Next for outsource? News production jobs

The jobs of news editors, photo editors, copy editors and page designers may face wholesale elimination at some newspapers in the new year as publishers seek to cut costs by outsourcing editorial production to cheaper vendors.

While several publishers struggling to sustain profitability over the last few years have shipped ad production to low-priced contractors, they largely have kept editorial production in the building out concern for the integrity of the product. But that may be about to change.

The relentless decline in advertising is prompting publishers and senior editors to look more favorably on what many admit is the unsettling idea of turning their news product over to vendors who say they can edit stories, write headlines, crop pictures and lay out pages for up to 55% less than it costs for papers to do it in house.

Dean Singleton, the CEO of MediaNews Group, told fellow publishers at a convention in October that his company is looking into having “one news desk for all of our newspapers...maybe even offshore.” In an age of computers and instantaneous communication, he told USA Today, it doesn’t matter “whether your desk is down the hall or around the world.”

Outsourced editing moved from talk to action last month at the Toronto Star and the New York Times Co.

To save about $4 million a year, the Toronto Star eliminated 78 editorial positions, or nearly a fifth of its newsroom staff, by contracting editing and page production to Pagemasters North America, an affiliate of an Australia-based company. Production will stay in Canada for the time being, but be located in a less expensive location than Toronto.

To save an unspecified sum, NYT is shifting up to 30 New York-based editing positions to the offices of its Gainesville Sun, which already provides editorial production services for some of the company’s other papers in Florida. “The plan for the news service calls for the Gainesville Sun, whose newsroom is not unionized and has lower salaries, to take over editing and page design,” a NYT spokeswoman told Editor & Publisher, which itself will close at the end of the year.

Bigger and far more dramatic deals may lie ahead, said Tony Joseph, the chief executive of Mindworks Global Media Services, a company that runs outsourced editorial production in India for publications in the United Kingdom, Hong Kong and already has done a few pilot production jobs for U.S. publishers.

In an email from New Delhi, Joseph said two large U.S. publishing groups are in “advanced” stages of discussions to move their editing operations to India and that three others are in the “early” stages of such talks. He declined to identify the potential clients or provide further details.

“Our experience with newspapers suggests that improvements in work flow and productivity could generate savings of up to 30%, even if outsourcing is done on-shore,” said Joseph. “Off-shoring could provide additional savings of 35% to 55%, depending on the location and cost structure of the client newspaper.”

For publishers running out of options to shore up their profits after four years of steadily shrinking revenues, those are seriously big savings.

E&P magazine shutting down after 125 years

Editor and Publisher, the trade journal that has covered the newspaper industry for 125 years, is being closed by the end of the year, staffers were told today.

The magazine and website, along with Kirkus Book Reviews, were not included in the sale of a clutch of business publications announced today by their parent, Nielsen Business Media.

Most of the Nielsen business publications are being acquired by e5 Global Media Holdings, LLC, a new company formed jointly by Pluribus Capital Management and Guggenheim Partners. But E&P and Kirkus were not included in the deal, leading to the decision to cease operations at both orphaned publications.

With the pending shutdown of the authoritative trade magazine and the reduction in the last few years in the number of securities analysts covering publishing, there will be scant independent reporting and commentary on the troubled industry at a time it most needs objective and honest feedback.

Although the next issue of E&P is just 10 days from press, the magazine’s New York-based staff was told in a hastily called meeting this morning that their publication would be shut and their jobs would be eliminated as of Dec. 31.

The full memo on the shutdown is at Romenesko and reaction is in the popular Fitz and Jen blog at E&P's website. Mark Fitzgerald and Jennifer Saba, the authors of the blog, are among the staffers who will lose their jobs.

A staff member who is being laid off said there are five editorial and three advertising employees at E&P. Staffers were told E&P was losing money and had not made budget since August, 2008. The extent of the operating losses were not revealed.

A newspaper to inspire you all over again

I stood in line with half a dozen people yesterday waiting patiently to buy a newspaper, wondering if I ever would witness anything like that again.

It was inspiring to see people eagerly scoop up a paper so fat with news that you had to take care that some of its 12 sections didn’t come tumbling out.

And the paper indeed was fat with news, real news. Real stuff I didn’t know about. Real stuff about my city, my country and my world. Real stuff I hadn’t heard anywhere else.

The paper was the one-time-only issue of the San Francisco Panorama, a broadsheet produced – as sort of a cross between a statement and a stunt – by McSweeney’s, the refreshingly idiosyncratic publishing house operating in San Francisco’s Mission District.

Most of the 20,000 copies of the $5 paper sold out without hours of hitting the street on Tuesday, which some newspaper people seized as a sign that even the hip, jaded and highly wired residents of San Francisco still cared about newspapers.

But the depth and ambition of this newspaper, whose price bumped to $16 on Wednesday and still is being offered here, were unlike anything you’ll see nowadays in most American cities.

While the enthusiastic response to Panorama cannot rightfully be construed as a vote of confidence in contemporary newspapers, it is well worth examining by publishers and editors eager to put new life into their increasingly lifeless publications.

And it is well worth celebrating by all of us who love newspapers, because it reminds us of how compelling a newspaper can be.

Smartly reported, sharply written and striking to behold, Panorama brims with passion and compassion for the Bay Area and the larger world we – and our kids – all inhabit.

Though Panorama is presented as a very broad broadsheet printed on newsprint, it reworks and updates the conventional format of a newspaper. Articles are long and written a in a literary, un-telegraphic style. Layouts emphasize storytelling, not story count. Most important of all, the content is meaty and provocative.

A page-one investigative piece as fine as I have seen in years ripped the lid off the inept reconstruction the long-overdue new bridge to Oakland. The project, Panorama predicted, eventually will cost $12 billion – or twice as much as we had been led to believe – “a figure that leaves even the officials in charge ‘staggered.’”

A second in-depth report details how the unbridled cultivation of illegal pot in scenic Mendocino County is poisoning wildlife, wrecking the environment, poaching scarce water assets and exploiting illegal immigrant workers. A report about gold mining in remote Imperial County tells a disturbing tale of environmental exploitation and corporate greed. Another piece delves deeply into the economics and politics of water in California, the scarcest commodity and the most politically charged issue in the state.

Farther from home, Panorama covered the wars in Afghanistan with short but incisive backgrounders, rounded out with first-person stories of two of the enlisted men bearing the brunt of the fighting – one of whom has served five tours at the front. A full-page infographic about the Congo crisis truly demonstrates how a picture can be worth thousands of words.

Perhaps the most moving feature in the publication was an article entitled “Lying to Live.” It is a series of translations of confessions extracted under torture from Iranian dissidents held at the infamous Evin Prison, where the only hope a prisoner has to survive is to tell the guards what they want to hear. “Jail officials’ kindness created a positive atmosphere in this jail, where I could think and get close to God,” said a statement attributed to journalist Saeed Shariati. His fate was not made clear.

Panorama didn’t stint on sports and entertainment, and even included two of the rarest things in most newspapers today: A 116-page, saddle-stitched Sunday magazine packaged in slick cover stock, plus a full-dress, 100-page, bound book section. Also included is a 16-page, full-color comics section containing nothing but deliciously edgy, home-grown strips.

Panorama even excelled in what it left out, eschewing the daily Tiger Woods hot-body count and coverage of the crashingly boring White House party crashers.

It’s not fair to measure conventional newspapers against the one-off issue of Panorama, which took 11 months to produce without the economic, staffing and deadline constraints increasingly encumbering most other publications.

But this experiment serves as a refreshing and inspiring reminder of the strength of journalism and the possibilities of print. Best of all, I am happy to report, the folks in line with me could hardly wait to read it.

The daunting reality facing newspapers

If chief executives get the big bucks for their ability to put the best face on bad situations, then newspaper bosses really earned their pay this week at the annual UBS media conference in New York.

With straight faces, the chiefs of McClatchy Co., the New York Times Co. and other major publishers told investors that things were looking up for the newspaper business because their sales would be down “only” 20% to 25% in the fourth quarter of the year after tumbling as low as 30% in prior periods.

While a slowdown in the industry’s sickening sales slide beats the accelerating revenue deceleration that has been eating away at newspapers for the last 42 months, it’s time for a reality check. So, here goes:

Newspapers are on track this year to produce their lowest advertising sales since 1986, representing a 43% drop from their all-time peak of $49.4 billion in 2005.

Based on the historic sales slide in the first nine months of the year, newspapers are likely to generate no more than $28 billion in advertising revenues in 2009, thus shedding more than $21 billion in sales since 2005.

In other words, newspapers appear to have gotten mighty close to losing almost half of their revenue base in a mere four years – a decline that began well before the economy began unraveling.

Advertising sales matter because they traditionally have generated 80% of the revenues at most newspapers, with circulation fees providing the balance. The profound contraction of the advertising market has caused some publishers to begin ratcheting up subscription and single-copy prices, but the industry at the moment will live, or not, by advertising.

While some demand for newspaper advertising undoubtedly will return when the economy recovers, a good deal of it will not, because many of the traditional advertisers have moved on.

An alarming number of the staunchest newspaper advertisers – including thousands of retailers and auto dealers – succumbed during the worst economic calamity since the 1930s, so there literally is no hope of regaining their business.

Many of the surviving advertisers – including retailers, employers, real estate agents and car dealers – are shifting ever-larger portions of their advertising spend away from newspapers to the web, where the costs are lower, audiences are highly targetable and response can be meticulously measured.

As illustrated in the chart below, the speed and severity of the sales plunge since 2005 is unprecedented in the heretofore remarkably charmed history of the newspaper business in the post-World War II era.

The collapse of the newspaper business most assuredly was aggravated by the downturn in the economy. But it is important to note that the sales decline was well under way before the economy cratered. It is a grave mistake to think, as some industry leaders apparently do, that the industry’s problems will be solved when the economy improves.

Here’s the perilous position newspapers are in – and how they got there:

From the end of World War II through 2005, newspaper sales climbed vigorously and almost continuously with only occasional minor setbacks during recessions. There was one frighteningly deep 9% sales plunge in 2001 caused by the tech wreck and the 9/11 terror attacks, but the industry quickly recovered when the economy rebounded in less than two years.

Thanks to the housing boom and the cheap-financing bubble in the middle years of this decade, newspaper ad sales reached an all-time record of $49.4 billion in 2005. The rapid recovery for newspapers after the 2001 scare evidently led publishers to believe they had dodged the competitive threat posed by the Internet, which began emerging as a commercial force in the mid-1990s.

In fact, as we know now, the interactive media in the last four years did more harm to publishers than they ever could have imagined, particularly by destroying their formerly lucrative classified advertising business.

The want-ad business, which until a few years ago produced 40% of publisher revenues and better than 40% of their profits, was picked clean by lower-priced, consumer friendly websites offering highly optimized environments for searching deep inventories of employment, automotive and real estate listings.

Based on projections derived from the industry’s actual performance in the first nine months of the year, classified advertising in 2009 is likely to total no more than $6 billion, or fully 65% less than the $17.3 billion in sales booked in 2005.

The financial crisis and recession that commenced last year carved deeply into national and retail revenues. Many heavy newspaper advertisers went out of business. Most of the remaining advertisers trimmed their spending to save money, while directing ever-greater percentages of their purchases into low-cost and highly targetable interactive media.

Based on the industry’s performance in the first nine months of 2009, national advertising appears to be on track to total some $4.3 billion for the full year, or 45% less than it was in 2005. Retail advertising, which is the meat and potatoes for almost every newspaper, is likely to drop this year to $14.8 billion, or 33% less than it was in 2005.

It is difficult to think of another industry that fell so far so fast and ever regained its former vigor. If someone knows of any examples, please let me know.

Thin ranks of top women editors get thinner

The upcoming exit of two of the longest-serving female editors-in-chief in the country will leave only two women leading newsrooms among the 25 largest newspapers.

The already thin ranks of top women editors will be depleted at year’s end by the departure of Sandra Rowe at the Portland Oregonian (the 22nd largest paper by circulation) and Karin Winner at the San Diego Union-Tribune (the 24th largest paper).

When the veteran editors step down, the only women left to run newsrooms among the top 25 papers will be Nancy Barnes of the Minneapolis Star Tribune (the 14th largest paper) and Susan Goldberg of the Cleveland Plain Dealer (the 18th largest paper).

The Oregonian has named a man as Rowe’s successor and the U-T is searching for a replacement, leaving the possibility that the vacancy in San Diego could be filled by a woman.

