the Chronicle is trying to cut its way from $50 million in annual losses to break-even, you can expect more to come.

Daniel Baum, who was fired from the New Yorker in 2007, is taking the very un-New Yorker approach of  tweeting the story, as well as details about the inner workings of the literary magazine. We doubt the New Yorker has ever said anything in 140 characters.

Gawker’s Ryan Tate takes issue with the conventional wisdom that bloggers can’t be depended upon to cover local government.  Keying off of David Simon’s testimony before Congress this week, Tate tells of his experience as a reporter in Oakland, Calif. pounding a local beat. “I often found that bloggers were the only other writers in the room at certain city council committee meetings and at certain community events. They tended to be the sort of persistently-involved residents newspapermen often refer to as ‘gadflies’ – deeply, obsessively concerned about issues large and infinitesimal in the communities where they lived,” he writes.

Tate makes an important point that’s been largely missing from the debate over the value of bloggers.  The conventional wisdom is that these newfangled Internet publishers like to lounge in their pajamas all day and spout off about the news reported by the hard-working journalists who get paid to sit in boring local government meetings and pore over boring documents.  No one in their right mind would do this kind of work without pay, the wisdom goes, so the decline of newspapers is the loss of an essential public service.

The flaw in this argument is that it assumes that no one cares about local government or will bother to waste time learning how it works.  But our experience is somewhat different.

Engaged Citizens

Drop by any meeting of your local town government and you’ll find concerned citizens sitting in the cheap seats, watching intently what’s going on.  What motivates these people?  Usually, it’s passion for the topics  being discussed.  Whether it’s an increase in property taxes, a school bond, a new sewer project or a prohibition against walking dogs on the town common, citizens do come out to learn about issues that matter to them.

All of these people are, broadly defined, potential bloggers.  Maybe their tools of choice don’t look like this one, but their desire to communicate is no less powerful than anybody else’s.  Some may choose to use a listserv or e-mail list.  They may tweet their opinions or share them on talk radio.  But they have opinions to share and facts to convey.

Check out a list of bloggers in the borough of Brooklyn as noted in the blog rolls on Brooklyn Heights Blog and A Brooklyn Life.  These people write about all sorts of things: local arts, events, politics, schools and community organizations. They’re not journalists, but they have a lot to contribute to a public discussion and they observe things at a level of granularity that few newspapers could ever match.

The twist is that every one of them has an opinion.  Their “coverage” is filtered through the lens of their biases, which is uncomfortable for people who are accustomed to just-the-facts reporting.  The flipside is that these people collectively gather far more information than news organizations ever could.  With dozens of bloggers covering the borough of Brooklyn, can you really make the argument that citizens have less news available about the their community today than they did five years ago?

The challenge for news organizations is to develop new ways to synthesize and make sense of this deluge of information.  Instead of assigning a reporter to cover city council meetings, it might be easier to set up a webcam and let citizens watch the proceedings themselves.  Local bloggers can be co-opted to contribute to a news aggregation site in exchange for traffic.  Journalists can be retrained to filter and interpret information and validate it against the video captured by the webcam. Coverage of events can be surrounded by opinion about what actually happened.

News organizations were created to serve a public that was starved for information.  Today, the equation has flipped.  We are drowning in information.  The new role of journalists will be to simplify and contextualize.  They’ll be serving a different need, but a need that’s no less pronounced than the one they served previously.

Kindle to the Rescue

The newest port in a storm for the embattled newspaper industry is Amazon’s Kindle, a $500 handheld device that can store thousands of books and periodicals while retaining some of the look and feel of traditional print.

The reason publishers are swarming the Kindle is because of evidence that consumers will do something with it that they don’t do with their desktop computers: pay subscription fees.  It’s not surprising that leading publishers like The New York Times and the Washington Post are syndicating their content through Amazon at fees of up to $14 per month. Both papers have announced programs to offer discounted Kindles to paying subscribers. The Detroit Free Press and the Detroit News are investigating ways to deliver devices from Plastic Logic of Mountain View, Calif. that offer a similar experience.

Is the Kindle the salvation for the industry?  Not at $500, it isn’t. As long as Amazon premium-prices the device, the market will be limited to no more than about 5 million US users, according to Forrester Research. Most people aren’t ready to pony up that kind of money for a device that can easily be left in the back pocket of an airline seat, as happened to Sara Nelson, editor-in-chief of Publishers Weekly last year.

But don’t expect these prices to hold.  At this point, Kindle has the market mostly to itself, but a slew of competitors are on the horizon. As Moore’s Law kicks in, expect prices to drop to the sub-$100 range within two to three years.  Big publishers are doing the right thing to prepare themselves for mass-market digital reading devices, which could replace laptop computers over time.  By not making the mistake of giving away their content for free on the Kindle, they can avoid the mess that has devalued their current online content.

