Two numbers stood out in Friday’s shocking news that the New York Times Co. was threatening to shut down the Boston Globe: $85 million and 450. The first number is the amount of money the Globe is expected to lose this year without union concessions. The second is the number of employees at the paper who have lifetime-employment contracts. All of those people should be very nervous right now.

The Times Co., which is groaning under $1.1 billion in debt, wants the unions to give up $20 million in concessions or face closure of the 137-year-old Globe, which has dominated the news business in Boston for more than 30 years. Given the size of the projected loss this year, $20 million seems like a modest amount. This would indicate that the Times Co. threat is merely posturing, as Alan Mutter argues. But ultimatums appear to be working in San Francisco, where the union just voted 10-1 to give the Chronicle broad authority to lay off employees without regards to seniority as well as to cut vacation time and extend working hours. The Chronicle and the Globe have similar audience characteristics.

The brass ring for Times negotiators has to be the 450 Globe employees who work under lifetime job guarantees. We knew such guarantees existed, but we hadn’t seen a count of the number of employees who have them until this past Friday; they comprise nearly a third of the unionized workforce. It’s hard to imagine any company handing out promises of that kind, but the Globe did that in 1993, when the economy was emerging from recession and businesses were being conservative about guaranteeing anything. Such management hubris testifies to the dominance the Globe enjoyed at the time over the Boston market, where its only competition is the working-class Herald and a string of suburban dailies.

We live in Globe country and can testify to the paper’s reach in the affluent suburbs. Drive through a quiet subdivision on any Sunday morning and the Globe is the paper you see in the driveways of the $700,000 homes. However, the tech-savvy Boston audience is also more open than most to online alternatives, which is perhaps one reason Boston.com is the sixth largest newspaper website while the Globe reported a circulation decline of more than 10% last November on top of an 8.3% decline six months earlier.

If the 450 employees each cost $100,000 on a fully loaded basis, that’s $45 million in annual costs over which management effectively has no control. We don’t have to comment on the lack of motivation that guaranteed employment must instill in a heavily unionized environment. If we were Times Co. management, though, we’d probably aim the first few blows of the ax directly at that soft middle.

The Globe covers its own news with reaction from community members ranging from fry cooks to U.S. Senators.

College student Adam Sell, who has interned at the Globe for two years, sent us a link to a Flickr photostream he created of the closing of the Globe‘s NorthWest bureau 10 days ago.

Miscellany

Two central Pennsylvania newspapers that have published separately with a single weekly combined edition will join forces on a permanent basis at the end of June. The Intelligencer Journal and Lancaster New Era will be published Monday through Saturday mornings with combined news and features operations but separate editorial pages.  The merger will result in the reduction of 60 full-time and 40 part-time positions, or about 20% of the workforce. Management said the combined circulation of 229,500 has been growing but that the economics of the publishing industry demands changes.

Publishers who are struggling with solutions to the revenue problem, none of them very appetizing, might want to look to Europe for inspiration. The big German publisher Axel Springer just reported record profits and is looking to expand overseas, possibly into the US.  Norway’s VG Nett charges citizens for access to its news through a cable TV subscription fee. And a group of papers in Belgium joined forces to force Google to remove their content from its search results. All in all, some papers in Europe are doing just fine, thanks to tight government partnerships and creative approaches to revenue

The Detroit Media Partnership, which publishes the Detroit Free Press and the Detroit News, has closed a deal with Plastic Logic to distribute the Plastic Logic Reader under purchase or lease to subscribers of the Detroit dailies as an alternative to paper delivery.  The reader is the size of an 8.5 x 11-in. pad of paper, weighs less than many print magazines and sports a touch-screen interface.

With the Minneapolis Star Tribune in bankruptcy, employees have started a grass-roots effort to save the paper. A group has launched a Facebook group (1,280 members, but only one discussion post since Jan. 17), a website (inactive as of this morning) and plans to hand out paper hats and scorecards at the Twins’ home opener. It’s probably going to take more than that.

If you like Chicago Sun-Times columnist Richard Roeper, you probably won’t after reading this egotistical, self-indulgent monument to himself. If this is how newspaper columnists regard their own celebrity, it’s no surprise readers are turning elsewhere. But there are a couple of good anecdotes that illustrate how divorced these scribes are from their readers.

Google CEO Eric Schmidt will keynote the Newspaper Association of America national convention in San Diego this week. Schmidt, who is often considered the great Satan by newspaper publishers, has nevertheless been a vocal proponent of the need to help the industry.  It should be an interesting encounter. Schmidt is scheduled to speak on Tuesday at 10 a.m. PDT. You can listen to his remarks live. NAA will offer a moderated “Cover it Live” discussion on its PressimeNow! blog, where visitors can pose questions, share their thoughts and get live reactions from attendees.

The Sun-Times Media Group is considering ending publication of some of its suburban newspapers as it struggles to emerge from its recently declared bankruptcy.

A.H. Belo Corp., owner of the Dallas Morning News and three other daily newspapers, will cut employee salaries next month and suspend a retirement supplement to pension plan participants next year. Cuts will range from 2.5% to 15%, depending on an employee’s salary. The company’s CEO will also take a 20% cut in pay.

Last month we told you about St. Louis Post-Dispatch editor Christopher Ave’s use of song to lament the layoffs of newspaper copy editors. Now, 26-year old Berkeley musician named Jonathan Mann has joined forces with the staff of the East Bay Express to come up with a solution to newspapers’ business problems. You have to wait to the end to hear it, but the three minutes are time well spent.