Winner resigned her position last week and Rowe announced her departure yesterday – the same day Janet Coats said she is leaving the Tampa Tribune, the 55th largest paper in the country.

While women hold a number of senior positions at every major paper in the country, a quick census of the 50 largest papers found only four other women running newsrooms in addition to Barnes and Goldberg.

Thus, the percentage of women editors at the top 50 papers is 12%, a mere quarter of the distribution of females in the population as a whole.

The pioneers who paved way for non-profit news

The excitement over the growing number of emerging non-profit news operations overlooks the achievements – and lessons to be learned from – the non-profit news ventures that have paved the way for them.

In this guest perspective, Steve Katz, the interim chief executive of Mother Jones, talks about some of the things he and his colleagues have learned at their 34-year-old multimedia venture. Steve also comments on these topics on his personal blog, Maimonides’ Ladder.

By Steve Katz

With fresh non-profit news ventures seemingly turning up left and right, you would think this was a brand new idea. But it’s not.

A wide variety of non-profit news ventures have been providing unique, professional-caliber, and invigorating perspectives on our world for many years.

A number of ventures – like the Center for Investigative Reporting, Ms., or my own organization, Mother Jones – predate the popularization of the Internet by more than two decades. And let’s not even begin to count how many years The Progressive, Harpers, National Geographic or The Nation Institute have been around!

The pioneers of non-profit journalism cover the full array of media, from magazines, to radio and television, to online.

Here’s an incomplete list of non-profit journalism orgs that pre-date the latest wave (you can find links to many of these at the Media Consortium website – of which many, but not all, are members):

Alternet

The American Prospect

Bitch Magazine

Center for Investigative Reporting

Center for Public Integrity

Colorlines

Democracy Now

Free Speech TV

Grist

Harpers

High Country News

In These Times

LinkTV

Mother Jones

Ms.

The Nation Institute

National Geographic

New America Media

The Progressive

Public News Service

The Real News

Southern Exposure/Facing South

The Texas Observer

The Washington Monthly

Yes! Magazine

It's obvious that this is a pretty polyglot list, representing what admittedly is a messy, diverse gang of organizations. Some are larger and financially stronger than others, some hew to the traditional canon of journalism more than others, some serve a general audience while others are very focused, and so on.

These veteran non-profit publishers don’t tightly cluster around one platform or function nor one way of looking at the world. That makes them notably less homogeneous than the new local and regional news startups that seem to be capturing so much attention – and funding.

The proliferation of new local-news projects seems to have been causednot only by the well documented decline of traditional newspapers, but also because of how the money has been flowing lately: in the direction of these new news operations. Chalk that up, in part at least, to the influence, for good and otherwise (mostly for good) of the Knight Foundation, the philanthropic leader in funding innovative experiments in journalism.

Here's the problem, though: The veteran non-profit journalism organizations – all of which produce their own original content, all of which generate genuine news for an attentive audience – represent an ensemble of voices that too often gets shunted to the side in "the future of news" conversation.

This has the effect – unintended, mostly – of excluding not just Mother Jones but other non-profit journalism outfits that for one reason or another don't fit into the new meme about what constitutes legitimate non-profit journalism.

I fear this may reproduce the traditional – and these days irrelevant – division between "mainstream" and "alternative" media, and narrow the conversation about our shared future. Why not learn from the experience of many people who have struggled for years with the same issues they are confronting today?

And for the start-ups especially, that's a real loss. It's not as if these guys really need to reinvent the wheel all by themselves. We've been at it for a long time, with, well, sobering results: there are benefits and costs of doing this non-profit approach - there's no magic, just a lot of hard work.

Common ground for a productive conversation, I’d say.

Ad guys in newsroom may not be so bad

I got the same queasy feeling every red-blooded journalist had when I read that the Dallas Morning News seems to be putting advertising-department overseers deeper into the newsroom that any major paper has done before.

But maybe – just maybe – this isn’t such a bad idea. Instead of the advertising people infecting news coverage, maybe – just maybe – the creative energy and constructive skepticism of the newsroom will rub off on the ad guys, who sorely need all the help they can get.

In what was hailed yesterday as a “bold” move in a memo co-authored by the senior vice president of sales and the editor of the newspaper, the Morning News staff was told that “general managers” hailing from the ad department hereafter would supervise several news sections like entertainment, travel, sports, autos and real estate.

The idea is to develop products that will please readers and advertisers alike, leading to fatter top lines and continued employment for what’s left of the newspaper’s shrunken staff. What’s not to like about that?

The obvious answer, of course, is that journalists could be compelled to trivialize, slant or otherwise corrupt their coverage to gain the favor of those new general managers, who presumably will be focused, first and foremost, on selling ads.

Any fair analysis of the agonies suffered by the newspaper business will show that the primary problem facing the industry is a loss of advertising revenue. This results directly from an epic and ongoing lack of imagination and innovation on the part of publishers and advertising executives, not in most cases on the part of their newsrooms.

So, it's not the newsrooms that need fixing. Quite the opposite appears to be the case.

That is why I suggested here a couple of years ago that it would do most newspapers a world of good if they ventilated the Chinese wall that traditionally has separated the business side from the newsroom. As I said back then, if you’ll pardon me quoting myself:

Unlike the executives on the business side who got their jobs by being good, but not particularly inventive, at exploiting the monopoly-like advantages enjoyed by most newspapers until the arrival of the Net, journalists don't have to defend the relevance of their role in an increasingly ineffective business model. As such, journalists are the most objective and least personally conflicted people working in publishing companies.

Further, most journalists possess a peculiar DNA that compels them to kick over rocks to see what crawls out. They, and they alone, appear to be the ones most likely to be motivated and equipped to ask such tough questions as what advertisers really think, what readers really want and, most importantly, what newspapers can do to regain the engagement of the advertisers and readers who have forsaken them.

The emergency facing the newspaper industry leaves journalists no choice but to broadly redefine their roles and overcome their near-universal reluctance to getting involved in the business of their business.

If they don’t act to defend the economic health of the institutions that make their valuable work possible, the institutions themselves may be irreparably damaged or lost forever. I can think of no higher calling for a journalist.

If management at the Morning News is sufficiently enlightened and disciplined to prevent the self-defeating corruption of the paper’s coverage, then maybe – just maybe – this bold experiment could be the beginning of a new kind of collaboration to create fresh and refreshing new products to reinvigorate revenues and readership. Maybe.

A master’s secrets for funding non-profit news

Second of two parts. The first part is here.

Unlike the founders of most non-profit news sites who concentrate on the journalism they yearn to provide, David S. Bennahum knows his chief task is to build a solid financial foundation for his non-profit Center for Independent Media.

While his emphasis these days is largely on cultivating philanthropic support for the six news sites he operates – and two or three additional ones he aims to open in 2010 – Bennahum hopes to find a way to sustain his organization in the future by generating revenues from the traffic his sites attract.

Right now, however, he is almost single-mindedly focused on raising money. And he’s pretty good at it, too. In an interview shortly before Thanksgiving, he revealed the secrets of how he does it:

Since launching his enterprise in 2006, Bennahum has raised more than $11 million from hundreds of individuals and nearly four-dozen foundations ranging from the Carnegie to Streisand funds.

Bennahum’s accomplishments as a fundraiser are nearly unrivaled in the realm of non-profit news. The total philanthropic support he has raised is surpassed only by Pro Publica, which benefitted from a $30 million grant from a single wealthy family. Bennahum, by contrast, has built his organization through dozens of four-, five- and six-figure donations.

Bennahum has worked hard, and successfully, to diversify his donor base. Although non-profit projects like Pro Publica, the Bay Area News Project in San Francisco, the Voice of San Diego and the Texas Tribune each has been dependent to date on the largesse of one large donor, Bennahum says no single benefactor accounts for more than $150,000, or less than 4%, of his annual funding.

If you let a single donor dominate a project, he said, other philanthropists tend to support different projects on the assumption that the cornerstone donor won’t let the project die. And it’s unwise, he said, to become overly dependent on the generosity of a single benefactor.

Bennahum said it also is a mistake to concentrate on raising money from journalism-oriented foundations. “They only have $80 million to $120 million to give away,” said Bennahum. If a project keeps going back to a J-fund year after year without showing an ability to generate sufficient revenues to eventually stand on its own, there is a danger the fund will lose interest, said Bennahum.

He prefers targeting funds that are eager to support reporting on issues like health or immigration policy. Besides, said Bennahum, a fund like Carnegie, with up to $3 billion to dispense in some years, is a richer target than any J-fund.

Bennahum said he always raises money locally before launching a new site and won’t start a site until he accumulates at least half the necessary funding in a target state.

He brought in $4.1 million in 2008 – his best year yet – but donations were down by nearly $1 million this year because of the weak economy. Bennahum said he was able to sustain operations by cutting back on expenses. “You always can find something to cut in any organization,” he said, noting that he even was forced to freeze his own pay at $200,000 per year.

Bennahum hopes to raise more than $4 million in 2010 to expand to new markets, saying the timing and location of future launches will depend on where donors step forward. California, Florida and Texas look most promising, he said, adding that he is not the least fazed by competition from any of the non-profit news ventures already in progress in those states.

Beyond philanthropic fund raising, Bennahum hopes to raise the level of “earned income” his sites produce through three potential avenues: advertising sales; revenues from live events like seminars and conferences, and subscription news products aimed at perhaps politicians, lobbyists and state contractors.

Of the three areas, the single most significant initiative he has undertaken to date has been in carrying network advertising provided by Google, which is on a run rate to contribute $84,000 per year.

When the Independent sites first started running ads, revenue was averaging 92 cents for every thousand impressions (making for a CPM of $0.92). “But we got an unsolicited email from Google one day that told us how to change our sites to improve the CPM,” said Bennahum. “We did most of what they said and our CPM now is $2.27, an increase of nearly 150%.”

This one case is a perfect example of the practicality, adaptability and mastery of detail that could make Bennahum the man who may turn non-profit news from a series of struggling, one-off ventures into a significant national force.

In other words, he could be the guy who eventually supersizes non-profit news.

The man who may supersize non-profit news

First of two parts. Part two is here.

David S. Bennahum may be able to do for non-profit journalism what Ray Kroc did for hamburgers, making him well worth watching as the hunt continues for ways to fill the journalistic void left by the meltdown of the traditional media.

A former Wired Magazine writer, turned Internet ad man, turned non-profit news maven, Bennahum is the founder and chief executive of the Center for Independent Media in Washington, DC, a philanthropic organization that is building a network of statewide news sites by pursuing some of the same principles employed by the founder of McDonald’s to put his dining establishments all over the map.

Bennahum quietly has raised more than $11 million since 2006 to launch award-winning operations employing 35 individuals to cover news and politics in five states adn the nation's capital. He started with the Colorado Independent and moved on to found Independent-branded sites in Iowa, Michigan, Minnesota, New Mexico and Washington, DC. He is crisscrossing the country nowadays to try to gather the necessary donor support to expand next year to California, Florida and Texas.

Bennahum’s accomplishments as a fundraiser are significant. The support he has raised over the life of his young organization surpasses every non-profit news organization but Pro Publica, which benefits from a $30 million pledge from the single, wealthy family that founded it. Bennahum has built his organization through dozens of four-, five- and six-figure donations, the largest of which he says was $150,000.

Unlike other news non-profits, which tend to be one-off labors of love cobbled together by trial and error, there is a distinct discipline to the systematic way the 41-year-old Bennahum (left) is building his organization, donor-by-donor and state-by-state.

His ability to cookie-cut news sites brings to mind some of the concepts that that helped McDonald’s grow from a single Southern California hamburger stand into a global fast-food empire. (The empire, as you may recall, generated sufficient wealth that Kroc’s widow in 2003 bequeathed a tidy $200 million to National Public Radio, by far the largest gift in its history.)

Kroc built McDonald’s by developing dozens of replicable systems and procedures, while scrupulously tracking costs to assure the consistency of his burgers and the predictability of his profits. McDonald’s pickle-to-bun ratio, for example, made it possible to instantly tell if an operator had deprived customers of their rightful pickle ration or, worse, if the operator was giving away too many, thus nibbling into profit margins.

Bennahum bristled at being compared to Ray Kroc when we skipped the $14 pancakes and stuck to the coffee at the elegant Clift Hotel in San Francisco, where he had been staying the week before Thanksgiving on a fund-raising swing. “Unlike McDonald’s,” he said in an interview at the pretentious Asian-Cuban fusion eatery off the lobby of his $165-per-night hotel, “there’s a lot of customization that takes place to fit the needs of local communities.”

