The president and publisher of the Louisville Courier-Journal delivered a rousing defense of the newspaper industry a couple of weeks ago in a speech that was just published yesterday. Arnold Garson used facts, statistics and a few points of information we hadn’t seen before to argue that the industry’s impending doom is greatly over-exaggerated, concluding that “The Courier-Journal will publish my obituary and yours, but not its own.” The Newspaper Association of America (NAA) should make him an industry spokesman.

The 3,400-word speech is well worth reading its own right, but here are the Cliff Notes of what Garson said:

• Yes, some newspapers have closed this year, but compared to the carnage among auto dealers and real estate brokers, the industry looks pretty good. Markets can adjust without collapsing.
• The Courier-Journal has cut back just like everybody else. That’s part of running a sustainable business.
• The most troubled newspapers today are those covered by now-irrelevant duopoly agreements that have kept weak competitors afloat. “Newspapers in Joint Operating Agreements are going to disappear,” he said, adding that this consolidation process has been going on for over a decade.
• The Courier-Journal‘s market penetration is up five percent over the last two years. The company’s print, online and mobile products now reach 85% of the adults in its core market every week and touch them an average of 5.6 times each week. By contrast, this year’s Super Bowl reached only 41.5% of the US adult population.
• One of the reasons is that the Courier-Journal has the dominant local website in its market.
• The big reason circulation is trending down? “Do Not Call. This federal legislation enacted in 2003 shut down overnight the newspaper industry’s No. 1 subscriber acquisition tool, and the only acquisition method that is economically efficient.” Garson added that Do Not Call legislation forced publishers to revise their business models, which had been based on high churn and low acquisition cost, to models based on high retention. This transition triggered circulation declines, but the situation is stabilizing.
• Young adults do read newspapers. Garson said his printed newspaper reaches 74 percent of the 18-34 year-olds in its market every week.

Wrapping up a persuasive argument, Garson imagines holding a press conference to announce a new product called a newspaper to a world that had only known electronic publishing. He ticks off the advantages: compact, professionally organized, factual, porn-free and you can read it on an airplane. The NAA should package up this idea instead of its current baffling Rube Goldberg campaign.

Clearly, not all publishers are the Courier-Journal. Judging from Garson’s commentary, the paper understood some time ago that it needed to focus itself locally and use all the channels its customers were using. There are also undoubtedly some factors that are unique to Louisville that support the Courier-Journal‘s relative health.

However, there are lessons any publishing executive can learn from Garson’s spirited defense. Statistics can work two ways and this publisher has dug up a few that make his business prospects look pretty good.

This afternoon I hosted a presentation in San Francisco on the topic of “World Without Media: What Will Fill The Void?” along with online journalism and social media expert JD Lasica at the New Communications Forum. Here are the slides from the talk. You can also read tweeted comments here.

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.

We really like Sen. Ben Cardin’s idea that newspapers should be allowed to operate as nonprofits. We like it so much, in fact, that we’re going to be the first news organization to take the Senator up on the idea. So effective today, we are a nonprofit. Our $87.13 in monthly advertising revenue is tax-exempt and we welcome donations. We agree not to make any political endorsements, which is fine because we don’t like any of the candidates anyway. We do fear, however, that some newspaper companies may find it a tad more difficult to accept the Senator’s plan. They have this tiny problem of a couple or three billion dollars worth of debt to take care of. Maybe Sen. Cardin should attach a rider making the nonprofit option part of the bankruptcy code. That’s an idea we could really support. But for now, heck, keep those donations coming. PayPal preferred.

A Queensland University professor surveyed 200 first-year journalism students and four that few of them read newspapers. “More than 60 per cent read a printed newspaper once a week or less often. Yet 95 per cent said they enjoyed keeping up with news,” said Alan Knight. Their preferred sources are broadcast TV and the Internet. The survey was conducted online, which means it’s statistically invalid by default, and the brief press release doesn’t say how Prof. Knight limited response to first-year students. Still, it’s interesting and the prof plans parallel studies in other countries.

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.

Spain’s El Mundo newspaper has an article about the Death Watch that has received some notice in the Spanish speaking world, including Cuba and Argentina. We wish our Spanish was better, but we think they’re mostly saying the same thing.