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

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

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

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

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

Debating the Value of Newspapers to Democracy

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

17th Century Newspaper

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

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

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

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

Miscellany

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

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

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

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

Analysts are digging into the new owners of the San Diego Union-Tribune and trying to discern the investment firm’s intentions.

Tom Gores (San Diego U-T photo)

Sign-on San Diego fills in some of the information void surrounding Platinum Equity, the purchase of the site’s parent. Despite its low public profile, the company is actually the 19^th largest private employer in the US, according to a Forbes estimate. Its founder, Tom Gores (right), has been listed by Forbes as the 163rd-richest American, with a net worth of $2.5 billion. It raised $2.75 billion last year – which was quite a feat in this economy – for its investment activities. The U-T is the first newspaper the company has owned but it may not be the last. There have been media reports that the principals are also looking at the Austin American-Statesman. Most importantly for U-T employees, the story quotes Platinum principal Mark Barnhill saying Platinum isn’t in the game for a quick flip. “We don’t worry about exits,” Barnhill says. “We worry about getting in on the entry side and running businesses effectively.”

Ken Doctor isn’t so sure. In his view, the deal may be all about the real estate. Citing sources who say Platinum paid no more than $50 million for the U-T, whose value once exceeded a half billion dollars, Doctor says the value of the land alone could be north of $100 million. “We may have entered a new rocky period for newspaper companies,” he writes. “The real estate on which they sit determines their market value.” Doctor notes that the biggest buyout in the history of the industry – the acquisition of Tribune Co. in 2007 – was carried out by a real estate tycoon. And property is part of the value that investors are scrutinizing carefully in Miami and Maine.

Writing on Paid Content, Doctor observes that Platinum Equity specializes in high-tech companies, so what’s it doing with a newspaper? The strategic adviser the partners are bringing in – David Black – has done nothing of note with the Akron Beacon-Journal that he took over in 2006. “The Black ownership has been unremarkable,” Doctor writes. So what did Platinum buy? Property “That real estate under its building…may be a real motivator for the purchase,” he concludes.

Incidentally, Ken Doctor has an interview with Michelle Nicolosi, who’s the editor in charge of turning SeattlePI.com into a true Web publisher. She’s trying to boost the idea of aggregation and local focus, but Doctor points out that links to direct competitors are pretty thin in the first week. The collection of 150 reader blogs is impressive, though.

Power in the Mid-Market

The Deal Journal blog at WSJ.com has an intriguing interview with Jonathan Knee, an investment banker who specializes in the media industry and who advised on the U-T buy. He has some intriguing insights that go well beyond the “industry is dying” conventional wisdom. Working from the premise that “within the pantheon of media sectors, the newspaper business is actually still one of the better ones,” Knee argues that the bloated cost structures that newspapers developed during times of plenty actually make them good candidates to endure the cost cuts they’re having to make right now, simply because there’s so much excess to cut. Furthermore, he argues, mid-market dailies are actually in a great position to harvest their monopoly positions and remain profitable for some time to come.

The secret: outsource whatever isn’t necessary to serve your local community. Then serve that local community very well. Don’t try to be bigger than what you are. Those boring local markets will “continue to generate…better profits than the supersexy businesses in the media industry asking for government or nonprofit help like movies and music.” Considering that small-market dailies have been considered the most at-risk properties in the business, Knee’s counter-intuitive views are worth reading.

Happy Birthday to Us

Today is Newspaper Death Watch’s second birthday (you can read our modest first entry here) and it’s been quite a ride. We started out by documenting the downsizing that was just beginning to occur in the business two years ago but quickly found ourselves engaged in more interesting issues like the future of news. Since 3/23/07 we’ve logged 382 entries and 528 comments, many from journalists who are being caught up in the cost-cutting. Last week we averaged over 2,000 daily page views and Technorati has us in the top 12,000 blogs worldwide. We’ve been profiled in Spain’s largest newspaper, interviewed on NPR,  traded views with Guardian Angels founder Curtis Sliwa on talk radio, and sourced on local TV in Sacramento.  We were also just interviewed by CNN.com for an upcoming feature on the transformation in the newspaper industry.

Two years ago, we published a book called The New Influencers that argued that the ability of individuals to publish to a global audience would disrupt the economics of media and transform our institutions. Since then, we’ve been living that idea.

Layoff Log

• Collateral damage: the Denver Newspaper Agency, which handled business operations for both the Post and the Rocky Mountain News, will idle 200 people as a result of the Rocky‘s closure. The news account says that’s 17% of the agency’s 850-person staff, but our calculator says it’s really 23%. The jobs aren’t needed any more without a paper to support.
• I turns out he Buffalo News won’t be laying off “dozens of employees” as ws feared a week ago. A deal with the Newspaper Guild succeeds in achieving targeted cuts of $2.9 million through a combination of wage reductions and givebacks. Still, nine people will lose their jobs.
• The Orange County Register had six rounds of layoffs last year and is promising more soon. No details on how many jobs will be lost.
• The Dayton Daily News cut 10 sales staff.
• The Skagit (Wash.) Valley Herald has laid off four people, including the editor-in-chief.
• The News-Gazette of central Illinois has been publishing both morning and afternoon editions on weekdays, but beginning June 1, it will publish ditch the afternoon edition. Elimination of an entire issue will save 1% in operating costs. Huh?