Fair enough. But his apparent determination to master the metrics and activities of his growing enterprise suggests he is turning the creation and operation non-profit news sites into an increasingly refined art, if not a science. To see what I mean, take a look at the slick dashboard Bennahum has developed to monitor the pickle-to-bun ratios at his sites.

Each of Bennahum’s sites bears the Independent name, each operates on an identical technical platform, each was organized and launched in the same fashion and each is operated in substantially the same way with budgets ranging from $350,000 to $400,000 per year. A site in California probably would require an annual budget of $500,000, presumably because of the high cost of a cup of joe at a place like the Asian-Cuban joint at the Clift.

Bennahum said each of his sites is run by an editor who makes about $50,000 a year and are populated by four to six reporters, who start at $36,000 a year, plus some freelancers. Bennahum, who made some money in digital advertising during the Internet bubble, said he pays himself $200,000 annually and, owing to the depressed state of the economy, hasn’t had a raise in two years.

Local variances aside, the Independent sites are organized and operated with as much consistency as possible, each learning from the experiences of the others.

In something akin to the training afforded promising line cooks at McDonald’s Hamburger University, Bennahum conducts a boot camp before launching a new site for his new hires, as well as community volunteers who hope to become future volunteer contributors, paid freelancers or staffers.

Except for the DC site, which has a national flavor, the other sites stick mostly to government and politics in their states. No sports, no celebs and not much science or cultural coverage, except as it relates to state government and politics.

The state sites endeavor to work with local public broadcasters to provide them with enriched coverage in exchange for heightened exposure. The Independent sites so far have not collaborated with any local newspapers, because it would be “tricky,” said Bennahum. But the organization tracks – and carefully reports to donors – every reference in print to any of its reporting.

Unlike the founders of most non-profit news sites, who are fixated on the journalism they aim to provide, Bennahum recognizes that his job is building, running and financing his organization. While he is clearly proud of the work produced by his editors and reporters, he leaves the journalism to the people running his news sites.

He knows his primary job is to cultivate philanthropic support and, he hopes, find a way some day to sustain his organization by generating revenues from the traffic his sites attract. Right now, howevere, raising money is Job One. And he’s pretty good at it, too.

Next: Bennahum’s fund-raising secrets

Playing whack-a-mole with copyright poachers

A new study confirming the widespread unauthorized use of newspaper stories on the web ironically demonstrates the futility of efforts to deter copyright poaching at this very, very, very late date.

In a breathless report issued yesterday, the content cops at Attributor, which runs a service scouring the web for copyright poachers, shocked no one when it said more than 75,000 web publishers in the last 30 days used newspaper stories without permission.

Attributor said no less than 112,000 “near-exact copies” of newspaper articles were spotted on sites where they shouldn’t have been, unleashing the usual tut-tutting from industry officials about the need for “new models for content monetization.”

The despair among publishers over lost subscription and advertising revenues is valid, as we say here in California. But publishers have only themselves to blame. They, and they alone, long since forfeited the opportunity to take affirmative action to prevent the uncompensated propagation of their content on the Internet.

The problem for newspapers now is that it’s too late to put the toothpaste back in the tube, as they used to say in the Nixon White House. Because resistance to the widespread dissemination of newspaper content on the web would be fruitless, publishers either can learn to live in the real world or spend substantial sums they can’t afford to flail against a phenomenon they haven’t a prayer of stopping.

Notwithstanding the above logic, it’s looking increasingly like some publishers will opt for the costly and inherently unproductive whack-a-mole game of trying to neutralize copyright poachers by forcing banner-ad networks like Google, Yahoo, Microsoft and others to cut off service to any offending sites.

The never-ending battle against countless ever-changing and constantly emerging copyright poachers almost certainly will prove to be as costly as it is ineffective, as I’ll discuss in a moment. But first, a bit of background:

The problem of unfettered and uncontrollable copyright abuse results directly from the short-sighted and penny-pinching decision most publishers made more than a decade ago to put their content on the Internet without charge and without taking advantage of any of the rights-management technologies that would have limited access to their articles to only authorized users.

The valuable content that differentiated newspapers from almost all other competitors was shoveled thoughtlessly onto the web because publishers never suspected readers or advertisers would accept the Internet as a serious source for news.

They were making so much money on the print newspaper business (until a few years ago) that they saw no reason to develop specialized content and services for the Internet. So “repurposed” content from the morning paper, which already was bought and paid for, was good enough for the web.

The consequence of this thinking is that newspapers ceded the development of this profoundly disruptive new medium to other people, many of whom now are feasting on the free content provided by the press.

There are so many alternative sources of news and information today that newspapers can’t possibly shut them off. Further, an entire generation under the age of 30 has been conditioned to believe that news and information – as well as music, video and all manner of other intellectual property – are supposed to be free.

Thus, we have moved, as Doc Searls brilliantly observed at the recent Harvard roundtable on saving journalism, from an age of information scarcity into an era of information abundance.

Publishers who thrived in scarcity think they somehow can recapture that era by trying to impose an artificial level of scarcity on their content by limiting who sees it and how it is used.

But it’s too late for that. The web is too big, too open, too unwieldy and too unruly.

If newspapers can’t come up with a more constructive way forward, they won’t just spend themselves silly. They also won’t succeed.

Journicide: A looming, lost generation of scribes

Vanishing employment opportunities and shrinking freelance compensation threaten to wipe out a substantial percentage of the next generation of professional journalists.

This journicide, to coin a term, is not merely going to be difficult and disappointing for the affected young people, who mostly will move on to find rewarding careers in other endeavors.

But the loss of a substantial portion of what would have been the next generation of journalists also will be tragic for society. The loss will deprive citizens in the future with the insights that only can be delivered by dedicated professionals with the time, skills and motivation to dig deeply into difficult stories.

Bloggers and other bloviators, this writer expressly included, will not take up the slack. Absent some miracle that motivates someone, anyone, to start fairly compensating journalists again, we are going to lose something that has been very important to our democracy throughout the life of the nation. I can’t imagine what it will be like without professional journalists, but I don’t think we will like the outcome.

Journicide has been under way since newspapers and other mainstream media began losing their formidable revenue-generating juju in 2006. The elimination of full-time professional journalism jobs since then has been so relentless that it has become remarkably, depressingly commonplace.

Paper Cuts reports that nearly 15,000 newspaper jobs were eliminated so far this year, putting the industry on track to rival, or potentially surpass, the nearly 16,000 jobs axed in 2008. Last month, the Associated Press zapped 90 positions to cut 10% of its payroll costs, and BusinessWeek pink-slipped a reported 130 individuals, or approximately a third of its staff.

As bad as things are for still-working and formerly employed journalists – and they are bad – the opportunities are even worse for journalists seeking their first gigs. There are two reasons:

First, young journalists trying to land entry-level jobs find themselves competing with seasoned pros who have been knocked off perches higher up in the food chain.

Second, the miserable state of the media business has combined with a sharp increase in the supply of available journalists to reduce compensation to humiliatingly low levels.

As a consequence, young journalists looking for opportunities to start careers – even the idealistic eager ones celebrated here by David Carr – are looking at an almost universally bleak economic landscape.

Salaried, entry-level positions at traditional news organizations are almost entirely unavailable, because the organizations are trying to avoid laying off any more staffers than they already have.

This leaves phalanxes of young journalists to compete among themselves for low- or no-pay internships and highly exploitive freelance opportunities that typically promise rich “exposure” but scant, if any, hard cash.

In one of the choicest positions I found recently when visiting industry job boards and Craig’s List in a number of markets, Wired Magazine is offering interns $12 an hour in San Francisco. This about two bucks better than the mandated minimum wage in the city but probably two bucks less (including tips) than you can make frothing macchiatos at Starbuck’s.

In the case of freelance opportunities, the pay rate ranges from a pittance to zero.

WeekInRewind.com is seeking unpaid “interns” in New York to write two to three reviews per week of no less than 400 words. “You must be a superb writer to qualify,” enthused its ad. “We want you to be a star….” They just don’t want to pay you.

SportsMixed.Com, a new site in Minnesota, is seeking budding Red Smiths. “Currently this position is unpaid, however compensation should become available in the future,” says its chipper ad. “For now, we offer the chance for writers to circulate their name, practice blogging style, break into a new sport and develop a following.” That’s generous of them.

A soon-to-launch stealth site promising “to showcase everything hip” in Los Angeles is recruiting people to write about restaurants, concerts, movies, clothing stores and people. The proffered compensation is: “Opportunity to get published and invited to hip parties in LA + eventual monetary compensation!” Wow!

A notch above being compensated in hip-titude is being paid piecework-style. A site called Gather.Com suggests in its ad that writers could earn “up to $500” per month. But the fine print explains that per-article payments will range from $25 to $100 “for any articles posted on Gather that receive a minimum of 250 unique page views.”

Significantly, almost none of the available entry-level jobs involves anything that could be remotely described as public-affairs journalism. The publishers hiring today seem to be far more fixated on shopping, entertainment and lifestyle coverage than actual news.

One refreshing exception emerged last month. Provoices, which aims to hire serious scribes “displaced” by the recent contraction of the news industry, was launched by Allvoices.Com, a site that to date has grown through the contributions of volunteer writers across the globe.

Provoices will be headed by someone who feels the pain of fellow journalists, too. She is Lynda Gorov, a former national and international correspondent for the Boston Globe who until last week was an involuntary freelancer for the better part of five years.

“People no longer want to pay you to write,” said Gorov in a telephone interview from Los Angeles, where she was dispatched by the Globe before her position was eliminated in one of its early cutbacks. “It’s not just that freelance rates have gone down. It’s that they don’t exist. ‘We’ll give you exposure’ is the phrase we hear now.”

Provoices will pay writers from $50 to $250 a story. “I don’t see dinosaur journalists who used to make $90,000 a year writing for $250,” she acknowledged. “But this is a chance for a lot of people scrambling to get a start at making a career in journalism or to continue working as a foreign correspondent in a country where $25o is a lot of money.”

She hopes to provide a modicum of the mentorship that most young journalists otherwise would never know. “When I walked into the newsroom of the Chicago Sun-Times years ago as a 23-year-old, I thought I had entered the Holy Land,” she said. “I learned my craft from the 60-year-old rewritemen and fed off the energy of my peers – and the fear of being mocked by them.”

But Provoices, like most news start-ups these days, will be virtual, existing only in the Internet cloud. “There are no newsrooms today for young journalists,” said Gorov. “They will never have that experience.”

Where does the lack of community and opportunity leave the serious journalist looking to make a name for herself? Often, manning an espresso machine while trying find time to tend a blog, hone a manuscript or tweak a YouTube video.

The starving-artist lifestyle may be colorful and appealing for a while, but it gets old fast if you are bunking on a friend’s sofa, living under the same roof you did in junior high and lying awake at night wondering how you are going to repay your staggering five-figure student loan.

If nothing changes, the next generation of journalists will give up and move on to entirely different pursuits. And you can’t blame them.

How many journalistas do you think will be satisfied having to make ends meet by working as baristas?

Bing not likely to outbid Google for news

In the latest wild idea to save newspapers, the Financial Times is reporting that Microsoft would pay publishers to prevent Google from linking to their stories, so as to drive more traffic to its Bing search site.

The idea, which merits high marks for creativity, seems most unlikely to get off the ground. Here are the relevant facts:

:: Approximately half of the traffic to newspaper websites comes from search-engine referrals, according to Greg Harmon of Belden Interactive, the most authoritative researcher on the behavior of online news consumers.

:: Fully 71% of the searches on the web are handled by Google, while fewer than 7% of the searches are handled by Bing, according to the latest industry statistics.

:: If a newspaper were generating revenues as low as $1 per thousand for banner advertising on the traffic steered to it by search engines, then Microsoft would have to pay the paper more than $10 per thousand to make it worthwhile for the paper to forsake traffic from Google.

Now, ask yourself this:

:: Could Microsoft be that desperate? Perhaps.

:: Assuming Microsoft were that desperate, could newspaper traffic be all that valuable to Microsoft when so much other news traffic would remain widely and freely available at Google? I think not.

:: Would newspapers risk slipping further into irrelevance among readers and advertisers by denying their articles to 71% of the world’s search traffic? I hope not.

So, what’s it all about?