We thought you might like to see the text of the e-mail interview with El Mundo correspondent Carlos Fresneda that formed the basis of this story. As always, your comments are welcome.

How do you feel when you read about events such as the end of the Rocky Moutain News? Which newspapers will survive in the US?

The closure of the Rocky Mountain News left me feeling sick because we are seeing institutions of knowledge collapse before our eyes. The vital public service that these newspapers provide is being lost and, for the moment, there is nothing to replace them.

I believe a few national dailies will survive, among them The New York Times, USA Today, The Washington Post and The Wall Street Journal. These papers made the transition to national distribution a decade ago and that will serve them will. The need for newspapers will not disappear, but the economic model of regional dailies is no longer sustainable. Papers that do not count their national circulations in the one million range will not be able to command the advertising fees to keep them alive. However, there will be a place for some print properties and a few will remain to fulfill that need.

Do you think that something like this could happen in Europe?

It depends on the location. Areas of Europe that are well wired for the Internet and have robust wireless infrastructures, like the Nordic region, will probably see the need for newspapers decline more quickly than those that charge high fees for Internet access or do not have affluent populations. Eastern Europe, in contrast, will probably be a fairly robust market for newspapers for some time. Some cultures are also more invested in the newspaper model, as is the case in the UK. In general, Europe will discard print newspapers more slowly than the US because traditions are more embedded and, in some cases, government subsidies will keep print publications afloat. France is an example of that.

Will more newspapers follow The Wall Street Journal model and charge for their content on the Web?

They will try but mostly they will fail. Readers aren’t accustomed to paying the costs of news, even in the print model, where the cost of a newspaper to a reader is trivial compared to the cost of producing it. Newspapers may be able to generate some revenue from subscription fees but not enough to support their operations at their current size.

Will “micropayments” be the solution for some of them?

The only way a micropayment model can flourish is if there is a broad-based campaign by journalists, public officials and celebrities to promote it. This is the model that is creating a viable paid-content model in the recording industry. There must be a public education campaign to convince the public that a vital information source is threatened and that it must be supported. Perhaps these organizations can steal a lesson from the music industry by giving away their content free on their website but charging for downloads to a Kindle. If readers perceive the value, they’ll pay. However, I think it’s unlikely that the news industry can muster enough support to make such a campaign successful.

The new generations of reader is used to getting information for free. Will these people be willing to pay for high quality journalism?

There will be public funding models like National Public Radio’s that will have some success applying public support to worthy news organizations. However, I doubt that individual readers will be willing to pay enough to cover more than a small amount of the operating costs of conventional newspapers. A few organizations may survive on public funding and philanthropy, but the vast majority of daily newspapers will not be able to sustain themselves under that model.

What will happen to investigative journalism?

In the short term, a lot of investigative journalism will disappear. However, I believe a new style will emerge over time that leverages increased public access to government documents and the work of individual “whistle blowers”  to fulfill many of the same objectives of investigative journalism. New-journalism organizations like Talking Points Memo actually recruit their readers to assist in the reporting process by scouring public documents and fact-checking information. In a world in which everyone is a publisher, some new models of investigative journalism will emerge that harness the work of individual citizens.

Will the new model of journalism using reader-generated content reach the same quality and level that “old school” journalism?

It won’t have the finish and polish of professional journalism and it won’t be nearly as well packaged, but the new model could be richer in many ways because so many people will be involved in the “reporting” process. There will also be new aggregators emerging online that gather the work of citizen journalists and package it professionally.

What is the future of the journalist? Will we be mostly self-employed and will the lack of funds eventually affect the quality of our work?

Journalists will need to think more about their personal brand than the brand of the publication they work for. Many more of them will be freelancers in the future, but they can still make a good living by selling their services to various outlets and by publishing in multiple media. They will need to be more specialized in focus but more generalized in terms of the media they use (text, audio, photo, video).

What is the future of weekly and monthly magazines?