And Finally…

What would you do if your newspaper closed? Consider a career in local government. The New York Times profiles Michael Hanke, a veteran newspaperman from Canton, Ohio, who lovingly covered his hometown for more than 35 years before being laid off in a cost-cutting move two years ago. It could have been a sad story, but there’s a happy twist: Hanke is now a county administrator, where he works side-by-side with some of the people he used to criticize in his newspaper columns. And they’re tickled pink to work with him. It turns out that reporters are naturally inquisitive, resourceful and knowledgeable. “We got a real bargain when we hired Mike Hanke,” says Jane Vignos, the board president who selected him from among 70 candidates.

The business media is in self-flagellation mode and with good reason. Editors are beginning to pick up the pieces and wonder how they managed to miss the biggest economic story of the last 50 years. Liberal commentators are having a field day.

Did the media blow it in failing to predict the financial crisis? Eric Alterman sums up a variety of perspectives and suggests that the real problem with US financial journalism is that at some point journalists stopped treating their audience as consumers and started treating them as investors.

Insiderism, the cult of personality and a lopsided emphasis on stock market performance created an oversimplified view of the financial world that led readers to believe that that super executives could defy gravity. The result was business sections running flattering profiles of people like Countrywide Financial’s Angelo Mozilo (right) even as those executives were driving their companies into the ground.

Alterman quotes a report from the UK’s POLISMedia: “If journalists see themselves mainly or merely as serving the market or investors, they may be less effective in their watchdog role…. Ultimately, do journalists have a broader professional duty to ensure that corporate malpractice comes to light, or is their role merely to provide whatever their readers want?”

He also points to an even more damning account in Mother Jones by former Wall Street Journal reporter Dean Starkman and bluntly titled “How Could 9,000 Business Reporters Blow It?”  Starkman was a member of the financial press corps that transformed itself from loyal opposition to chummy insider as the bubble grew. “I rode in black cars, lunched at all the places you read about, and more than once flew across the country to report a 1,200-word story,” he writes.

Reporters and the subjects of their reports both benefited from the Wall Street boom, creating little incentive for either side to end the party. The result was a rash of glowing coverage of larger-than-life executives and very little investigation into what they were executing. Starkman (left) pays homage to “The Reckoning,” a 1990 Wall Street Journal account of the devastating human toll of a corporate leveraged buyout. “It is safe to say that that piece, which tied the Safeway LBO to workers’ suicides, heart attacks, and more, would never be proposed, let alone published, today,” he writes.

He’s also blunt in attacking the formulaic executive profiles that conferred a god-like aura on corporate executives while paying scant attention to the underlying rot in their businesses. “Personality profiles, critical as they may be, are comfortably within the narrowing business-press discourse. Plus they’re a lot easier, and less risky, than investigations-and it’s that part of business journalism that has been allowed to wither,” Starkman writes, quoting Fortune‘s Katie Brenner.

Ultimately, insiderism ruins objectivity. “Increasingly, business coverage has addressed its audience as investors rather than citizens, a subtle but powerful shift in perspective that has led to some curious choices,” Starkman writes, citing as an example the Journal‘s claim that borrower fraud was a big part of the subprime financial mess when no such evidence existed.

Much attention is being focused on the damaging impact of layoffs on newspapers’ watchdog role. Reading these two pieces, one gets the sense that in the case of the financial press at least, the watchdogs were inside snuggled comfortably at the feet of their masters.

Layoff Log

Three dozen employees of the Buffalo News have accepted a generous buyout offer of a minimum $60,000 cash payment, but that’s still not enough. The Berkshire Hathaway-owned newspaper may need to cut another 21 jobs. That would be about 6.5% of the company’s 900-person workforce.

The Wichita Eagle is one of McClatchy’s top-performing newspapers, so it only has to lay off 5% of its workforce.

The Fargo-Morehead (N.D.) Forum is eliminating 25 more full-time jobs on top of the 21 it cut last month. Altogether, that amounts to 19% of its 240-person workforce. The neighboring Grand Forks Herald is cutting eight jobs and will end publication of an advertorial supplement.

The Toledo Newspaper Guild is pleading with management of the Toledo Blade not to lay off as many as 60 more people. The newspaper laid off 23 people in December, mostly in the newsroom. The new cuts could amount to as much as 14% of its remaining 425-person workforce.

As a public service, we staggered through The New Republic‘s 8,900-word opus about the perilous state of the newspaper industry so you wouldn’t have to. We suppose this ponderous, professorial epic is supposed to put  TNR‘s weighty stamp of legitimacy on the crisis. If you buy legendary Chicago Tribune editor Colonel Robert McCormick’s view that the greater newspaper is the one that weighs more, then this is the greatest analysis ever published.

Unfortunately, it isn’t. Lacking much insight that wasn’t stated better in Eric Alterman’s briefer and more readable New Yorker analysis of nearly a year ago, Princeton professor Paul Starr proposes that the demise of major metro dailies is a threat to democracy itself.

This is not a new opinion, although Starr does cite research that supports the idea that communities without active news organization tend to suffer from more government corruption and less accountability.

Two teams of researchers found “a very strong association: the lower the free circulation of newspapers in a country, the higher it stands on the corruption index. Using different measures, they also find a similar relationship across states within the United States: the lower the news circulation, the greater the corruption,” he writes.

This isn’t startling news, but the 2003 and 2006 studies cited lend some factual support to an emotional issue. It’s one of the few bits of new information in the whole sprawling opus.

Polarizing Forces

Starr’s sole original insight is that growing polarity between populations that  are “in the know” and those that choose to ignore the news leads to partisanship, which is in turn reflected back by the media.

“The viewers who gave up news for entertainment tended to have little or no attachment to party, while the news junkies tended to be strong partisans–and so the audience for news has become more partisan than it used to be. Cable news programs with a sharp ideological slant have responded to this shift, and perhaps contributed to it,” the author states.