The threat of selling out to Microsoft is aimed at getting Google to pay for linking to newspaper stories, something that, for the most part, it does not do. (There are a few notable exceptions to this rule, such as the payment Google makes to the Associated Press and a few other international news agencies for using their content.)

The problem with this bargaining tactic is that it appears newspapers need Google more than Google needs them. Publishers are well within their rights to try to squeeze some money out of the search gorilla but they had best remember who’s running the jungle.

Carnage continued in Q3 newspaper sales

Contrary to disingenuous happy talk from industry leaders, the third quarter brought absolutely no relief to the relentless dive in newspaper advertising, as total sales fell $2.5 billion to bring the year-to-date decline to nearly $7.9 billion.

With three months to go in the worst year ever for newspapers, the drop in sales in the first three quarters of 2009 is roughly equal to the combined revenues for the last 12 months of Gannett and McClatchy Co. In other words, it’s as though two of the largest publicly owned publishers in the land just fell off the face of the earth.

Sales plunged deeply in every category in the third quarter, according to statistics posted last week by the Newspaper Association of America, the industry-funded trade group. “The broad consensus is that the worst has passed,” said NAA chief executive John Sturm in a statement to Bloomberg News accompanying the grim numbers.

Based on the excellent industry data provided by the NAA itself (which we will explore further in a moment), it is difficult to come to a remotely similar conclusion.

While there is no denying that advertising sales are suffering in part as a result of the worst economic calamity since the 1930s, the long-running plunge in print sales illustrated below demonstrates that newspaper sales were in trouble well before the economy collapsed.

Based on the trend, it would be decidedly unrealistic to believe that newspaper sales will return to anything close to their former strength when the economy rebounds, whenever that might be. Let's go to the numbers:

Continuing 14 straight quarters of mostly accelerating declines, total print advertising in the third period fell a bit less than 29% to $5.8 billion. Interactive advertising sales, which the industry once hoped would be its salvation, dropped nearly 17% in the third quarter to $623 million, marking the sixth quarter in a row of declines in this crucial category.

The only good news in the unremittingly ugly figures reported last week is that the rate of decay in the third quarter was “only” 28.95%, as compared with the all-time record sales plunge of 30.15% in the prior period. Here are the details of the third-quarter debacle:

:: Classified advertising led the declines, falling 37.9% from the comparable period in 2008 to $1.47 billion.

:: For the first time since 1995, national advertising sales dropped to less than $1 billion. They were $956 million, or 29.8% lower than a year ago.

:: Retail sales slid a bit less than 24% to just under $3.4 billion. They haven’t been this low since the first quarter of 1987, when they were $3.3 billion. Adjusting for inflation, the 1987 performance would be equivalent to $6.3 billion today, according to the Bureau of Labor Statistics.

Among the classified categories, automotive and real estate advertising, two long-time pillars of the newspaper advertising model, each was down by 43% in the third quarter, compounding drastic declines in recent years.

Auto sales, which nearly hit $1 billion in the third quarter two years ago, were $321 million in the same period in 2009. Realty advertising, which topped $1 billion per quarter as recently as two years ago, declined to $358.6 million in the third quarter. It will take a long time for either vertical to return to its former strength, assuming they ever will.

Recruitment advertising, which surpassed $2 billion per quarter at the peak of the Internet bubble in 2000, all but dried up in the third quarter of this year, falling nearly 64.7% to a mere $175 million. Employment advertising is not simply at its lowest point in history, it is all but gone.

With major categories like employment, auto and real estate reduced to being shadows of their former selves, it is hard to see how anyone can say the worst is over.

Polls apart on charging for content

With the issue of charging for online content the hottest topic in publishing circles, polls are popping up everywhere purporting to divine consumer sentiment. But they unfortunately are all over the map.

Thus, the surveys are providing neither guidance nor comfort for publishers as they agonize over whether or how to charge for the valuable content they have been giving away for more than a decade.

On the question of whether consumers would purchase news, sentiment ranges from a high of 53% willing to pay in a poll conducted late in the summer for the American Press Institute to a low of 20% in a survey released this week by Forrester, the independent market-research firm. In a third study, also released this week, the Boston Consulting group found 48% of respondents would shell out for news.

On the question of how much the readers who are willing to pay would be willing to pay for content, the API study got an average of $4.64 per month and the Boston study got an average of $3 a month.

The Boston study, which was conducted internationally, determined that Americans and Australians are cheapskates when it comes to how much they would pay for the news. While the average in the U.S. and Australia was $3 per month, the averages for other countries came in higher: Italy, $7; Spain, $6; France, $5; Germany, $5; Finland, $4; Norway, $4, and United Kingdom, $4.

The price points indentified in the various studies are notably lower than the average $8.33 per month that Steven Brill discusses when he attempts to persuade publishers to adopt his Journalism Online payment system.

It looks like publishers trying to figure out what to do clearly have more figuring to do.

Health, wealth and sex sell best on web

Health, wealth and sex are what sell the best on pay sites on the web, says the author of perhaps the most comprehensive survey to date of interactive revenue strategies.

After systematically surveying 550 subscription and membership sites, Anne Holland, who is best know as the founder and former proprietor of the popular Marketing Sherpa website, reckons that American consumers will shell out nearly $15 billion this year to buy content on the web.

Holland conducted the survey to kick off her newest venture, Subscription Site Insider, which, naturally, will be a membership-supported service providing data and best practices to those operating paid websites – or who aspire to do so. The new report, which represents possibly the most ambitious effort to date to capture the state of play in pay, can be purchased here for $247.

Holland decided to scope out the emerging pay market as her next act after Marketing Sherpa, which she sold in 2006. She quickly identified the three areas that are the most productive for web publishers who want to charge for access to content via either subscription or membership fees.

“They are the usual ones,” she chuckled in a telephone interview. “Health, wealth and sex.”

Holland defines “health” sites as those that either entertain or contribute to the sense of well-being of their customers. She said this category, which includes sites like World of Warcraft, Ancestry.Com, Classmates.Com and Match.Com, will produce a collective $5.9 billion in sales in 2009.

Holland said the wealth category, which consists of sites that help people make or save money, will generate $5 billion in sales this year. And sex, of course, refers to the adult- entertainment sector, which Holland pegged as a $4 billion annual business.

Getting down to the nuts and bolts of running pay sites, the survey found that a surprising 42% of business-to business (B2B) sites said they achieved profitability within six months of launch and that 40% of consumer-oriented (B2C) sites reported that they were profitable in the same period.

Only 9% of B2B and 3% of B2C sites said they waited two years or longer to achieve profitability, suggesting that most operators bow out quickly if they can’t see a path to profitability within a short period of time.

“Not every subscription site is profitable,” warned Holland in a report on her findings. “At less than $10,000 in initial investment (if you create your own content), the barrier to entry is low enough that some entrepreneurs get into the industry who are not capable of the precise and sustained effort required to make a profit. This means that every year dozens of sites are launched and then abandoned a few weeks or months later.”

Still, 17% of the sites covered by the survey said they were making in excess of $1 million in annual profits, and Holland said there’s a “happily prosperous ‘middle class’ of sites making profits in the solid six figures.”

As for how to build a subscriber-supported web business, Holland said 48% of sites recruit new subscribers by offering a free trial to those willing to furnish a credit-card number. She said 28% of sites allow free trial without a credit card for a period of time but that 24% of sites require consumers to begin paying on day one.

Holland said most evidence suggests that offering a free trial without taking a credit card “is a losing proposition,” adding: “Asking for a credit card upfront is good – and honest – business.”

Subscription or membership fees are only part of the revenue mix at most sites, the survey found.

Half of the sites supplemented subscription fees by selling additional published material, 43% offered consulting or coaching services, 39% booked income from alliances with affiliate marketers like Amazon, 32% carried network advertising and 32% sold ads directly. Other revenue streams included ticket sales, list rentals, software sales and classified ads.

In addition to developing the right sort of content and go-to-market strategy, the research suggests that the key to a healthy interactive venture is to build a matrix of revenues, rather than simply relying on monolithic advertising or subscription strategies.

“Of course you should have additional revenue streams,” agreed Holland. “In fact, you need them for optimal profits.”

Newspaper epitaph: ‘Who else is doing it?’

A year ago, Alan Jacobson, a talented and indefatigably innovative newspaper designer, came up with an idea for a highly targeted, efficient-to-produce and effortlessly viral website that is exactly the sort of thing newspapers need to strengthen their online franchises.

After spending many frustrating months trying to interest publishers in his idea, he got a piece of advice from a friend. “Forget newspapers,” said the friend, who actually used a shorter and saltier F-word than “forget.”

After giving up on newspapers – you guessed it – traffic on Jacobson’s site is soaring and he is getting ready to pursue a multi-threaded revenue plan. His progress to date, as detailed below, suggests that he potentially can create a number of similar cost-effective and scalable sites to build community, traffic and revenues.

But there’s far greater significance to this story than any success Jacobson may achieve. His experience in dealing with publishers is a perfect example of what ails – perhaps fatally – the newspaper industry. And it is this:

Publishers can’t stand being the first to do anything innovative.

In the most perverse and consistent institutional character flaw I have witnessed in more than 35 years of covering and conducting all sorts of business, I have found that publishers are constitutionally unable to be the first movers on anything that might give them a competitive advantage.

This is completely opposite of the way every successful business operates. A successful business develops a unique product, service or selling proposition and then vigorously exploits it as hard and as fast as it can to get ahead, and stay ahead, of its competitors.

Imagine where Apple or Google would be today if every innovation had to sit on the shelf until a competitor first proved its value.

But innovation is a dirty word at newspapers. When confronted with a potentially game-changing idea, the first question publishers always ask is, “Who else is doing it?” That phrase could well stand as the industry’s epitaph.

The inability to think outside the box helped put the newspaper business into a crisis it may not be able to survive.

But guys like Alan Jacobson, who began his career as a newspaperman until he hung out his shingle in 1992 as Brass Tacks Design, is a member of that steadily shrinking fraternity of people who have an irrational affection for newspapers and can’t stop working on ways to save them.

Thinking a year ago about how to create an inexpensive, viral site to attract fresh ad revenues for newspapers, Jacobson hit on the idea of publishing a blogging platform for middle-school students that he named Tween Tribune.

The idea is pretty simple: Harvest a few interesting and age-appropriate stories each day from the Associated Press and encourage educators to use the stories to teach their students about reading, writing and critical thinking by posting comments on the site.

In addition to providing advertisers with what Jacobson calls a “clean, well lighted place” to reach the multibillion-dollar youth market, the site would pay an extra dividend for publishers. It would hook a certain number of young readers on the news and, in the best case, begin to build loyalty to each of the newspapers that Jacobson hoped to recruit as partners.

To make a long, painful and all-to-common story short, Jacobson turned up only one newspaper partner after more than half a year of pitching. When he stopped trying to work with publishers and began emailing teachers directly on Oct. 1 to tell them about his service, traffic at his site went from 25,000 page views a month to better than 25,000 views per day on some recent days.

Teachers report that their students get a kick out of reading and commenting on nutty stories like the woman who formerly had the longest fingernails in the world and serious ones like President Obama’s idea of shortening summer vacation.

And teachers are tickled to have found ways to fire up their students. “This is a great resource,” said educator Rita M. Driscoll in an email from the school district in Chesterfield County, VA. “I loved seeing the positive reactions, the engagement in reading and students so enthusiastic about writing.”

With students writing thousands of comments a week and teachers taking it on themselves to introduce other educators to the site, traffic appears to be climbing to the level that it will be possible to begin selling advertising, said Jacobson. Once the concept has been thoroughly proven, he also believes he may be able to charge school districts for access to premium features he plans for the service.

Jacobson has identified other verticals where he believes he can build communities to generate the same sort of response from adults – and the advertisers trying to reach them.

Even though Jacobson has decided to stop chasing newspaper publishers, he does have an answer to the question of who did it first.

It is the Valdosta (GA) Daily Times, where publisher J.H. Sanders said Tween Tribune enabled his 14,000-circulation paper to generate $18,000 a year in long-term sponsorship revenues in a matter of days from the likes of Shoney’s Restaurant, South Georgia Medical Center, Wilson Eye Center and Valdosta Technical School.

“By sponsoring this site, you are showing the community that you care about the schools and helping teachers find better ways to connect students with current events,” said Sanders in an email. “The teacher feedback has been great. The advertisers are happy with the way the site looks and how they are positioned.”