That depends greatly on the audience. Computer displays can’t match the visual quality of a printed page and will never match the tactile quality. Magazines that deliver high visual quality to discerning audiences – high-end travel and lifestyle publications, for example – may do very well for a long time. Those that mainly deliver news will be under more pressure. Magazines with large newsstand circulations will probably do better than those that deliver principally through the mail because people are accustomed to reading them when out of the home. However, mobile news services may blunt much of this advantage over time. I think Brides magazine has a long life in print ahead of it. I’m not sure The Economist does.

Should we blame publishers for the current crisis in the same way US car makers are being blamed for not seeing their problem coming?

Journalists aren’t responsible for this crisis. The business executives who failed to understand changes in their audiences that were apparent a decade ago deserve most of the blame. They considered the Internet to be simply another distribution medium for their printed products and they failed to adapt their services for the unique characteristics of the Web. They also failed to adjust their sales models to target small and local businesses. They placed their bets on classified and department store advertising, and as those revenue sources were taken away or went out of business, they had nothing to fall back upon. Even more damaging was the consolidation spree of the last 10 years that plunged many publishers into heavy debt. Most of them will never recover. The burden of debt service handcuffs them from making meaningful change in their business.

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]

It’s the pit of winter and the economy is stuck in molasses, yet the tone in the newspaper business has turned brighter. The few publishers who aren’t weighed down by crushing debt are talking tough and a paid news model is getting renewed attention.

Charlie Rose convenes a panel of industry notables, including The Wall Street Journal‘s Robert Thomson, Time‘s Walter Isaacson and New York Daily News owner Mortimer Zuckerman, who provides comic relief (See “And Finally…” below). The issue is “The Future of Newspapers,” and Poynter has thoughtfully provided a transcript.

Thomson’s comments are the most insightful. He hits the nail on the head with his description of Google as the great leveler: “Google is great for Google, but it’s terrible for content providers, because it divides that content quantitatively rather than qualitatively.” He also has razor-sharp criticism for editorial arrogance. “There’s a great tendency for journalists to be high and mighty, and to underestimate the intelligence of readers. And I think one of the reasons they’re losing readers is for that very reason.” And he says the Journal now “loves” the paid-subscription model it considered abandoning only about a year ago.

Everyone marvels at the new Amazon Kindle (right) and declares that it may be the last chance to create a reader-funded news model. Isaacson says the challenge for newspapers is to “prevent us from giving it away for free on the Kindles…just like we gave it away for free on the Web. We’ve got one more shot at it… Let’s make some really cool…applications we can…actually charge for.”  Tom Foremski and Greg Sterling both have interesting comments on the roundtable.
Watch the video here:

Making the Case

The New York Times has an op-ed by Eduardo Porter that argues that no other entity can take newspapers’ place. Citing numerous historical precedents, he argues that populations with an active media enjoy higher voter turnout, better government services and a higher standard of living. “During the Great Depression, the Federal Emergency Relief Administration doled out more money in counties with more radios,” he writes, in just one example. “Today, Hispanic voter turnout is higher, relative to the non-Hispanic vote, where there is a local Spanish-language TV station.” He also says television has been cited as an important factor in declining voter turnout beginning in the 1950. Porter’s use of these distant mirrors is novel, but his assumption that it takes a newspaper for a population to achieve these benefits is a bit of a stretch.

The former CEO of Cox Newspapers makes a plea for embattled newspaper companies to fight back. Jay Smith retired eight months ago, just as the walls were beginning to cave in, and he recently joined with three top executives from the business to talk about the industry’s plight. “Their passion and enthusiasm contrasted with…the bleak forecasts for newspapers,” he writes. “Their voices have not been heard much, but they should be.” In particular, “Donna Barrett, who runs the 140 newspapers of Birmingham, Ala.-based CNHI Inc., says nothing in the financials of her company resemble the gloom and doom she reads about.” And the publisher of Parade magazine says he’s still delivering a convincing ROI to advertisers.

Smith is right that these publishers aren’t being heard, and why not? If CNHI is bucking the industry trend, we’d think the Newspaper Association of America would be parading her around like a football hero. It’s odd that those individuals are so quiet when their business is under such siege.