It’s a good point, but we wonder why it takes so long to make it.

Starr concludes that a public funding model is the only likely solution to the news industry’s crisis, an idea that has been pretty thoroughly eviscerated by people with spreadsheets. He observes, correctly, that the critical public service that newspapers have traditionally delivered as a loss leader thanks  to their enormous profitability is probably lost forever. He’s right that the efficiency of the Internet is not always a good thing, but he gives only scant attention to the new models that are succeeding while casually discarding wonders like Wikipedia as a mere rehash of information reported by journalists. How myopic.

TNR also thumbs its nose at emerging media outlets by failing to provide a single hyperlink in its nine-screen report. Perhaps this was merely oversight or a shortcoming of technology, but the omission appears to say, “Screw you, Internet. Here’s the self-contained first and last word on the topic, which is how God intended journalism to work.” Hyperlinking is an essential value of online communications and the failure to give readers the means to educate themselves about anything that wasn’t touched by New Republic editors appears clueless at best and arrogant at worst.

Many visitors to this website also frequent Reflections of a Newsosaur, a blog written by Alan Mutter, who is “perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time.”

Mutter was a reporter and editor at major metro dailies for 20 years before transitioning to a successful career as a technology CEO in Silicon Valley. His blog combines an executive’s financial acumen with a journalist’s inquisitiveness. Newsosaur offers insight on the media industry’s financial condition that you just can’t get anywhere else. Not surprisingly, it is one of the top 10,000 blogs worldwide, according to Technorati.

Mutter particularly enjoys challenging conventional wisdom with mathematical fact. Early this week he poked holes in the recent excitement over micropayments by creating a likely revenue scenario. Using The New York Times as a subject, he concluded that micropayments would bring in less than $4 million a year, or enough to pay about 2% of its staff.  For small papers, they would amount to beer money. Pundits have come to rely on Mutter for reality checks like that.

Knack for Numbers

His financial analyses are his signature item. Mutter sounded the alarm about the newspaper industry’s growing debt load more than four years ago, and he has methodically documented the damaging role that debt has played in limiting the industry’s options. His Default-O-Matic documents the financial viability of major players, giving early warning of who’s likely to be next off the cliff.

A complete financial restructuring of the industry is likely, Mutter says. Debt has painted publishers into a corner and many will have no choice but to walk away from their obligations and let the banks and investors sort it out. It’s not that the core business model is so bad, he says. It’s that their financials stink.

Having reader Newsosaur for a couple of years, we thought it would be interesting to find out more about the person behind it. So we called up Alan Mutter and spent an hour on the phone with him. Our complete, lightly edited interview is below for you to stream or download.

Show Notes

Download the interview (right-click and save)

Stream the interview:[audio:Alan_Mutter_NDW_Interview.mp3]

A.H. Belo will lay off 500 employees, or about 14% of its workforce. Combined with 590 layoffs in two rounds last summer and fall, Belo has cut its total workforce by an astounding 25% in less than a year. Belo is also seeking to recover more cash by suspending a savings plan matching fund program, raising parking and transportation charges to employees and reducing cell phone reimbursements. The company owns several major daily newspapers, including the Dallas Morning News, Providence Journal, Riverside (Calif.) Press-Enterprise and the Denton (Texas) Record-Chronicle. Belo stock slipped about 4% on the news amid a general pounding of newspaper stocks on Friday. Gannett said fourth quarter net fell 36% and Media General said it would suspend its dividend. This quarterly malaise has become so common that it barely even merits mention any more, particularly with most of these stocks trading in the two-dollar range.

Jeff Pijanowski has started a running tally of newspaper layoffs. The 2009 total is already 1,399. Erica Smith has been doing the same thing since early 2008, and her total for the new year is 2,002. Let’s hope they’re staying in touch.

Voice of Reason in Nonprofit Debate

We’re tempted to shout “Hear, hear!” to Jonathan Weber’s superbly argued comeback to the doom-sayers who argue that going the nonprofit route is the only viable way to save American journalism.

In 1,400 words of unusual clarity, the publisher of the proudly for-profit NewWest.net makes these cogent points:

• The people making the strongest case for taking news organizations nonprofit mostly work for nonprofits themselves (a reference to David Swensen and Michael Schmidt’s op-ed in The New York Times last week);
• Nonprofit news organizations still have to meet their numbers, and that makes them subject to the same pressures to feed their audiences celebrity pabulum as profit-making organizations;
• Nonprofits will actually hurt profit-making news organizations by competing for advertising revenues while enjoying the benefit of tax-exempt status;
• The argument that readers are losing out because US newspapers have cut foreign bureaus is hokum. Americans have access to more foreign reporting than ever thanks to the Internet;
• There are successful profit-making ventures emerging online right now;
• The profit motive encourages innovation;
• To discard profitable business models as unworkable right now is to give up any hope that new models can emerge.

We particularly commend Weber for pointing out that much of the argument for giving up the profitability ghost is predicated on the belief that news organizations must continue to work they way they always have. As we’ve noted here many times, innovation flourishes when people discard assumptions. Paving the cowpaths of old newsgathering models will simply keep us marching in the same direction.