Tween Tribune is almost pure profit for the newspaper, because Jacobson built the site, edits the content he buys from the AP, handles hosting and manages customer service. The Valdosta paper, at its own option, contributes a few stories of its own.

While the revenue for this or any other niche site seldom will be enormous, every little bit adds up. If you accept the reality that narrowcasting is the future of interactive media, then Tween Tribune appears to be a good example of how this may be done.

So, publishers, it now appears to be safe to talk with Alan Jacobson — if he has time to take your call.

Ugly ethnic profiling tarred Ft. Hood coverage

The news media succumbed to ugly ethnic and religious profiling in their coverage of the shooting last week at Fort Hood. Shame on them.

Media executives ought to closely review their coverage of the Fort Hood massacre to develop sufficient organizational discipline to avoid spreading in the future the sort of inflammatory information they irresponsibly aired and published as the tragic event unfolded.

The ethnically tinged tenor and tone of the coverage emerged rapidly on cable news in the minutes after the shooting occurred on Thursday. The initial story line was this:

At least three suspected Islamic gunmen wearing stolen military uniforms infiltrated America’s largest Army base and killed or wounded dozens of people in a coordinated terrorist attack. One gunman was killed and two others were wounded and taken into custody.

This entirely inaccurate narrative (except for the location of the shooting and, unfortunately, the magnitude of the carnage) emerged as frenzied cable newsers struggled to fill the air with instant analysis of an event for which they had almost no authoritative information.

In fairness, the cable commentators were misled by inaccurate tidbits provided by ill-informed members of the Texas congressional delegation, including the flat-out assertion of one congressman that the incident was an act of terrorism. Things weren’t helped, either, by the fact that the official Army spokesman took hours to tell the media that the lone gunman, who he initially said was killed, actually was still alive.

In the absence of clear and coherent information about the attacks, the cable babble was re-tweeted widely for hours not only on Twitter but also by presumably responsible news organizations that, in the absence of anything else to say, simply turned on Twitter feeds at their websites.

Thus, an already alarming event was cast in a far more sinister light than it should have been.

The most distressing consequence of the misguided early coverage is that the shootings were portrayed as an act of organized Islamic terrorism.

This spin was en easy leap from the ethnicity and religion of the suspect, Maj. Nidal Malik Hasan, an American-born Muslim whose parents emigrated from Palestine. But it was as inflammatory as it was dead wrong.

Even after the early misinformation was cleared up, the Islamic terror angle lived on into the weekend, and there probably are still many Americans who believe to this moment that the event indeed was a terror attack.

The Muslim terror angle didn’t stop on cable TV. It infected second- and third-day stories in newspapers that had plenty of time to reflect on the facts of the case and should have known better than to contribute to the misguided narrative.

For no other apparent reasons that the suspect’s religion and ethnicity, the thrust of this article in the New York Times on Saturday – three days after the event – was that “officials were not prepared to say whether the attack was the act of a lone and troubled man or connected to terrorist groups, foreign or domestic.”

It was not until Sunday – four days after the event – that the Times finally ran a piece saying “investigations have tentatively concluded that it was not part of a terror plot.”

It was completely appropriate for the Times and other media to inquire into whether the shooting was motivated by something other than the assailant’s private demons. But ask yourself this:

Would the Times or any other responsible news organizations have pursued the Islamic-terror story line this vigorously for so many days if the shooter had been a white Christian of English extraction who was born in the United States?

If I were a Muslim or an Arab, I would be incensed and frightened by this irresponsible coverage. I am neither a Muslim nor an Arab but I am incensed and frightened, too.

Chicago news co-op starts on a shoestring

While the editors of some notable non-profit news startups pull down hefty six-figure salaries, the founding editor of the Chicago News Cooperative says his pay will be a single digit for the next 12 months: $0.

That low, low introductory salary in part is testimony to the dedication of co-op founder James O’Shea, a lifelong Chicago newsman who had a brief tour as editor of the tempest-tossed Los Angeles Times before, as he put it, “I was generously given the opportunity to spend more time with my family.”

But O’Shea’s decision to work without pay for a year also reflects the fact that his ambitious news start-up is funded far more thinly than any of the high-profile news projects that have launched in recent months.

To date, O’Shea has raised a single $500,000 grant from the Chicago-based MacArthur Foundation to field a modest staff of “about 10” full-time reporters, plus freelancers, that he intends to deploy to cover city, county and state government and politics, as well as education and cultural affairs.

Although O’Shea is working for free, the rest of the staff – which includes such former Chicago Tribune stalwarts as business columnist David Greising and City Hall correspondent Dan Mihalopoulous – will get full-boat wages.

“I did not take a cut in pay to come here,” said Greising in an interview. “But I came because I would have eaten my heart out if I had stayed at the Tribune and this thing proved to be a success.”

Assuming a staff of 10 full timers costing an average of $135,000 apiece per year (counting benefits, equipment, office space and other overhead), a quick calculation suggests that $500k would cover operations for barely a third of a year. Throw in a decent freelance budget and the runway gets shorter.

The amount of money O’Shea has assembled to launch his project is dwarfed by the $30 million backing the Pro Publica non-profit investigative venture, the $5 million in seed funding committed to the nascent Bay Area News Project in San Francisco and the approximately $4 million raised by the newly launched Texas Tribune.

O’Shea, who not surprisingly spends the bulk of his time these days seeking additional support from individuals and foundations, is by far the worst paid among his peers. The editors of Pro Publica and the Texas Trib respectively make $570,000 and $315,000 per year; staff hasn’t been hired yet for the San Francisco project.

Unpaid labor is not unprecedented in the realm of journalism start-ups. Joel Kramer says neither he nor his wife has ever been paid for their full-time commitment to launching and running the 2-year-old MinnPost. Solo operators say they are toiling without pay from Seattle to North Carolina.

The Chicago project has more going for it than the initial grant and O’Shea’s pro bono services.

It has landed a contract to begin providing on Nov. 20 two pages of local content two days a week for the Chicago edition of the New York Times. O’Shea declined to detail terms of the NYT deal in a telephone interview, but he did say that an exclusivity provision in the contract forbids sharing the content produced for the Times with any other print publication in Chicago.

The news start-up, which O'Shea co-founded with book publisher Peter Osnos, also has established content-sharing relationships with two public broadcasters in the market, WTTW and WBEZ. And it will benefit from such things as free legal work and six months’ worth of free office space from Winston and Strawn, one of the city’s top law firms.

O’Shea is the first to agree that there’s lots more to be done to get to his target of $8 million to $10 million in non-profit funding. “I have enough money in the bank to produce content for the New York Times for a year” if the co-op sticks strictly to fulfilling that contract, he said.

But he needs more money to launch a hoped-for website and to broaden output beyond the articles produced for the Times. “I am closing in on enough money to get the website off the ground early next year,” he said. “But there is no big donor at this juncture. If you know anyone with $5 million, have them give me a call.”

O’Shea has a long-term plan to wean the project off philanthropic funding by recruiting at least 30,000 individuals to pay $2 per week to subscribe to the co-op. He hopes subscribers will be enticed by the novel social networks he plans to establish at the website. The networks would work like this:

Readers interested in particular subjects – ranging from education to the Mideast peace process – could organize discussion groups, forums and activities among themselves, said O’Shea.

“If they don’t like the coverage they are getting, they can write their own op-ed piece,” said O’Shea. “If they would like to see some reporting we are not providing, we would introduce them to editors and writers” who could produce pieces commissioned by the news community. “For each service,” said O’Shea, “we would change members a small fee.”

O’Shea was the managing editor of the Tribune before being tapped as one of a rapid succession of editors at the Los Angeles Times during a period of repeated and increasingly painful cost-cutting. When he declined to cut any deeper on his watch, he was forced out in early 2008.

That led to a period of rest and reflection at the Shorenstein Center at Harvard University, which in turn prompted O’Shea to join a number of like-minded individuals in Chicago over the summer to launch what became the CNC.

“This isn’t a job,” he said. “I was a journalist all my life and this is a continuation of what I was doing. I am trying to help out with what I know and with my passion for the business.”

Pay walls never may come at some papers

The resolve to charge for most interactive content is dissolving at some newspapers, potentially thwarting the plans of other publishers who still hope to erect pay walls on their sites.

Despite determined statements by several publishers earlier this year that they intended to make consumers pay for the valuable content newspapers have given away for more than a decade, the managers of some newspapers have come to realize that they can’t afford to lose the traffic that pay walls almost certainly would turn away.

So, the executives are scrapping plans to charge for most, if any, of their content. The latest thinking – which, of course, is far from unanimous across the industry – is illustrated in two fresh data points:

:: Goli Sheikholeslami, the general manager of WashingtonPost.Com, told a conference at the Shorenstein Center at Harvard last week that “not enough people are willing to pay” to make the sale of online content a viable business. “If could get 5 million people to pay me to visit my site each month, I would be done,” she said. But Sheikholeslami said she has no hope of doing so.

:: Although Hearst Corp. attracted headlines in February when its top newspaper executive said he aimed to start charging for content, Mark Adkins, the president of the San Francisco Chronicle, told me last week that “we believe in being a free website” but plan to develop supplementary “premium content we will charge for.”

The Chronicle plan sounds a lot like the decision of the Minneapolis Star-Tribune to continue to run a free site while charging $19.95 a year for access to premium coverage of the Minnesota Vikings. The Viking package emulates the long-running Packer Insider at the Milwaukee Journal Sentinel, which grosses more than $1 million a year.

The hybrid free-plus-premium approach, which seems to be where the industry is heading in several large markets, may be one of the reasons the Gannett Co. recently urged its editors to get their “swagger back” by stepping up the production of unique and differentiated content.

Not all publishers are backing off pay walls.

Newsday recently began charging a stiff $5 per week for access to all but the first couple paragraphs of each story on its website. But Newsday is giving free web access to both its print subscribers and the Long Island residents who connect to the Internet via the broadband service sold by its parent, Cablevision Systems. Between the newspaper and the cable service, Newsday potentially will be available for free in three-quarters of the households in its market, an advantage not available to most publishers.

Pay walls were erected this summer in places like Harlingen, TX, and Schenectady, NY, suggesting that it may be possible for publishers in isolated markets to execute a strategy that retards the shrinkage of their print readership until the last generation of print-oriented readers dies off. This defensive, backwards-looking approach hardly seems to be a recipe for future success in the interactive marketplace.

The decision not to charge for most content at papers like the Washington Post and the San Francisco Chronicle means that competing publications will have to think twice about pursuing aggressive pay strategies.

If the Washington Post continues to freely give away its political and international coverage, can the New York Times get away with charging for essentially the same content? If the Chronicle gives away its regional coverage, would competing papers in Oakland, Santa Rosa and San Jose dare to go the other way?

Apart from such competitive considerations, a growing number of newspapers are coming around to facing the harsh reality of the marketplace. This, more than anything else, may be influencing their reluctance to press ahead with aggressive pay strategies.

Once upon a time, publishers coulda woulda shoulda charged for their content. But the web today is awash in sites offering free access to world news, national news, sports news, business news, entertainment news and, increasingly, local news produced by a growing host of start-ups. Further, an entire generation of those under the age of 30 has been conditioned to expect the news to be free.

While publishers ought be able to collect premium prices for unique and valuable content, most of them have whacked their news organizations to such a point that they produce very little original, premium product. Without an investment in creating valuable content – which most publishers can’t comfortably fund – most efforts to charge for content will shrink audiences and advertising revenues at a time publishers can least afford to lose them.

Nearly half of the newspaper publishers in the United States stated in a recent poll that they are not convinced they should try to charge for content. A lack of resolve among not just newspapers but also publishers across many media almost certainly would undercut the efforts of the organizations that did attempt to implement a pay strategy.

To be sure, some publishers continue to be intrigued by pay walls.

Steven Brill, the chief executive of Journalism Online, said in an email on Friday that inquires are brisk from publishers interested in evaluating the pay service he plans to deploy.

“You are misinformed about folks being less inclined” to charge for content, said Brill, who intends to begin beta testing his pay system within eight weeks at selected publications. “We are fielding calls from, and doing meetings with, publishers (blogs, online-only websites, newspapers, magazines, for-profits and non-profits) every day from here and overseas.”

The question they ask, said Brill, is not “if” but “how” to charge for content.

But the biggest question for Brill is how many of his prospects actually will elect to move forward. Given the challenges described above, wanting to charge for content may be a long way from actually being brave enough to do so.