Speaking of sieges, check out the comments at the end of this piece. They’re typical of the reactions we see to published commentaries on the industry’s future: political bashing of the media by both left- and right-wing ideologues accusing newspapers of liberal or conservative bias. This response is so common that we wonder if it’s a coordinated campaign. The comments invariably have nothing to do with the original commentary. They seem designed to spread some kind of agenda. Does anyone have a theory as to why this criticism turns up with such mind-numbing frequency?

But Will They Pay?

Eric Alterman, who penned last spring’s riveting account of the newspaper industry’s problems in The New Yorker, updates the scene in a shorter account on The Nation. Unfortunately, he has no better ideas for saving the industry than anyone else. Alterman recaps the solutions that have been proposed, ranging from micropayments to charitable support, and finds them all wanting. And he points out that the core news section of the typical major metro daily is the part most at risk. “Ironically, it is the sections of the paper most crucial to informed democratic discourse that are in danger of disappearing,”Alterman writes. “Sports news, entertainment news, health news, fashion, celebrity and style reporting will always be with us in one form or another, because they are such delightful places to advertise.” In contrast, no one wants their ad to appear next to a story about an airplane crash.

Writing on Nieman Journalism Lab, Matthew Ingram basically agrees. Ingram recaps the recent debate and says there’s no way readers are going to pay the freight. “Newspapers have never been paid directly by readers for the news,” he writes, adding that subscription and or newsstand fees cover, at best, a few pages worth of production cost. “What newspapers need to do is find ways of creating content that is more valuable than the perishable daily news.” Ah, but that is the problem. No one short of a few specialized publishers has figured that one out.

Miscellany

Three weeks after it pulled the plug on a print advertising program, Google has cancelled a second offline initiative. Google Audio Ads was the second leg of the stool that Google was building to support its expansion into offline advertising. Like Print Ads, the program was meant to upsell airtime to search advertisers. However, the radio industry never much took to the idea, seeing it as a way to commoditize its business. Only one major station owner, Clear Channel Radio, signed on to the program and many smaller networks gave Google the cold shoulder. The search giant still has a similar program to sell television ads and analysts say that one probably isn’t going away soon. About 40 people will lose their jobs.

Have you tried the The New York Times’ new article skimmer? We just did and pronounce it cool. The as-yet-unnamed service (though we like “skimmer” just fine) attempts to recreate the experience of scanning a printed newspaper on a computer screen. Each “page” includes a tiled assortment of summaries and sections slide pleasingly into place. Coolest feature: “Instead of displaying dates, articles gradually fade as they get older,” says a post on the Times‘ First Look blog. ReadWriteWeb notes that it would be nice if you could read the articles in the same interface. But first things first. This is a nice new idea.

And Finally…

Is Mortimer Zuckerman losing it? Or perhaps the collapse in value of his Manhattan real estate holdings has addled his mind just a bit. In this exchange from the Charlie Rose interview referenced above, Zuckerman oulines his plans to turn around the Daily News through the addition of color:

I committed to the new presses out of sheer passion 18 months ago…They will dramatically increase our revenues, because we’ll have all color, and this will increase our advertising revenues, and it will also increase our circulation, because it will be a completely transformed visual product.

The Daily News is one of the last newspapers to go to color. Printing in color isn’t helping anyone right now. But just wait a few years and Zuckerman’s daughter will figure out the solution:

I own The Daily News and I’m determined to keep The Daily News going because my daughter, who is 11, is now committed to be the next publisher…She’s agreed. She liked the working conditions. She liked the demands.

Rose comments, delicately, “Most people would hear you say that, and they would say, you know, he doesn’t — with all due respect, you don’t get it.”

Newspaper companies went on the offensive this week, launching a public relations campaign to rebut forecasts of their impending death and boasting that more people read a newspaper the day after the Super Bowl than watched The Big Game.

The group was conceived by executives from Parade magazine, which wouldn’t exist if it weren’t for its weekly insertion in Sunday newspapers, and people from three other companies: Community Newspaper Holdings, Philadelphia Media Holdings and Cox Newspapers. Philadelphia Media Holdings, which owns the Philadelphia Inquirer, is teetering on the brink of insolvency and Cox has put 29 of its newspapers up for sale. In other words, the group hardly represents the pinnacle of management excellence in a troubled industry.