At the same time, we do want to acknowledge laid-off Providence Journal reporter David Scharfenberg’s well-argued case for a national journalism fund in a Boston Globe op-ed. The federal government already invests in public radio and public television, he notes; why shouldn’t online journalism be afforded the same benefit? Scharfenberg suggests a $100 million fund would “seed low-cost, Internet-based news operations in cities large and small – combining vigorous, professional reporting with blogging, video posts, citizen journalism, and aggregation of stories from other sources.” It’s not clear how he arrived at the $100 million figure or how these new Web projects would be different from the hybrids that are emerging as the media melts together into a single pool, but the amount seems modest enough in light of the billions being given to bail out the financial industry, whose misdeeds may never be publicly known because there are no journalist watchdogs around to report them.

Miscellany

The contentious dispute between the Hawaii Newspaper and Printing Trades Council and the Honolulu Advertiser has been resolved, with the Advertiser apparently getting the upper hand. Employees will have their wages cut 10 percent cut under a deal announced Friday. Union members will also give up two holidays a year. Just eight months ago, the union rejected management’s offer of a flat pay package with modest bonus increases. After looking at the company’s books and witnessing more layoffs, the union agreed to a much worse deal than the one it rejected earlier, with the sole added provision that it can see management’s books twice a year and the empty promise that the Advertiser will make “every practical effort to avoid involuntary layoffs.” There could be some grumbling in the ranks come dues-paying time in Honolulu.

E.W. Scripps is accusing partner MediaNews Group of behaving badly in borrowing $13 million from its Denver Newspaper Agency partnership to meet payroll at the Denver Post. Scripps is on its way out of Denver as it works to sell or close the Rocky Mountain News. Despite its lame duck status, Scripps will apparently miss the $13 million, which it can’t recover through loans due to the terms of its joint operating agreement with MediaNews.

Writing on Wired.com, Bruce Sterling analyzes French President Nicolas Sarkozy’s newspaper bailout and sees nefarious motives. Sarkozy announced last week that the French government will move to bail out its ailing print media (see There’ll Always Be a France)  by boosting support for newspaper deliveries, doubling government advertising and giving every 18-year-old French citizen a free one-year newspaper subscription. Is Sarkozy concerned about the disappearance of a free press? Hardly, Sterling theorizes. Rather, the collapse of the industry on the continent will raise the French President’s visibility as he becomes one of the few politicians who generates any media coverage at all. “While political rivals are scrabbling with bloody fingertips for a few grams of serious public attention, Sarkozy still has a regional empire of conventional media,” Sterling writes. Cynical indeed.

Sam Zell has had plenty of negative attention for under-estimating the enormity of the problems facing Tribune Co., but he’s still got admirers in the real estate industry. Another big-city publisher, Mortimer Zuckerman of the New York Daily News, says three Manhattan skyscrapers his company purchases lost $165 million in value in just seven months. It turns out Zuckerman’s Boston Properties acquired the buildings shortly after Zell exited the office property market in February 2007 for $39 billion. It was basically the peak of the market. In comparison, Zell’s personal losses on Tribune Co. amount to only about $300 million, according to most estimates. Our calculator tells us that’s about four months’ interest on the proceeds from his real estate sales.

Chicago Tribune associate editor Joycelyn Winnecke has earned plenty of derision for a Jan. 19 memo stating that attitude will now be a factor in employee performance reviews.  The idea that skeptical reporters should be expected to present a positive mental attitude strikes some journalists as just wrong. BusinessWeek‘s Catherine Arnst sums up some of the reactions in a blog entry. “The beatings will continue until the morale improves,” notes one predictable comment, and several other visitors weigh in with perspectives on both sides of the issue.

Layoff Log

• The Wenatchee (Wash.) World announced the first layoffs in the daily’s 104-year history.  The 12 furloughs will reduce the newspaper’s workforce from 145 to 133. “We hung on as long as we could,” said Publisher Rufus Woods.
• The Pioneer Press of Minnesota has laid off eight employees since a 14-month contractual provision against layoffs expired Dec. 31.

And Finally…

Yes, that really is Olympic gold medal swimmer Michael Phelps smoking a bong pipe in a photo taken last November during a house party at the University of South Carolina. Phelps has admitted that he “engaged in behavior which was regrettable and demonstrated bad judgment.” Observers said he knew exactly what to do with the pipe. To be fair, Phelps was taking a long hiatus from training at the time. Fox Sports has more, along with a link to a photo gallery of “Sports’ top tokers.”

You can skip roughly the first 1,500 words of Jon Austin’s lengthy essay on The Rowdy Crowd and jump right to the nut graph about micropayments. This otherwise rambling opinion piece makes a persuasive case that the news business can create a viable economic model by charging small amounts for each item of content a reader consumes. We’re not talking 25 cents here; we’re talking ¼ of a cent. The technology actually exists to charge very small amounts for very focused transactions, Austin writes, and the newspaper industry could be the first with sufficient motivation to make the system work.

Micropayments were an idea that came out of the early Internet. The idea was that electronic networks removed so much cost from a transaction that it was theoretically possible to conduct profitable exchanges at prices of as little as a few cents. The cell phone companies have been doing this for years by debiting transactions against a buyer’s phone bill. Now Apple is selling iPhone software applications for as little as 99 cents. It’s not a big step from there to ask readers to pay a few pennies to get an article they can’t find anywhere else. People are already comfortable with carrying around their Starbucks and McDonald’s cards and charging small transactions against them. Why can’t the same thing work for information?

The Economist suggests a similar idea in a short column that suggests that consumers may be more willing to pay than one would think I they didn’t have a choice. “Few people would have guessed how much British viewers would be prepared to pay to watch televised football matches—which used to be on free-to-view channels—before Mr Murdoch’s satellite television bought up the rights and began charging,” says the unnamed editorialist. The piece also quotes Los Angeles Times editor Russ Stanton, saying that the paper’s online revenues now pay for the entire print and online editorial staff, a claim we hadn’t seen before. This makes print officially a loss leader at the LA Times.