Wild guesses won’t solve journalism crisis

The Harvard conference tasked with finding new business models for journalism had the impossible mission yesterday of trying to solve a problem no one had the language to describe, the tools to measure or the skills to fix.

In other words, the conference resembled the primitive study of physics before Isaac Newton invented modern calculus at the tender age of 23. Absent anything approaching Newton-esque insight, the gathering in Boston essentially came up empty handed despite the earnest efforts of the four-dozen invited participants.

Instead of systematically exploring invigorating new ideas or ground-breaking paradigms, the group gravitated to the predictable yadda-yadda: foundation funding, federal subsidies, subscription schemes and a smattering of random ruminations about revenue. (My tweets are here; extensive notes from Bill Densmore are here.)

The effort fell comfortably into the middle ground of the many similar efforts undertaken lately as the crisis in journalism grows. That means the gathering, like so many others, made scant progress toward solving the problem of finding future ways to fund anything approaching the generous number of dedicated and reasonably well-compensated journalists formerly fielded by the tottering mainstream media.

Maybe that’s because there is no way to do so and the system we know is destined to succumb, for better or worse, to some new order. But maybe the gathering couldn’t make much progress because it consisted for the most part of the usual suspects rehashing the usual positions on the usual topics.

With all due respect to my dedicated and talented colleagues, we need to try something different. Next time, we need to hear from people we don’t know, exploring things we don’t know about and examining potentially useful solutions we have yet to consider.

I was neither the first nor the only one in the room to note that the overwhelming number of conferees were white men well past the age of 45. This description most definitely applies to yours truly.

Apart from the obvious demographic skew in the room, the worldview among the participants appeared to be strikingly homogeneous, too.

When a speaker tried to make the point that young people today don’t read newspapers but might do so as they mature, someone asked how many in the crowd read newspapers when they were in college. Almost everyone in the room raised his hand and the group chuckled at the realization that we were hardly a random sample of even our own graying generation.

Given the absence of even a shred of research into modern consumer attitudes and the almost absolute lack of young people in the room, the best conferees could do was to discuss the behavior they observed in their children (or grandchildren).

Even those anecdotal observations were unreliable. An editor said she fussed so often at her daughter about the unread stack of papers at her college dorm that the young woman started grabbing one for her room any time she expected her mother to visit.

Wistful thinking, seat-of-the-pants supposition and wild-ass guessing are hardly the ways to address the multibillion-dollar business problem underlying the journalism crisis that threatens the health of our democracy.

No competently managed business would think of taking such a haphazard approach to a challenge as potentially devastating as the press is facing today.

It’s time for editors, publishers, academics and foundations to pony up for serious, in depth and disciplined study of what consumers want, what they need and how journalists and media companies can provide it.

The good news is that this sort of thing is done every day in universities and businesses. And the better news for us journalism majors is that you don’t even have to know calculus to do it.

Harvard hoedown ponder$ making $ in new$

Some 50 of the foremost thinkers about journalism have been invited to Harvard University today to ponder no less a problem than this: “How to Make Money in News: New Business Models for the 21st Century.”

The event commences at 9 a.m. and is scheduled to adjourn at 2:30 p.m., so I guess the organizers are pretty high on the capabilities of the crowd. Or afraid prolonged frustration would provoke a food fight.

The leader is Alex S. Jones, the director of the Joan Shorenstein Center on Press, Politics and Pubic Policy, and you can buy his terrific new book here or, preferably, at some struggling, locally owned bookstore.

Somehow, I am among the invited participants and, while I am grateful to be schmoozing at the Shaker-meets-Danish modern Charles Hotel outside Harvard Yard, this feels like an inverse Groucho moment. Here’s what I mean:

As you will recall, Groucho Marx, a foremost thinker himself, said he wouldn’t want to be a member of any group that would have him. In this case, I would imagine the other 50 people feel that way about any gathering that would include me.

I don’t know what to expect. But the agenda and guest list are embedded below if you are inclined to whip up a few prognostications on your own.

As circumstances warrant, I may tweet a few thoughts here from time to time. While visiting Twitter, you also can sign up to follow my future (m)utterances.

But I am pretty sure Groucho would question your judgment if you did.

Harvard - How to Make Money in News

Newspaper circ stats: Murkier than ever

At a time newspapers ought be striving to earn the confidence of their remaining advertisers, they are reporting not just record low circulation numbers but also the murkiest figures ever.

The historic 10.6% drop in circulation reported on Monday would have been trouble enough for the ailing newspaper industry. But publishers managed to make matters worse by taking unprecedented liberties with the way they tally the discount circulation that represents a significant percentage of the readership at many papers.

While publishers previously were required to collect at least 25% of the cover price of a paper to report it as paid circulation, the industry changed the rules as of April 1 to permit a copy of a newspaper to count as being fully paid if it sells for as little as a penny.

The consequence of the change in the discounting rule is that circulation figures are all over the map. As we will see in a moment, circulation cratered at one newspaper that reduced discounting but remained comparatively healthy for a competitor that continued to offer promotional pricing.

Both approaches are perfectly legal under the rules the publishers set for themselves at the Audit Bureau of Circulations, the official-sounding organization they fund to monitor the way they count bellybuttons. So, all’s well in Publisher Land.

But the inconsistent circulation data is bound to not merely confound advertisers but also cut into the industry’s fragile credibility with them. Here’s a case in point:

Of all the circulation declines reported this week, none was more eye-popping than the 25.8% drop in the last six months at the struggling San Francisco Chronicle. The plunge at the Chronicle seems even more dramatic when compared to the 7.2% tumble reported at the papers published by its rival in Northern California, MediaNews Group.

While there may be many explanations for the disparate results, both publishers agreed the principal reason for their divergent performance is the way they approach discount circulation.

Mark Adkins, the president of the Chronicle, says his newspaper has all but sworn off selling newspapers at discounted prices in the interests of boosting subscription revenues to offset a long-running decline in advertising sales.

Where 25% of the subscribers to the Chronicle paid a discount price a few years ago, fewer than 10% of its subscribers get a bargain today. The paper has raised prices aggressively, charging $1 for a single copy in its home city and double that – or more – in distant locales.

Adkins credited the aggressive circulation-pricing strategy with helping the paper reduce losses that previously had surpassed $1 million a week. He is hoping the paper can at least break even in 2010 after suffering annual losses in excess of $50 million.

At MediaNews, president Jody Lodovic says his company has made a strategic decision to keep subscription prices low to hang on to the largest number of subscribers for the sake of the long-term business.

While Adkins said the Chronicle today derives some 40% of its revenues from circulation (and hopes to boost it to 45% next year), Lodovic said MediaNews pursues the more classic formula of generating 20% of its sales from circulation and the balance from advertising revenue.

Lodovic said the Chronicle made a “short-term decision to boost pricing” to cut its operating loss. “We consider ourselves to be longer-term thinkers,” he added. “We’ll compare notes in two or three years from now to determine who had the best strategy.”

In the meantime, the deep drop in the Chronicle’s circulation means that MediaNews dramatically has increased its dominance in Northern California.

MediaNews has a combined daily circulation of 712,868 among such properties as the San Jose Mercury News, the Oakland Tribune and Contra Costa Times. The daily circulation of the Chronicle, which used to bill itself as the largest paper in Northern California, has shriveled to 251,782.

Thus, MediaNews outsells the Chronicle by 2.8 copies to 1. Six months ago, the edge was 2.2 to 1.

Will advertisers understand the difference in the way the newspapers count their subscribers? Will it matter when they make their buying decisions? Or will they be too confused to bother with newspapers altogether?

Newspapers, the mass-less mass medium

The devastating double-digit drop in daily newspaper circulation in the last 12 months leaves little doubt that the classic mass media model will not work for newspapers – or perhaps any other medium, either.

Publishers who think their businesses are going to live or die according to the number of bellybuttons they can deliver probably will see their businesses die. The smart ones will get busy on Plan B, assuming there is a Plan B and it’s not already too late.

The undoing of newspapers has been under way for decades and should come as no surprise to anyone who has been paying attention.

As of now, this quintessential mass-media product reaches barely a third of the nation’s households. There’s no telling how low penetration might go. Here’s how we got there:

Daily newspaper circulation fell a record 10.6% in the 12 months ended in September to an average of 39.1 million copies, representing a 38% drop from an all-time peak of 63.3 million in 1984. Circulation now is lower than it was prior to World War II.

Because the nation’s population has more than doubled in the post-war era, the percentage of households buying newspapers has plunged. Newspapers today are purchased on average in only 33 out of every 100 American households, as compared with 98 homes in 1970 and 53 households as recently as 2000. Details are in the table below.

Notably, the drop in newspaper penetration began well before the commercial debut of the Internet in the mid-1990s. The move away from newspapers was prompted by the rising popularity of television and other pre-web electronic distractions, plus growing work, commuting and family demands that attenuated the time and attention people could spend reading newspapers.

There’s no doubt the arrival of quick, cheap and reliable Internet connectivity cut into demand for newspapers. The long-running decay in newspaper sales began to accelerate in 2005, dropping 8% in 2008 and 10.6% in the most recent period, marking the first double-digit decline in history.

The sourest economy since the original Great Depression didn’t help. But don’t blame the economy for something that has been under way for decades – or expect things to get better when the economy recovers.

Despite the obvious, long-running decline in circulation penetration, an amazing number of otherwise intelligent newspaper executives have been spending entirely too much time trying to spin audience numbers instead of acting to save what’s left of their rapidly wasting franchises.

A particularly stunning example of this self-delusion is the rule change that took effect on April 1 that allows publishers to count a paper costing as little as a penny as a fully paid copy by the Audit Bureau of Circulations, the industry-funded group that is supposed to keep publishers honest. Previously, publishers had to charge at least 25% of the cover price for a paper for it to count as paid circulation.

This change means that the dismal circulation numbers announced yesterday potentially are bleaker than they otherwise would appear to be. Not a great way to build trust among advertisers, is it?

In fairness, it should be pointed out that a portion of the decline in newspaper circulation in the last few years has been self-actuated.

Seeking to control costs at a time of disastrously plummeting revenues, publishers pulled back on vanity circulation to distant points beyond their core markets. That’s why, for example, the Atlanta Journal-Constitution no longer covers Dixie like the dew.

Other publishers curbed costly promotional programs that artificially fluffed circulation by selling papers at deep discounts for a limited time to people who then had to be replaced by offering still-cheaper promotional discounts to a new batch of expensively acquired “subscribers.” (There is no way to tell how much the decline in promotional discounting may have been offset in the latest reporting period by the change in rules that allows papers to count a copy sold for a penny as being fully paid.)

A few publishers – like those in Detroit and Mesa, AZ – deliberately reduced circulation by respectively eliminating home delivery on some days of the week or simply lopping days off their print-publication schedules.

Publishers like the New York Times and Dallas Morning News have begun requiring consumers to pay far more towards the cost of producing a newspaper than publishers ever have dared. This will tend to reduce total circulation but make the remaining sales more profitable than they have been.

The combination of contracting consumer demand and rising publisher parsimony almost certainly means circulation will continue to trend lower.

In light of this, publishers would be well advised to develop targeted print and interactive products that deliver demonstrable value to the growing cadre of advertisers focused on maximizing the efficiency of their purchases, not paying for bloated audience numbers.

Back in the day, the “mass” audience assembled by the “mass” media was of paramount importance to the successful sale of advertising. But reach is a ridiculously retro concept in this day of targeted interactive media and sophisticated marketing analytics.

Circulation statistics, like the depressing ones released yesterday, are an anachronistic artifact of the ancient era when newspapers and broadcasters aimed to deliver the largest possible audience to advertisers.

Anyone who remains focused on assembling the most eyeballs or bellybuttons in a market is pursuing exactly the wrong goal. Today, it’s all about quality, not quantity.

The problem is that some newspapers already have let so many readers and advertisers get away that they may have left too little left to sustain viable businesses.

Record plunge: Newspaper circ at pre-WWII low

Following an average drop of 10.6% in the last 12 months, daily newspaper circulation has fallen to a pre-World War II low of an estimated 39.1 million, according to an analysis of industry data released today.

The first double-digit circulation decline in history means only 12.9% of the U.S. population buys a daily newspaper. The analysis is based on data provided by the Audit Bureau of Circulations, an industry-funded group.

Newspaper circulation now is lower than the 41.1 million papers sold in 1940, the earliest date for which records are published by the Newspaper Association of America. Back in 1940, newspapers were purchased by 31.1% of the population.