Miscellany

If anyone thought the purchase of the San Diego Union-Tribune by an equity investment firm would save the company from major layoffs, their hopes have been dashed by news that Platinum Equity plans to lay off 192 employees — or about 19% of the U-T‘s workforce — over the next couple of months. The announcement came just three days after Platinum Equity completed its purchase of the paper from the Copley Press.  Once the new owners, who are self-described turnaround specialists, dig into the property they just acquired, more layoffs will probably follow.

Rupert Murdoch wants to start charging for access to the newspapers owned News Corp., apparently in the belief that subscribers to the New York Post are just like subscribers to The Wall Street Journal. Good luck with all that.  The Boston Globe is also looking into micropayments as a way to extract revenue from readers of its popular Boston.com website, reveals Globe publisher P. Steven Ainsley in an interview that is otherwise unremarkable.

Murdoch, who has been pessimistic about the economy for months, now says things are getting better. This week he declared that “it is increasingly clear that the worst is over,” and that “revenues are beginning to look healthier.” You wouldn’t know that from quarterly earnings just reported by Gannett, McClatchy and Lee Enterprises, but in all fairness, those are backward-looking indicators.

…and they were optimistic.  McClatchy dumped water today on an already soggy earnings parade by checking in with a loss of $37.5 million, or 45 cents per share, for the first quarter. Excluding one-time charges, McClatchy said it lost $22.9 million, or 28 cents a share. Analysts had projected a loss of 11 cents.

The results are way down from a quarterly loss of $849,000 a year ago. What may be worse is that the company’s revenue fell to $365.6 million, down nearly $66 million from a year ago and well below analysts’ consensus expectations of $391 million.

The only good news is that McClatchy said it remained in compliance with debt obligations, which means it isn’t in danger of bankruptcy at the moment. They’re debating what this means at McClatchy Watch.

The New York Times Co., which is struggling just to hold its business together, reported a loss in the first quarter as advertising revenues dropped a sickening 27%. The only good news is that the company delayed some debt payments and the CEO said there are signs that ad spending might increase in the third quarter.

The company’s performance dramatically undershot Wall Street estimates, where analysts were expecting a loss of 3 to 6 cents a share. The actual operating loss was 34 cents. Even online revenue, which was traditionally been a bright spot, was down 5.6%.

Media General also disappointed the few analysts who continue to follow the company, reporting an operating loss of 77 cents a share on an 18% drop in revenue. One analyst had pegged the likely loss at 5 cents a share on revenues of $180 million. Actual sales were a little under $160 million.

Moody’s has downgraded Gannett Co. yet again. The agency lowered its rating of the publisher into junk territory earlier this year and has since lowered it again. Now Moody’s says Gannett may not have the necessary profits to meet the terms of one of its debt convenants. Gannett logged a 60% drop in profit on an 18% slide in revenue in its most recent earnings report.

And there are more earnings still to come.

Specialty Publishers Hold Their Own

The 10,000-circulation weekly Jackson County (Mo.) Advocate focuses on serving its own neighborhood and it’s doing just fine, thank you. Sure, its four-person staff works long hours to produce the weekly, but employees will also stop to talk with residents who stop by the office because that’s where the best stories come from. Like the local man who found an image of the Virgin Mary on a rock in his back yard. “You never know who’s going to come through the front door,” says Editor Andrea Wood, who’s interviewed in this five-minute report by local radio station KCUR. “We’ve done stories about people who had grown freakishly large pears. It’s about the community.”

Wood says the turmoil that’s killing large metro newspapers isn’t hitting hyper-local titles nearly as hard. “This industry is stable,” she says. “People use the [community newspaper] for scrapbooks. You’re never going to get that from the Internet.” Local businesses are also more stable and loyal advertisers.

The Advocate competes with the Kansas City Star, which has been cutting back local news coverage. That appears to be helping the Advocate. Circulation is growing and now tops 10,000 subscribers. The Star no longer sends reporters to cover local government meetings, leaving the Advocate as the main source of information about their community.

Further to the west, where the industry downturn has been very bad to the local newspaper industry, a veteran publisher of Chinese-language papers has actually started a new one. Brian Ho launched News for Chinese, a free monthly, just one month after the financial crisis hit. He admits that his motivations were unconventional: He got a great deal on real estate and started the business to keep the offices occupied while the market recovers. Nevertheless, local advertising has picked up nicely and, while he still isn’t making a profit, Ho says that may be in the cards. “If my newspaper can earn a small profit to support my employees, I will consider that as a success.”