It seems to us that micropayments are worth another look. If a consortium of publishers could agree to share the costs and to firewall some of their content this way, the technology just might have a chance to generate a meaningful revenue stream for publishers whose local content is truly exclusive.

Le Lockout

“Photographers and journalists at the paper make an average salary of $88,000 for a 30-hour week. Editors make an annual average salary of $125,000. Employees are entitled to four to six weeks of annual vacation paid at time-and-a-half.” Sound like paradise? Actually, the union is pretty unhappy with the state of affairs at Le Journal de Montreal and a contract dispute with management led to a lockout over the weekend. Management charges that the union refuses to negotiate a contract in good faith,  and this has frustrated modernization efforts. Union leaders charge that parent company Quebecor Media’s plans to merge Le Journal’s online presence with the media conglomerate’s other holdings will debase the quality of journalism. We can’t remember a newspaper union ever making that a bargaining issue before, particularly at a time of crisis.

Miscellany

Writing on the Knight Digital Media Center, David Westphal suggests that newspapers could tap into foundation grants to shore up their investigative journalism practices. Noting that the Knight Foundation recently gave $5 million to 21 civic foundations for projects that sounded strikingly like local news operations, Westphal suggests that public/private partnerships could enable newspapers to tap in to grants made to local civic organizations and fund projects that would be otherwise unsustainable. It turns out that philanthropies aren’t as resistant to the idea as you might think. Westphal quotes sources at the J-Lab at American University saying the lab has already funded 120 pilot projects with mainstream news organizations. He also quotes the president of the American Society of Newspaper Editors saying the idea deserves discussion.

A couple of big asset deals may be about to go down. PaidContent.org reports that The New York Times Co. is close to selling 19 of the 25 floors of its new headquarters building in Manhattan to an investment management firm. We weren’t even aware that there were any investment management firms left. The deal would reportedly have W.P. Carey & Co. buying the space and leasing them back to the Times. In a sign of how screwy the real estate business is, the Times Co. would retain ownership of the six floors it doesn’t occupy. PaidContent also says Tribune Co. is mulling a $900 million offer for the Chicago Cubs from the Ricketts family. The offer is the best of the three Tribune has received. Even if it’s successful, approvals and financing could take months.

Tim Windsor, who’s newly blogging at Nieman Journalism Lab, points us to a veteran journalist with the delightfully ethnic name of Gina Chen who’s got a terrific how-to blog called Save the Media. Gina exhorts journalists to dive in and start using tools like Facebook and Twitter. She also offers advice to make those tools a little less intimidating. Her plain-talk style is easy to read and she understands the journalist’s perspective. She joins our blog roll and we recommend you bookmark her site.

The Port of Belfast, Northern Ireland, is bullish on newspapers. Or at least bullish on newsprint. It will spend £4.5 million (about $6.1) expanding its paper and newsprint handling facilities. “From nothing just ten years ago, paper imports are now an important part of the port’s diversified trade base,” said the port’s chief executive.

Terence Walsh of the Frederick (Md.) News-Post gets caught up in Obamania, asserting that the new president “has inspired more people, especially young people, to pay attention to the world around them and serve their communities than any politician in recent memory.” He believes this is a rare opportunity for newspapers to reassert their value to young people who are newly energized to learn about the world around them. We hope he’s right, thought ungluing young people’s eyes from their Facebook news feed might be a bigger task than editors imagine.

Class act: The weekly Town Meeting of Elk Rapids (Mich.) shut down after more than 30 years last week. It announced its closure in a two-sentence ad on page 2 of its final edition: “Today marks the final issue of the Town Meeting. We appreciate your loyalty over the 30-plus years the Town Meeting has served your community.”

And Finally…

Chris Freiberg started a Facebook group asking people to buy a newspaper on Groundhog Day (Feb. 2) as a way of showing support for the industry. He invited 600 friends and word-of-mouth has since swelled acceptance to more than 14,000 people. It’s a nice endorsement for a beleaguered industry, but you do have to read some of the raw and funny wall posts.

Downturn Hits Ethnic Press

New York’s ethnic press, which has been mostly insulated from the downturn affecting the newspaper industry, is beginning to suffer. A Spanish-language daily and a Chinese weekly have already closed this year and now the Ming Pao Daily News, which is considered the most intellectual of New York’s four Chinese newspapers, is reportedly slated for closure by its Hong Kong parent. The New York Times notes that ethnic newspapers enjoy an intimacy with their readers and advertisers that big-city dailies traditionally don’t and that this has bought them some security in the past. But the lousy economy is threatening the already thin margins of these small-circulation properties, and many don’t have websites to fall back on. Ming Pao will continue to publish a free daily, which has been the sole bright spot in the market. New York had 10 Chinese daily newspapers just 20 years ago.

Extra! Extra! Blog All About It!

Blogging has come full circle in San Francisco, where a software entrepreneur-turned-publisher has launched a weekly newspaper composed entirely of blog entries. Joshua Karp has big plans for the chain he calls The Printed Blog. If his idea reaches its full potential, he’ll have hyper-local twice-daily editions in thousands of communities around the US. Chicago alone could support 50 localized Printed Blogs. Karp’s editorial model is very Web 2.0-like: bloggers give him their stuff in exchange for a slice of the profits. More than 300 have already signed on. Profits aren’t an issue right now, but Karp believes that local businesses will appreciate the tight control they’ll have over their ad messages as well as the low cost of $15 to $25 to reach 1,000 readers. The New York Times account quotes one advertiser exulting in his new ability to tailor his ads to specific neighborhoods. Printing is outsourced to local distribution points. Naturally, there’s a website.