Nevertheless, the Newspaper Project launched with a website and ads that appeared in 300 newspapers on Monday. Here’s a PDF, if you’re interested. So far, the website appears to be mainly a linklog of material that’s appeared elsewhere, but the slate of authors is impressive. “Future ads will highlight the civic value of news content and how well print advertising continues to work for many businesses,” says Poynter’s Rick Edmonds.

It’s good to see the industry standing up for itself, but it’s depressing to see this initiative so focused on print. We agree with Ken Doctor, who was quoted applauding the project by the AP but who pointed out correctly that a name like “Newspaper Project” demonstrates a backward-looking perspective at a time when the industry really needs to talk about the future. Running kickoff adds in 300 newspapers strikes us as a recursive exercise to promote the industry to its existing audience, although the decision was no doubt heavily influenced by the availability of free ad space. Perhaps the group will focus future messages on the essential role newspapers play as sources of online news. That message is more likely to resonate with the disconnected under-40 audience.

P.S. Speaking of Philadelphia Media Holdings, owner Brian Tierney has reportedly asked the governor of Pennsylvania for state aid to keep the Inquirer and Daily News afloat. State aid may be the only option, since the company already missed a debt payment last September and survives at the benevolence of its creditors.

P.P.S. Monday was “National Buy a Newspaper Day.” The grass-roots effort was conceived by reporter Chris Freiberg of the Fairbanks Daily News-Miner, who set up a Facebook group and recruited 20,000 people to pledge to do their part for at least one day. We did by picking up a copy of the Orlando Sentinel. Another Facebook group has now formed targeting Feb. 13 for a similar action.

Gillmor Weighs in On Nonprofit Debate

Last week’s New York Times op-ed promoting the idea of funding newspapers as non-profit ventures continues to draw the ire of new-media advocates. Dan Gillmor, who practically fathered the citizen journalism movement, bluntly dismisses the proposal by two Yale financial analysts as “shallow thinking” and says that plenty of innovative for-profit business models are emerging. Expanding on comments we reported earlier (see “Voice of Reason in Nonprofit Debate”) Gillmor argues that the flaw in current save-the-industry thinking is that the industry as we know it deserves to be saved. Newspapers “have been systematically looted over the years, to send money to far-off corporate headquarters to pay fat executive salaries and boost stock prices. Preserve them? Why would we want to do that?” he asks.

The role of non-profits is to preserve worthwhile markets that can’t support profitable ventures, notes Gillmor, a veteran newspaperman. There are certainly some unprofitable newspaper functions that deserve to be supported, such as covering city council meetings, but “a great deal of the community information we’ll get in a few years will come from for-profit sources… We’re seeing an explosion of innovation now.”

Gillmor is right on the money. Endowments, public trusts and government funding shouldn’t be dismissed as a means to fund journalism in the public interest, but to use charitable contributions to fund a badly broken business model is, you know, paving the cowpaths.

Blaming Google

Recovering Journalist Mark Potts takes a machete to a recent column by former Washington Post editor Peter Osnos in which Osnos blames Google for profiting from links to newspaper content. Google has replaced Craigslist as the industry bogeyman in recent months, despite the fact that it has tried harder than any other successful Internet company to find ways to shore up the print business. Complaints that Google is harvesting the hard work of newspapers through links from Google News ring hollow, Potts says, when you consider that Google News doesn’t carry any advertising. Newspapers fail to appreciate the fact that Google sends them 20% to 30% of their online volume, he notes, and they ignore the fact that many do a lousy job of optimizing their pages for Google Adsense, the result being that the search giant ends up serving generic ads with poor click-through performance to stories that deserve better.

In a comments exchange, Potts piles on further, noting that the newspaper industry is uncomfortable with the notion of real competition. “Google and Yahoo control more than half of local online advertising spending,” he notes. “That’s disgraceful–and the shame lies entirely at the feet of newspapers, for failing to adequately pursue local online ad opportunities.”

Murdoch has NYT Envy

Rupert Murdoch “sits around all day and thinks about buying The New York Times,” said Murdoch biographer Michael Wolff in a Tuesday session at the Harvard Business School Club of New York. Murdoch also thinks the Times‘ financial saga will play out soon and there’s a fair chance Murdoch will end up with his trophy, Wolff said. That won’t necessarily be a bad thing for the Old Gray Lady, since Murdoch’s Wall Street Journal has managed to avoid layoffs until now.