Sunday circulation, which fell an average of 7.5% in the last six months to an estimated 40.9 million copies per week, is at the lowest point since 1945 when it was 39.9 million.

At that rate, Sunday papers in the last six months reached only 13.5% of Americans, as compared with 28.5% in 1945, when the population was less than half the size it is today.

My circulation estimates are calculated on the entire universe of some 1,400 dailies in the United States. In announcing the most recent circulation decline, ABC put daily readership at 30.4 million for the 379 newspapers in its sample, which reflects most of the biggest papers. But a lot of smaller properties are not counted in the ABC figure.

Newsday’s not-so-bold pay gambit

At first glance, Newsday appears to be making a bold move by becoming the biggest newspaper to date to start charging for most of its content on the web after giving it away for free for years. But the move isn’t really that brave.

The newspaper is hedging its bets by taking advantage of its unique position as a division of the predominant cable television provider on Long Island by continuing to give free access to the newspaper website to those who not only subscribe to the print edition but also use the cable service to access the Internet.

This neat trick is beyond the capabilities of most other publishers, who generally don’t own the cable systems in the markets they serve. Other newspapers should take this into account in the event they are inclined to emulate the Newsday experiment. On the other hand, this idea may provide a good reason for enterprising publishers to take the manager of the local cable system to lunch.

As reported here in one of the last free articles at Newsday, the paper plans to start charging users $5 a week for access to its website unless they subscribe to the print edition of the newspaper or access the Net through the cable service provided by its parent, Cablevision Systems.

The combined reach of its newspaper and cable TV businesses means Cablevision already penetrates 75% of the homes in the service area, according to Newsday. It will be interesting to see if this initiative helps Cablevision rope in many stragglers.

RIP, news embargoes

Add news embargoes to the growing jumble of detritus in the hellbox of journalism history.

In an age of insta-news, embargoes are so meaningless and unenforceable that they aren’t worth the pixels they are printed on. As a consequence, publicity seekers are on notice that they no longer will be observed here.

I am sorry to see embargoes go, because they were useful while they lasted. But that was then and this is now.

For those unfamiliar with the concept, newsmakers historically distributed press releases, speeches and other documents to the media prior to their official release so journalists had time to read them and prepare stories in advance. The idea was that the story would not be published or aired until the time specified in the embargo.

This was useful to journalists and their readers/viewers/listeners because it presumably gave reporters a chance to do a better job of assimilating and presenting the material. It also often helped newsmakers gain wider dissemination for their stories.

While a number of otherwise sophisticated people would like to think the embargo system remains operative to this day, recent experience proves that it is not.

Carefully orchestrated embargoes were blown out of the water on recent releases concerning the new non-profit journalism project in San Francisco and the Columbia University report on the meltdown of mainstream journalism.

If journalists can’t honor embargoes on releases about journalism issued by other journalists, then all bets are off.

Embargoes probably will survive in some rare cases where the newsmaker has the ability to deny access to the media on future occasions. A television network probably would avoid abusing advance access to the the State of the Union address for fear of being frozen out in the future by the White House.

In general, however, it will be open season on press releases 24/7 from here on out. Anyone wanting to control the timing of future missives should do what companies do with their earnings reports: Put stories on the wire/web at the moment they want them publicized and not a minute sooner.

Speeding up the treadmill probably won’t enhance the quality of news coverage. But it will make the journalistic food fight as fair as it can be.

Columbia writes off the MSM. Now what?

For all the drama conveyed yesterday by the vote of no confidence in mainstream journalism rendered by one of the nation’s top journalism schools, the 98-page study issued by Columbia University is perhaps most significant for what it doesn’t say.

While cataloguing a host of previously discussed potential fixes for the press, the report falls short of breaking new ground. That may be because there is no new ground to be broken (though that seems improbable). Or because journalism in the future will be practiced by a crazy quilt of professionals, semi-professionals and amateurs supported by any number of for-profit, non-profit and individual schemes.

So, yes, saving journalism is a tall order. But the solutions advocated in the Columbia report – grandly but somewhat misleadingly titled “The Reconstruction of American Journalism” – for the most part range from curiously impractical to startlingly unoriginal.

The bulk of the report (text here) commissioned by the Graduate School of Journalism at Columbia University traces the decline and fall of the mainstream media. Summing up their exhaustive but frequently derivative analysis, authors Len Downie, the editor emeritus of the Washington Post, and Professor Michael Schudson, conclude:

“The days of a kind of news media paternalism or patronage that produced journalism in the public interest, whether or not it contributed to the bottom line, are largely gone. American society must now take some collective responsibility for supporting independent news reporting in this new environment….”

But the study’s suggestions for the future, which fall into the three principal categories discussed below, leave the reader wanting more – not just a deeper analysis of the compendium of mostly familiar proposals but also, significantly, some original thinking about what innovations might go beyond them.

The report calls on the feds, foundations and journalism faculties to fill the void that has been created by the MSM meltdown. Following is a summary of the high points of the findings and my reaction to them:

Federal support for news gathering

The report recommends that the federal government give for-profit news media whatever tax breaks and antitrust waivers they need to continue to limp along.

It says the Federal Communications Commission should allocate to news organizations some of the $7 billion it collects annually to assure rural telecommunications services, adding that serious consideration should be given to assisting the media with federal economic stimulus funds.

The study says the Corporation for Public Broadcasting should require public broadcasters – who already have plenty of fiscal challenges of their own – to step up coverage in their local markets to fill the void created by the ailing newspaper business.

Commentary

The antitrust waivers conferred by the Newspaper Preservation Act failed to save the Rocky Mountain News, Seattle Post-Intelligencer and Tucson Citizen. As demonstrated by the need of the Poynter Institute to sell Congressional Quarterly to help support the St. Petersburg Times, newspapers owned by non-profits face the same challenges as their profit-seeking brethren.

The annual sales and number of jobs associated with the media industry are not sufficiently large to make them a priority for a federal bailout during this period of unprecedented economic distress. The federal investment in improved rural broadband penetration contemplated in the stimulus package would give consumers a greater choice of information than a handout targeted to a limited number of defined news organizations. Assuming for the sake of discussion that a handout were in the offing, who would choose which news media to support?

Federal funding and journalism are a dangerous combination. As recently as four years ago, Bush administration appointees terrorized the CPB by attempting to politically skew its coverage. How could deeper government involvement in news coverage help save jounalism?

Foundation support for non-profit journalism

Reporting that American University in Washington found $128 million in foundation funding had been given to “news non-profits” between 2005 and 2009, the study said the sum was not enough.

The authors urged philanthropists, foundations, and community foundations to “substantially increase their support for news organizations that have demonstrated a substantial commitment to public affairs and accountability reporting.”

The report expressed confidence that citizen involvement can help make up for the loss of professionally generated journalism, stating: “For over a century, the Audubon Society has relied on thousands of local volunteers for a national bird count that provides crucial data for scientists in what might be termed pro-am scientific research.”

Commentary

As discussed above with respect to the St. Pete Times and reported here in the case of the Chi-Town Daily News, non-profit organizations are subject to the same economic pressures as conventional businesses.

While we have been fortunate to date that the supporters of most journalism non-profits have promised to prevent their interests and prejudices from intruding on coverage, there is great danger when an organization like Pro Publica depends on a single source for the preponderance of its funding.

The skills involved in counting birds are not commensurate with those necessary to expose such scandals as the shameful care provided wounded warriors at Walter Reed Army Medical Center. Len Downie knows this full well. He was executive editor of the Washington Post when it broke the story.

Journalism schools should pick up the slack

“Universities, both public and private, should become ongoing sources of local, state, specialized subject, and accountability news reporting as part of their educational missions,” said the report. “They should operate their own news organizations, host platforms for other nonprofit news and investigative reporting organizations [and] provide faculty positions” so “professional journalists, faculty members and students can collaborate on news reporting.”

Commentary

The report does not discuss the major issue of who would fund such activities, even though most public and private universities are struggling with budget shortfalls as a result of the contraction of the economy.

As but one example of the financial pressures affecting most universities, the faculty senate at Columbia warned that most units at the university will find the 2010-11 academic year to be “significantly more austere than FY 2009-10 if current assumptions of a second year of 8% reductions in endowment support” are borne out.

Conclusion

The Columbia study was an ambitious undertaking attempting to explore one of the most significant problems facing our democracy.

While it would not be fair to expect it to provide all the answers, it owed readers a deeper exploration of the proposed solutions. In failing to offer many original ideas, it fell particularly short of its stated mission of offering a blueprint for reconstructing journalism.

Its single greatest achievement may be demonstrating that there is a lot more work for the rest of us to do.

Text of Columbia report on MSM breakdown

Writing off the capacity of the traditional media to continue ably covering the news, a report commissioned by the journalism school at Columbia University calls upon the feds, foundations and journalism faculties to take up the slack.

In the 98-page report commissioned by the Graduate School of Journalism at Columbia University, Len Downie, the editor emeritus of the Washington Post, and Professor Michael Schudson trace the decline and fall of the mainstream media, concluding:

“The days of a kind of news media paternalism or patronage that produced journalism in the public interest, whether or not it contributed to the bottom line, are largely gone. American society must now take some collective responsibility for supporting independent news reporting in this new environment….”

The report was scheduled for release at 8 a.m. Tuesday. Because the embargo was widely broken this morning by the New York Times, Washington Post and others, I am publishing the text below:

Reconstruction of Journalism

The un-sale of the Boston Globe

Given the scant hope of attracting a respectable price for the Boston Globe, it’s not surprising that the New York Times Co. pulled the paper off the market. The lingering question is why the company thought it had a shot of pulling off an acceptable deal in the first place.

In the latest sign of how far formerly coveted metropolitan newspapers have fallen, the offers for the Boston Globe apparently were less than 10% of the $1.1 billion the NYT paid for the paper in 1993.

By the Globe’s own account, the paper attracted offers of less than $100 million apiece from two separate investor groups, which each offered something like $35 million in cash consideration plus promises to assume $59 million in pension liabilities.

The modest interest attracted by the Globe is commensurate with the token consideration paid in such recent sales as those of the San Diego Union-Tribune (“less than $50 million”) and Sun-Times Media Group ($25 million). This is not to mention the unpublicized but presumably unappealing offers rejected by the owners of the Austin American-Statesman and the Miami Herald.

Net of the professional and brokerage fees normally associated with a transaction of this nature, NYT probably would have realized approximately $30 million in cash if it had sold the Globe for the prices offered by the potential buyers.

That sum scarcely would have made a dent in a balance sheet reflecting more than $2.6 billion in assorted liabilities, including $761.6 million in long-term debt at the end of June.

The fact that the sale was a non-starter should come as no surprise, as predicted here when the parent company launched a tortuous but eventually successful campaign to win $20 million in union concessions to help offset an anticipate $85 million operating loss in 2009. The effort to explore the sale of the paper commenced shortly after the unions abandoned the hope of retaining such cherished rights as lifetime job guarantees for 170 long-time employees.

NYT says it still is seeking offers for the Worcester Telegram & Gazette, the Globe’s little sister in the troubled New England newspaper division. Sales in the group, which plunged 20% in the first half of this year to $214 million, are 56% lower than they were in the same period in 2005.

The value of both New England papers already has been written down severely by the NYT.

The writedowns were required by accounting rules that require companies to periodically review the value of goodwill they claim for acquisitions. When the prices of assets plunge, as they have for newspapers in both the public and M&A markets, the owner is required to reduce the value of the affected assets and charge the writeoff against earnings.

The New England papers have been clobbered by those accounting requirements. Since 2006, NYT reports that it has written off $985.8 million of the combined $1.4 billion it spent to acquire the Globe and T&G. The Globe was bought for a then-record price of $1.1 billion in 1993 and Worcester was purchased for $295 million in 2000.

If NYT now turns its full attention to making a profit at the Globe, there is a chance it can start rebuilding the value of the franchise when the economy turns around. The trick, of course, in these tricky times for metro dailies is managing expenses tightly enough to make a profit on whatever sales it can muster.

While the good news for Globe employees is that they will remain in the NYT fold, the most interesting news is that the newspaper probably will begin operating more stringently than ever.

AJC wimps out on endorsements

The first job of a newspaper is to set the agenda for the community.

That most inspiring thought, from Howard M. Ziff, one of my most inspiring journalism professors at the University of Illinois, came to mind when I read that the Atlanta Journal-Constitution has decided to stop endorsing candidates for public office.