Layoff Log

• Voice of San Diego is reporting that another 50 employees will be laid off at the Union-Tribune. The paper has been a prominent victim of the area’s cratering economy, having already laid off 15% of its employees a year ago and staging another buyout since then. The U-T has also been for sale for the past six months. While several local investors have expressed interest, no one has written a check yet.
• The Mason City (Ia.) Globe Gazette has laid off nine full-time employees and will leave six open positions vacant. No word on how large the total staff is.
• Lee Enterprises-owned River Valley Newspaper Group, which includes two dailies and eight weeklies in Wisconsin, has cut 10 positions across the company.
• The Traverse City (Mich.) Record-Eagle has cut the equivalent of eight positions from a staff of unspecified size.
• The Peoria Journal Star is laying off an unspecified number of employees part of a plan to reposition the paper. Asked for a quote, publisher Ken Mauser delivers one of the most vapid comments of this new year: “Like many companies operating in today’s business environment, change will be inevitable and necessary to position our business for the future.” A blogger at Illinoize says 11 people lost their jobs.

Miscellany

The sour economy has spurred the San Jose Newspaper Guild and two newspapers to come to terms after 23 months of negotiations. The 25 Guild members get a year of job security and pay raises through 2012, but give up the right to block management from outsourcing some of their jobs.

The right-wing Tulsa Beacon takes the publisher of the Tulsa World to task for joining the most exclusive country club in the city while simultaneously laying off 28 people at the newspaper. Hypocrisy, the Beacon reports, is exclusively the domain of the liberal media.

Good obituary writers have their research done well before the subject is laid to rest. In that spirit, Newsosaur Alan Mutter begins the process of writing an obit for the Chicago Sun-Times, a newspaper that he clearly believes is destined for our R.I.P. column in the not-too-distant future. Mutter, who used to work at the Sun-Times, begins his tale in 1984 and tells the story of the first 10 years of ownership changes that “turned our thoughtful, respected and reasonably prosperous tabloid into a scandal sheet.” It’s a personal, poignant and sometimes funny account that will be told in installments.

Congratulations to Martin Langeveld, whose thoughtful News After Newspapers blog has been scooped up by the Nieman Foundation as part of its journalism lab.  He’s joined there by Tim Windsor and Matthew Ingram. In an introductory entry tellingly tagged “audience, doom, newspapers, and print,” Langeveld describes the reasons why the industry has entered into an inescapable vortex and how the thinking at daily papers must change if there is to be any hope of survival. He will continue to serve up the provocative ideas he started at NAN and the industry will be better for it.

The Register-Pajaronian of the Santa Cruz valley area will cut back its publication schedule to three days a week from six. The 141-year-old paper blamed its financial troubles on the collapse of major advertisers Mervyns and Circuit City. Unspecified layoffs accompanied the move.

If you’re still wondering “Who the hell is Carlos Slim?” Fortune has some background for you. A brilliant investor who specializes in buying distressed firms, Slim is now bailing out The New York Times Co. and may end up controlling the company as a result. For journalists, the nut graph is near the end: ‘Slim seems to neither covet the attention nor access that comes with being a media baron, nor to share the controlling Sulzbergers’ view that their ownership is a trust that puts the company’s journalistic mission ahead of commercial imperative.” If it’s a bio you want, get thee to Wikipedia.

And Finally…

The Boston Globe held out longer against front-page advertising than The New York Times – about two weeks longer. The Globe‘s first page-one ad ran on Wednesday, timed to coincide with the production of an additional 100,000 inauguration issues. The ad was for the movie “Defiance” (see below).

Google CEO Eric Schmidt has been one of the most vocal supporters of newspaper among the ranks of the digerati, so it must hurt him to pull the plug on Google Print Ads. When it launched the program two years ago, Google hoped Print Ads would not only be a revenue stream but also a sincere effort to bridge the print/online gap and inject new life into newspapers’ traditional business. Unfortunately, “It is clear that the current Print Ads product is not the right solution,” wrote Spencer Spinnell, Director of Google Print Ads, in a blog entry, “so we are freeing up those resources to try to come up with new and innovative online solutions that will have a meaningful impact for users, advertisers and publishers.”

Print Ads was a variation of Google’s ad brokering system that enabled advertisers to bid on space in member newspapers. Google eventually amassed over 800 newspaper partners. The program differed from a bigger initiative by Yahoo because Google targeted print advertising directly. Yahoo’s newspaper partnerships are strictly online. Spinnell’s announcement was tinged with regret. “We believe fair and accurate journalism and timely news are critical ingredients to a healthy democracy,” he wrote. “We remain dedicated to working with publishers to develop new ways for them to earn money.”

Will Slim Bid for Times Co.?

Now that Mexican billionaire Carlos Slim has loaned The New York Times Co. $250 million to meet its debt obligations, speculation is focusing on his motivations.  With a personal fortune estimated at more than $60 billion, Slim is one of the world’s richest men. Buying the Times Co. would add a new chapter in his storied career investing in telecommunications, retailing, construction, banking, insurance, railroads and mining. Unlike Sam Zell, Slim could finance the Times Co. with pocket change, meaning he could own one of the world’s greatest media brands without the overhead of having to meet onerous financial terms. Alan Mutter suggests that Slim could parlay his investment into an outright takeover, something no other investor has been able to attempt because of the Ochs Sulzberger family’s tight control of the company. He notes that the comparatively shallow-pocketed Rupert Murdoch bought Dow Jones for a much higher price. “If Murdoch could swing $5 billion for Dow Jones with only $8 billion in personal net worth, then imagine how much Slim could afford to pay for a trophy like NYT,” Mutter writes.