Wolff had few kind words for Carlos Slim, the Mexican billionaire who recently invested $250 million in the New York Times Co. at generous financial terms. “He’s our national embarrassment. He’s a crook,” the author said, quoting a source in the Mexican media. In contrast, Murdoch is a pure newspaperman, he said. And despite Murdoch’s reputation for exploiting sex and violence to sell newspapers, he hasn’t messed with the Journal’s editorial quality.

That argument isn’t satisfying Pali Research analyst Rich Greenfield, a vocal critical of newspapers who has neverthelss been a staunch supporter of Rupert Murdoch. Not any more. Greenfield has cut his guidance on News Corp. a rare two levels from “buy” to “sell,” citing lack of strategy. “While we have long viewed Rupert Murdoch as the most visionary CEO in the media sector…we are increasingly surprised/frustrated with his lack of strategic direction related to News Corp’s television station, newspaper and book publishing assets.”

Meanwhile, Portfolio magazine says two sources say there will be 50 layoffs at the Journal next wek.

Miscellany

Two Canadian newspapers – including the giant Globe and Mail of Toronto – announced layoffs. The deepest cuts come at the 110,000-circulation Halifax Chronicle Herald, which is idling 24 of its 103 staff members, or almost a quarter of the workforce. “The numbers just kept getting worse and worse and worse and we just don’t know where they’re going to end,” said Dan Leger, the Chronicle Herald‘s director of news content, in a dour summary. The Globe and Mail laid off 30 people on top of the 60 who had taken an earlier buyout offer. That’s about 11% of the total workforce.

More newspapers are trimming publishing schedules to cope with the advertising downturn. In Ohio, the Troy Daily News, Piqua Daily Call and Sidney Daily News all announced plans to cut out Tuesday editions. The publisher said the reduced frequency will help avoid layoffs, adding that about 10% of the combined staffs at the three dailies had been cut in recent months. Group Publisher Frank Beeson has details on how the transition will be handled on one of the more hideous-looking newspaper websites we’ve ever seen (via Martin Langeveld).

The Baltimore Examiner will close on Feb. 15, ending its three-year-run as the city’s second newspaper. Launched by a company controlled by Denver billionaire Philip Anschutz, the free daily had been troubled since the beginning. Parent company Clarity Media Group had cut newsroom staff by half since launch and reduced home delivery from six to two days per week last summer. A spokesman blamed the closure on a lack of national advertising. The AP report said the newsroom was shocked by the news, a surprising reaction considering that the Examiner had been on the market for months. About 90 people will lose their jobs.

The Examiner is part of a small chain that includes siblings in Washington and San Francisco. Those papers are unaffected by the closure. It seems odd that Clarity would have chosen to launch two of its three newspapers just 40 miles from each other. However, MediaPost says the company hoped to achieve advertising synergies between the two.

Campus Paradox: College Students Prefer Print

College newspapers continue to defy overall demographic trends by enjoying greater success with their printed products than their websites. In fact, writes Brian Murley, the challenge for campus publishers is to get more students to visit them online. Murley, who is assistant professor of new and emerging media at Eastern Illinois University, director for innovation at the Center for Innovation in College Media, and the college media correspondent for MediaShift, writes at length about the growing financial problems at college newspapers. National advertising has been tough to come by, and local advertisers still prefer to run in print. College publications have been hurt by the global recession, as has everybody else. Some of them are now also seeing their university funding dry up. In response, many are toying with supplements on topics like housing and entertainment, and they continue to push local sports as a key differentiator.

Murley points to an Alloy Media + Marketing study last spring that found that 76% of college students had read their college newspaper in the past month. This behavior contradicts the conventional wisdom that young people don’t read newspapers, but perhaps reinforces the notion that hyper-local coverage can appeal even to the digital generation.

There’s Life After Newspapers, But Less Money

Veteran reporter Robert Hodierne posted an online survey asking the question: “Is there life after newspapers?” He got 595 responses and while the results aren’t scientific, they offer an interesting glimpse into experiences of people who have left or been forced to leave the daily grind.