I can’t think of a more vital part of the agenda-setting role for a newspaper than vigorously vetting candidates and forthrightly informing readers of the findings. So, why is the AJC walking away from it?

In a sterile and bland editorial, the newspaper gave no compelling reason for electing to neuter itself when it comes to elections.

“We have heard from readers — and we agree — that you don’t need us to tell you how to vote,” the paper said in an editorial published Friday. “What readers tell us they need is information on who the candidates are, what they have done and what they want to do in the new job.”

While illuminating the records and aspirations of a candidates in a presumably fair and down-the-middle format is a valuable public service, the newspaper will deprive its readers of the unique and equally valuable insights gained by the reporters and editorial writers who cover the candidates on a day-to-day basis.

In an era when any number of user-generated media are producing any number of user-generated opinions, opinions indeed are plentiful. But those opinions frequently are of questionable quality and pedigree.

Those of us who still have confidence in and respect for newspapers want to know what professional journalists really think about the people running for public office. The editorial page should be a major venue for getting that information.

From a practical point of view, many of us depend on a newspaper’s assessment of the laundry list of judges standing for re-election and the hopefuls running for such often obscure boards as those governing community colleges, transit agencies, mosquito-abatement districts and the like.

After years of relentless staff cuts, routine and sustained coverage of those government activities is the most likely to have been truncated or eliminated at most newspapers. Absent input from the newspaper’s editorial page, most voters would have no idea whom to support.

Here in California, the land of limitless, usually ill-conceived and often misleading ballot propositions, I depend on newspapers to cut through the fiscal and rhetorical voodoo associated with most of them. While papers still provide he-said, she-said coverage of the highest-profile ballot measures, the propositions often are so intentionally befuddling that even the most diligent voter needs a straight steer from the newspaper’s editorial page.

The AJC is correct in saying that it can’t tell its readers how to vote. Even if every voter doesn’t follow a paper’s lead, however, a newspaper has the right and responsibility to share what it knows and lead its community.

Thorough and balanced reporting, combined with well-considered opinion, are two of the major things that differentiate newspapers from their incessantly proliferating online competitors.

There’s no excuse for abandoning those powerful attributes — or for wimping out. Why is the AJC doing so?

The editors doth protest way too much

Editors across the land couldn’t let Newspaper Week pass this week without wantonly violating the primary rule in medicine and marketing: First, do no harm.

“Talk of the demise of newspapers is premature,” said the headline on an editorial in the Aiken Standard that was typical of the faux-plucky tone adopted by most of the editors laboring to make the case that somehow, some way, their publications would survive.

Who are they trying to convince? The readers or themselves?

“Over the past century and a half, Nevada has had somewhere on the order of 450 newspapers,” said the Ely News. “We're down to 43 now – a number that held steady this year even though one newspaper was folded, because another new one started.”

Now, there’s a hopeful trend.

As any sensible marketing or advertising expert will tell you, emphasizing the deficiencies or poor sales of a product is exactly the wrong thing to do.

Customers only buy products – or, in the case of newspapers, use them for free on the Internet – because they see a value in them. They don’t do it because they feel sorry for the vendor or the vendor feels sorry for himself.

Yet, newspapers can’t seem to stop their incessant self-flagellation over the challenges facing their industry.

If you want to see how silly this is, ask yourself this: What are the chances General Motors would buy the following ad?

“Sure, we know we make lousy, gas-guzzling cars that are expensive and unreliable. Sure, we know our market share is dropping because we have inferior technology and styling. Sure, we are operating in bankruptcy and needed a massive federal bailout to save a few of the jobs that we haven’t already cut. But wouldn’t you like to buy a car from us anyway?”

Enough already.

A double dose of denial in Denver

At almost the very moment former publisher John Temple candidly told the Berkeley media-technology conference last week the reasons why the Rocky Mountain News succumbed, the Rocky Mountain Independent was drawing its final breath.

The Independent was the second in a series of online news sites established by several Rocky veterans in the hopes of being able to continue doing the work they love in a place they would hate to leave.

Ironically, the Independent failed for exactly the same reason the Rocky did: A suicidally stubborn determination on the part of the organizers to be in the business they wanted to be in, instead of attending to the business they needed to attend to.

As Temple told the UC Berkeley Media Technology Summit at Google in his talk (text here), the Rocky hit the wall because it failed to understand its customers and how to do business in the new era of interactive media.

The Rocky thought its competition was the Denver Post, instead of the whole, dang World Wide Web, said Temple. It figured its future would be secure as long as it remained the best possible newspaper it knew how to be.

In his speech, Temple quoted an executive of E.W. Scripps, the Rocky’s owner, who said: “We were not used to the market telling us how things should be. We were used to telling people what we thought they needed and how they needed it.”

“That,” said Temple, “has to change.” Amen.

The same sort of self-indulgence led to the unraveling of the Independent. A quick recap:

When the Rocky shuttered in February, approximately three dozen staffers got together to launch a website they called In Denver Times. Their plan was to emulate as much as possible the work they did so well at the Rocky, while continuing to receive the same sort of pay and benefits they had enjoyed at the newspaper.

To achieve this, they immodestly planned to get 50,000 people to subscribe to their website for $60 a year. Despite the patent implausibility of the idea (as ably dissected here at the time by Steve Outing), the journalists actually persuaded some local businessmen to provide them with office space and a sum of seed funding to get started.

The journalists got busy doing the work they loved but they didn’t attend much to the strategic, operational and financial realities associated with a start-up business. They essentially assumed, as had their former employer, that the quality of their work would attract the patronage they needed to continue doing what they loved.

As money began to run out at In Denver Times, the journalists turned to the investors for more. Despite the fact that the subscription drive fell spectacularly short of its goal (the organizers claimed 3,000 sign-ups but we will never know for sure), the investors actually considered putting in more money, according to one of them, Kevin Preblud.

But the dollars never came, because the investors wanted the payroll trimmed to reduce the cash-burn rate until such time as the business began generating more subscriptions, a decent amount of advertising sales or some other sort of reliable revenue stream.

The journalists balked at making cuts, Preblud said at the time. The investors and the journalists went their separate ways and the journalists started a successor site, the Rocky Mountain Independent.

Sadly but unsurprisingly, the journalists announced last week that they were abandoning the effort after selling only 300 subscriptions to support them in the work they loved to do.

As the folks at the Independent discovered, start-ups are hard. Having participated in several and failed at some, I can tell you failure is far more instructive than success.

The point of this discussion is not to kick the founders of the Independent while they are down but rather to extract some lessons from their experience so individuals contemplating similar ventures can avoid making the same mistakes.

The lessons at the Independent are almost identical to those of the Rocky, so they apply as much to established media as they to do the newest start-up:

:: The product has to match the market. Until further notice, the presumptive price for online news content is free. Anyone interested in Denver news had to go no further than the free sites operated by the surviving Denver Post and the several local broadcast media. The subscription model was a non-starter and everyone involved should have known it. It was wishful thinking to expect the second subscription drive would succeed after the first one failed.

:: The content has to match the medium. The journalists for the most part luxuriated in writing the kinds of articles on their websites that they luxuriated in writing for the newspaper. Neither of the sites leveraged the power of the web to weave social networks, enable users to personalize content or do any of the other things that consumers commonly expect from a modern interactive experience.

:: The first business of a business is business. Like so many entrepreneurs, the journalists started their websites so they could do the work they wanted to do. But a business, especially a start-up, requires far more than passion for the work. It requires close attention to the nuts and bolts of raising money, making sales and controlling expenses. Above all else, it requires the discipline of living within your means until the business grows healthy enough to fund your aspirations.

The start-up news sites failed for fundamentally the same reasons the Rocky did. People felt the universe would reward them for doing what they wanted to do, instead of doing what they needed to do to earn the patronage of readers and advertisers.

Sorry, folks, it doesn’t work that way.

How to sell news on the web: A checklist

Publishers groping with the question of when, whether and how to charge for interactive content often raise the issue of what they could sell, if indeed they ever decided to try. Here’s a quick checklist to see if you are ready:

1. You cannot charge for such commoditized content as world, national, business, sports and entertainment news.

2. You might be able to charge for local coverage, if it is sufficiently intensive, comprehensive and exclusive to make to make it required reading for residents of the targeted community.

3. In the business-to-business realm, you probably can charge users for exclusive information that helps them make money, avoid losing money or, ideally, both at the same time.

4. You probably can charge consumers for two things: (a) exclusive entertainment content and (b) authoritative information that helps them hang on to more of their money.

Astute readers will note that much of the information publishers would like to sell does not fall into any of the above categories. This suggests that newspapers and broadcasters who are keen on peddling content need to focus on creating saleable product before they begin trying to charge for it.

I came to the above conclusions after rating content subjectively on a scale of 1 to 5 according eight attributes I felt would affect its value. The attributes are as follows:

Uniqueness – How likely are you to find the content someplace else? The more unique the content is, the more points it gets for the purposes of this analysis.

Routineness – Is the content a special class of information or such common stuff as weather reports, stock quotes or sports scores? Special content gets high points; ordinary stuff gets no points.

Time sensitivity – Will the value of the information deteriorate over time? Examples might be the exact moment coveted concert tickets go on sale – or fresh information that might affect the opening price of a stock. The more time-sensitive the information is, the more points it gets. The more it can be delivered on the mobile platform, the more value it has.

Business urgency – Is this information that will help someone in business make (or avoid losing) money? The more mission-critical the content would be to a business person, the more points it merits.

Targetability – How tightly targeted is the information to the interests of the consumer? The more customized the information can be, the more points it deserves.

Entertainment value – Unique entertainment content – like the first opportunity to hear a popular singer’s new recording or the sneak peek of a movie trailer – gets extra credit.

Localness – The closer that unique content is to home, the more it is worth, especially if it is exclusive.

Home economics – If it helps consumers save money – like the refrigerator ratings in Consumer Reports – content will earn top points.

Put them all together and you get the graph below. As you can see, the sweet spot for business-to-business publishers is depicted in blue. The consumer-oriented content most likely to fetch premium payments is shown in orange.

The opportunity seems to be bigger for B2B than B2C content, but operators of the websites of the Wall Street Journal and Financial Times already knew that.

A kvetch-free journalism conference

They said it couldn’t be done. But it was.

They said a conference about the future of journalism couldn’t take place without the usual kvetching about the golden, olden days, with publishers grieving shriveled margins and editors caviling about the bloggers challenging their previously unassailable wisdom.

But we did it. The two-day Media Technology Summit sponsored by the University of California at Berkeley adjourned today without sliding into the Bermuda Triangle of denial, anger and depression that ordinarily characterizes such shindigs.

Working closely with with Dean Neil Henry and Assistant Dean Gina Rieger, I helped organize the summit, which was sponsored by the Koret Foundation, Google and the McCormick Foundation.

The more than 100 participants at the meeting included a fleet of tweeters who provided a far richer record of the proceedings than could be attempted in any single post. So, I won’t try.

Thanks to Chuck Peters, play-by-play coverage of the first day of the meeting is organized here and the second day is embedded below. Thanks to Tara Hunt and the nearly two-dozen others who took turns along with her at the podium, copies of most presentations will be appearing here in the next few days.

How did we route around the journalistic Bermuda Triangle?

Maybe it was the feng shui of the Googleplex in Silicon Valley, where we met. “It’s so shiny here,” said one participant. “It makes you feel like nothing could be that bad.”

Maybe it was because an eclectic array of speakers from the worlds of media, technology and academe stressed the possibilities, instead of the challenges, of moving journalism into an era when it roams wider, digs deeper, reports better and is more intellectually, psychically and financially rewarding that it has been for several long years.

But it probably was because we learned about the power of human and computer networks to not just enlighten the public discourse but also to enliven commercial prospects for the news organizations smart, bold and nimble enough to leverage them.

Much experimentation lies ahead on the uncertain road to the future of journalism. And experimentation, by definition, is loaded with uncertainty and the prospect of failure.

But the road to wherever we are going will be a bit easier to travel, because this conference left the usual baggage behind.

Other views on the summit

Following are articles I have discovered about the conference. If you know of more, please let me know at alan [dot] mutter [at] broadbandxxi [dot] com.

With information galore, we need news judgment

Summit takes hard look at future of journalism

Le future "hybride" des medias

Reflections on Day 1 of UCB Media Tech Summit

Last Rocky Publisher Conducts News Autopsy

25 Lessons from Media Summit