Journalism’s Distant Mirror

Writing in The New Yorker, Jill Lepore reminds us that newspapers have been declared dead before. Her historical account begins in 1765 and takes us through the crucial role that newspapers played in colonial America by fanning public outrage against British – and later American – rule. The Stamp Act, passed by Parliament that year, was widely thought to be the death of newspapers, since it affixed a tax to every page printers produced. But resourceful publishers persevered, even moving their presses by boat under the cloak of night to evade government enforcers.

Lepore notes that the concept of an impartial press is a relatively recent invention. “Because early newspapers tended to take aim at people in power, they were sometimes called ‘paper bullets,'” she writes. “Standards of journalistic objectivity date to the nineteenth century. Before then, the whole point was to have a point of view.” In fact, Benjamin Franklin, who could be considered the father of the American newspaper, didn’t see his role as being “to find out facts. It was to publish a sufficient range of opinion.” In that form, “Early American newspapers tend to look like one long and uninterrupted invective.”

This oppositional role didn’t just roil the British authorities. John Adams signed into law the Sedition Act in 1798, making it a crime to defame his administration. “Adams had come to consider printers a scourge,” Lepore writes. Adams’ successor, Thomas Jefferson, was an ardent supporter of a free press, but by the beginning of his second term, even Jefferson admitted to having thought about prosecuting some publishers.

While not framing the point explicitly, Lepore makes the case that partisan journalism of the kind practiced by bloggers isn’t necessarily a bad thing. Truth may be the casualty of unbridled opinion, but that was also the case in the 18^th century, when even Sam Adams occasionally made up stories to dramatize British cruelty. The fact that some newspapers published untruths didn’t make them any less vital to the establishment of a fledgling democracy. “Without partisan and even scurrilous printers pushing the limits of a free press in the seventeen-nineties, [author] Marcus Daniel argues, the legitimacy of a loyal opposition never would have been established and the new nation, with its vigorous and democratizing political culture, might never have found its feet.”

We feel compelled to note again that Newspaper Death Watch is cited in the article’s opening paragraph, although we differ with the author’s characterization of our tone as gleeful. We prefer to think of it as bemused.

Miscellany

The LA Times is girding for more layoffs. Russ Newton, the Times‘ senior vice president of production, sent a letter to the Teamsters union, which shared it with its members. “The Los Angeles Times has decided to take steps to further reduce its cost including, but not limited to, layoffs,” Newton writes. “[T]he Company intends to implement the cutbacks no later than March 15^th, 2009.”

Romenesko reports that Gannett newspaper boss Bob Dickey’s decision to fly from Virginia to Arizona to announce plans to sell the Tucson Citizen wasn’t entirely altruistic. In fact, Arizona appears to have been just a waypoint on a trip further west. Dickey is in Palm Beach, Calif. this week for the Bob Hope Chrysler Classic golf tournament.

Editor & Publisher‘s Mark Fitzgerald reviews the redesigned Chicago Tribune and pronounces it a “home run.” With its clean look, lack of jumps and liberal use of info graphics, the “to-go” edition of the Trib, which will only be sold on newsstands, “eloquently makes the argument that it’s time America’s big-city dailies seriously consider converting to a compact format,” Fitzgerald writes. The question is when the Tribune will simplify things and make the tabloid edition available to home subscribers, too.

Lee Enterprises reported a 69.3% decline in first-quarter profits as revenues dropped 13%. The company said it is further cutting costs and will ask shareholders to authorize a reverse stock split to comply with the minimum bid price requirement of the New York Stock Exchange listing standards, if necessary. In an unrelated move, the publisher of the Lee-owned Wisconsin State Journal and Madison Capital Times said it will cut 12 positions, mostly in editorial.

The World Association of Newspapers will postpone its annual congress because of the global economic crisis. The meeting was set to take place in Hyderabad, India in March, but only 250 delegates have signed up so far. That’s well below the 1,500 who usually attend.

Last summer we told you about Neighborsgo.com, a spinoff of the Dallas Morning News that uses a social network to anchor a community journalism initiative. Apparently it’s working. Editor & Publisher reports that Neighborsgo is being expanded to cover 47 neighborhoods, with each section featuring headlines, local restaurants, gas prices, education resources and crime news.

Media malaise continues to spread beyond the newspaper industry. Warner Bros. Entertainment is cutting its global workforce by 10% by laying off 600 people and leaving 200 vacant positions unfilled. Clear Channel Communications, which is another diversified media company, announced plans to idle 1,850 workers last week.

Hearst Corp. has officially notified employees of the Seattle Post-Intelligencer that they will all lose their jobs if no one buys the newspaper. This may have seemed obvious following last week’s announcement that the paper will be shuttered if a buyer isn’t found, but Hearst had to send a letter as a formality. A few people might be offered jobs at SeattlePI.com if the publisher elects to keep the website alive.

And Finally…

Here’s one to satisfy your inner voyeur. Nicholas White was trapped in an elevator in New York City’s McGraw-Hill building for 41 hours. It was a lonely ordeal, but White unknowingly had a security camera to keep him company. His plight is documented in a time-lapse video that condenses 41 hours to just a few minutes set to mournful music.