You can read Hodierne’s 4,100-word essay on American Journalism Review here, but here are some bullet points we took away. More than half the layoff victims report finding full-time work within three months. More than 90% found jobs within a year. Only 6% found jobs at newspapers. Most of those who switched industries – media relations is a popular alternative, but Hodierne’s vignettes cover a broad range of new careers – say they’re happy in their new jobs. Even so, 85% said they miss working at a paper.

The news isn’t all good, though. Many are making less money. “The midpoint salary range for their old jobs was $50,000 to $59,000. Those who listed salaries for their new jobs were a full salary band lower – $40,000 to $49,000,” Hodierne writes. Worse is that the salary cuts appear to hit older workers harder. “The median age of those who made less than $20,000 at their old newspaper job was 24. The median age of those now making less than $20,000 is 48.”

Hodierne interviewed many respondents and found a wide range of experiences. Theresa Conroy opened a yoga studio and loves it. But Joseph Demma, who participated in three Pulitzer Prize-winning projects, found himself unemployed at 65 and considering a job as a Wal-Mart greeter. The piece is heavier on anecdotes than statistics, but it offers an interesting glimpse into the lives of many career journalists who have had to adapt to the realities of the new market.

Miscellany

Add Media News Group to the growing ranks of publishers asking employees to take a week of unpaid leave in order to avoid job cuts. This follows Gannett’s announcement of a similar plan earlier this month. Media News’ 3,300 employees at more than 50 newspapers in Northern California have to take a breather by the end of March. The union is negotiating the terms, which is what unions do. Lake County News has more details about cutbacks at Media News, including a report that the company had to loan its flagship Denver Post $13 million to make its December payroll, has cut its staff at the East Bay Newspaper Partnership by 60 percent and laid off the person at the Lake County Record-Bee who is largely responsible for laying out and proofing the paper. If the last item is true, then Craig Silverman at RegretTheError might want to keep a careful eye on future issues of the Record-Bee.

The Congressional Quarterly, which isn’t quarterly, is for sale. No, this isn’t another distressed publishing property being shopped for pennies on the dollar. CQ is actually a nicely profitable business with a subscription website, a weekly magazine and a daily paid newsletter, among other properties. It’s just that owner Times Publishing Co., which is wholly owned by the Poynter Institute, has other things to worry about, like how the south Florida advertising collapse is affecting the St. Petersburg Times. CQ has come under pressure from a slew of recent startups covering Capitol Hill and it needs some careful oversight in order to stay competitive. Plus, Times Publishing could use the money.

NPR’s Marketplace reports that there are plenty of working journalists on Capitol Hill; they just aren’t working for newspapers. Specialized newsletters continue to thrive amid the general industry carnage because they serve up valuable information to small audiences that are willing to pay for it. “Our readers get excited about things like section 112R of the Clean Air Act,” says Rick Weber, who oversees the Inside EPA newsletters. “We cover the minutiae of how policy is shaped and implemented.”

Specialty publications may be attractive options for laid-off journalists who don’t mind focusing on a single topic or government agency. They offer plenty of entrepreneurial opportunity and a lean management structure. The downside is their vulnerability to political shifts and economic uncertainty due to their reliance on a small number of paying subscribers.

“The Death of Daily Newspapers Is a Step Forward” headlines an opinion piece by former newspaper reporter Jon Severson, who maps out a long list of publications that arrive continuously on his BlackBerry. Severson monitors about 30 news feeds on his handheld device and supplements that information with an assortment of weekly magazines, radio programs and personal contacts. “I don’t know a twenty – or thirtysomething young professional worth his or her salt who doesn’t own a Blackberry or similar smart phone,” he writes. “We’ve moved on to more efficient ways to get the information that suits our busy lifestyles.” And it’s eco-friendly.

And Finally…

This has nothing to do with newspapers, but it’s wicked fun. T-Mobile cashed in on the flash mob craze two weeks ago by staging a simultaneous dance by more than 200 people at Liverpool Street Station in London. The event had to be done in one take to maximize the element of surprise, and bystanders did exactly what the cell phone carrier hoped they would do: they recorded the dance on their cell phones.