Awaiting New Owner, Union-Tribune Frets About Its Politics

Alf Landon

Voice of San Diego reports on a conundrum at the Union-Tribune: it doesn’t know whether it’s conservative or liberal any more. The U-T has leaned to the right going back to 1936, when it endorsed Alf Landon for president even as Franklin Roosevelt won 62% of the vote. New owner Platinum Equity has no clear political bias. Its chief partner gave $20,000 to the McCain campaign, but the partner who has the most experience running newspapers seems to prefer Democrats. Also, Platinum is based in Los Angeles, causing some locals to worry that the owners won’t care about local politics. That could tip the balance of elections, since observers figure the newspaper’s endorsements typically deliver a 3-5% edge to candidates, who tend to be conservative. It will tip the balance even more if the new owners decide to adopt a liberal bias.

J-School Enrollments Soar As Jobs Vanish

Alana Taylor is an NYU journalism major who’s doing everything right, yet “I have no idea what I am going to do when I graduate,” she writes on MediaShift. The college junior has 4,000 Twitter followers, lots of professional connections on LinkedIn and a well-established personal brand, but the jobs just don’t appear to be out there. She interviews industry experts (including us) and gets discouraging news: working for a daily is a non-starter because many papers are going under and even the survivors aren’t paying a living wage. Starting a business is impractical in this economy. About the only hope for employment is to hook on with an Internet company and hope for the best.

Nevertheless, J-school enrollments are at an all-time high, which prompts BusinessWeek’s Sarah Lacy to ask “What are these people thinking?” Lacy writes on TechCrunch that her lack of journalism training made her a more successful journalist. “I don’t know how to write an inverted pyramid story or even really what that is. I do know how to write for different platforms, be scrappy and break news. I’ve had zero important alum connections and never got an internship at a big daily. And, in hindsight, that’s probably the greatest stroke of luck I could have had.”

Being free of the hidebound expectations of an irrelevant journalism style has freed her to adapt her reporting style to the new standards of the Web, she writes. In contrast, her friends who went to J-school found that the experience delivered no career value. In fact, it embedded habits that are proving to be liabilities in the free-form style of the Web.

Miscellany

This year’s Pulitzer Prize for local reporting goes to Paul Giblin (no relation), who teamed with Ryan Gabrielson for a five-part series in the East Valley Tribune about a local Sheriff’s questionable obsession with immigration enforcement. Unfortunately, the honor will be bittersweet for the Tribune, which laid off Giblin when it cut back to four-days-a-week last October. Jeff Bercovici notes the irony, and catches up with the Tribune’s publisher, who issues a rather embarrassing comment about winning journalism’s top prize:  “I don’t think [Giblin’s dismissal] diminishes at all, frankly, the excellent work they did on that project.”

Unions in San Francisco continue to strike a remarkably agreeable attitude toward Hearst’s demands that they help reduce expenses at the Chronicle by $50 million or face shutdown of the paper. The union representing delivery truck drivers agreed to let the paper cut between 90 and 100 driver positions by hiring subcontractors for home delivery. In return,  the drivers keep the right to deliver papers within the city limits. Annual savings are expected to top $5 million.

The Riverside (Calif.) Press-Enterprise has reportedly laid off an unspecified number of employees. No word on body counts, but Gary Scott lists the names of 14 reporters and editors whom he believes got the ax.

The New York Times’ Tom Zeller takes issue with Marriott’s recent decision to cut out delivery of newspapers to its hotel rooms because of environmental concerns. Assuming that guests are turning more to their laptops and PDAs for the news, Zeller wonders if the decision doesn’t actually increase carbon emissions. He finds evidence that in countries that produce most of their power from fossil fuels, a 30-minute snuggle with the newspaper is actually less damaging to the environment than a PDA power-read. Of course, you have to take into account the cost of delivery, the impact of logging trees for paper, etc. It’s all very complex.

Columnists are supposed to be controversial, and you have to give media critic and Newser exec Michael Wolff credit for stirring up controversy with his forecast that 80% of newspapers will die within 18 months. You also have to give media veteran Martin Langeveld credit for injecting reality into that outrageous comment. Langeveld pulls out his calculator and notes that for Wolff to be correct, two newspapers would have to close ever day for the next year-and-a-half. Sometimes mathematics is a great tool.

And Finally…

The 31 newly laid-off employees at the Raleigh News & Observer decided to poke some rather vicious fun at the newspaper’s owner. They mocked up a front page comparing McClatchy to the Titanic, which sank 97 years and one week ago. The parody portrays McClatchy CEO Gary Pruitt as a happy-go-lucky ship captain who sees the icebergs coming but figures his ship will simply strike them a glancing blow and use the ice fragments for cocktails. “She was welded together from the hulls of several old steamships, including a leaky tub called the RMS Knight Ridder,” they write. You can download a PDF of the mock front page here.