When Steve Jobs unveiled the iPad last month, there were immediate debates over what kind of impact it would have on both the news habits of consumers and the bottom lines of news organizations. But one thing seemed obvious: that the iPad would be a glorious playground for user-interface designers, information architects, and others who think about how information should be found, structured, consumed, and designed. That 9.7-inch screen, combined with the iPhone’s multitouch interface, will inspire some innovative new ways to present news. At the unveiling, the only taste we got of these new ideas was The New York Times’ iPad app (above), which brought a bit of the typography and layout DNA of the print newspaper onto the device.

To think about these issues, I got in touch with John-Henry Barac. He spent a decade at The Guardian on the print side, as an art director and designer, then moved to the digital world. As a consultant, he designed The Guardian’s first iPhone app, which stands out as one of the more interesting within the iPhone news app world, much of which bears a certain bland sameness. (I particularly liked the small tag icon that allows the curious to quickly match other stories to the keywords of the current one.) John-Henry’s now an independent design consultant, anxious to get his hands on an iPad and to explore the new medium.

Here’s an edited version of our conversation. Among the topics we discuss:

— Will a more print-like screen push designers to build more print-like interfaces?
— How can surprise and serendipity be brought back into the reading experience?
— Will the iPad make reading longer pieces more interesting — or tolerable?

Joshua Benton: When you first saw the iPad and that screen, what were the thoughts running through your mind as a designer of news apps?

John-Henry Barac: Well, the first thing is obviously space — actually having physically a lot more space to play with. The iPhone format demanded that you strip away and keep simplifying, whereas the iPad offers the opportunity to bring back more into the page, and allow the reader to scan, select, and read an article all on the same screen. There are a few lessons to draw from the iPhone experience, in terms of keeping it simple and focused.

You mentioned [before the interview] the tag icon — when we were doing that, my specifications to the developers were that the button should be physically bigger than the tag is, so that the actual space for the finger to touch is a invisible button is a lot larger than the tag. So it’s kind of about giving visual cues, but also helping the user to use those objects and not to mis-hit and all the rest of it.

But I think the point about the tag icon was to give the ability to physically dig deeper into a story, and I think that’s what I find very exciting about the touch interface and about the iPad. You’ll be able to do that, but with physical targets which are easy to hit and which will let you delve deeper into the story.

In designing newspapers, you’re always thinking about how to offer the reader different ways into a story — so there’s the headline, there’s the standfirst and the rest of it, but there’s also other call-outs and boxes and other objects which allow the user multiple ways to access the story. And if those are used carefully and coherently, they help to build greater depth of the story that you’re trying to tell. I think the iPad begins to offer that level of complexity. It offers the reader many different ways to kind of grab hold of part of the story that might interest them, whether it’s a small snippet with a link or another way to dig into a longer article.

Josh: One thing that immediately struck me is that, when you look at the iPhone and the small screen, as a news designer it’s immediately apparent that you’re going to be dealing with a different visual grammar, a different visual language then you would be with a print newspaper. I wonder if with the iPad, which looks a lot more like a sheet of paper and like something with a print analog, whether we’re going to see the visual cues and visual language of print just be carried over to the new device. Or will it be an opportunity to build new kinds of cues, in the same way that the iPhone forced you to build new ways to design news?

John-Henry: One would want to think of new ways of doing things, absolutely. One thing that springs to mind is the ability to access news in a hierarchal way: to have a column of stories on the left, for instance, very much like Apple’s native apps. In Mail you have your list of messages, and you tap on a message and read it in the wider column. And I think that’s kind of the first obvious thing to do.

But also, for instance, the ability to be able to have a story and a related Twitter feed which is constantly updating, both of them right there with you on the page. Or the ability to have links which open up dialog boxes which enable you to access more content, which you can then put away again and continue reading the article. I think what there are many cues which you can borrow from the newspaper but then rethink in this medium.

But I think the other big difference is touch. Someone asked me the other day, “Why would you want to build an iPad app when you could just use your website?” And I think what touch gives you is such a different way of accessing information as a user. It’s physically direct. You’re much more focused — you can literally touch a fact and get more information about it. So I think therefore you do want to actually work on something new. You don’t want to just think it’s a big space which you’re gonna access the browser — you want to really think about touch, the way the user manipulates the information, the ways which you might be able to take a photograph, look at it more closely, enlarge it, put it away again, continue reading the story. I think that touch is the very exciting thing here. I think there’s room for exploring a more traditional model on the iPad as well, but I think you don’t want it to feel just like a great big PDF that you’re dragging around.

Josh: What was your reaction to The New York Times’ app as it was shown off during the iPad announcement? It’s the only example we have so far of a vision of how to develop a news application for this device. It seems to take a lot of cues from print in terms of carrying over the typography from print, carrying over the column styles, and carrying over the layout of the stories on a page.

John-Henry: It’s very much looking at the familiarity of the print model — the impression is that you’re scanning through the paper. The typography was glorious, firstly. And the ability to look at videos or galleries within your articles was immediately an enormous plus. I wouldn’t want to comment too much about it, since it was a couple weeks’ work and there’s a lot of work to be done on what their iPad app finally looks like. It seemed it could be quite easy to get lost — to not figure out where it was you came from, or else to have to kind of drag your way back. We need more thought on indexing, seeing what your journey is through the paper.

My starting point might be a little different, and the kind of early imagining that I’ve had has been more to do with different speeds of data — different speeds of content, longer and shorter reads, involving Twitter, being able to use dialog boxes to give you more information you can check out and then put away. But I think it’s very exciting to see people trying out a model closer to a newspaper.

Josh: One of the things print fans talk about is the discoverability and the serendipity of flipping through pages — coming across the story you may not have realized you’re interested in. One of the big problems with iPhone news apps is that they pretty much all have a straight list of stories to scroll through, and that’s it. You can do things around most-emailed lists and such, but it’s a very hierarchical, non-surprising presentation. It seems like the iPad might be a platform that allows more ways to present possible reading opportunities to readers.

John-Henry: Absolutely. With the Guardian iPhone app, one of the comments I saw was from users or readers saying they were able to rediscover serendipity, with the tag icon and the ability to follow a keyword or a subject. Rather than just read an article, you might follow the subject of, I don’t know, “iPad” or “Apple,” and find out what the stories are around that subject. And you might follow another keyword and end up in a different part of Technology, or in an education story, or whatever. Accessing related data, following links within stories, or dipping from an article into a gallery, then from that a photograph in that gallery into another related article — all of those things give you more ways to browse and to just discover things. I’m sure there are many, many, many other ways to bring back serendipity — but one has to get one’s hands on these devices first and try it out, really.

I think that one thing one hopes for with touch is that people will be inquisitive with the device. It really does invite you to tap around and find out what’s there. But on the other hand, I have had to tell one friend of mine, who is a veteran of digital devices — I’ve had to show him the tag icon and that he could tap on it. I’ve had to show him that you could double tap on a gallery and get a browser in your front page and not leave the front page to do it. So sometimes people aren’t quite as inquisitive as one would hope.

Josh: That brings up the matter of the familiarity of a user interface. An iPhone user who has downloaded several news apps has probably gotten used to how they all work and how similar they all are to one another. Maybe a new platform will make people be a little more adventurous and try out new kinds of interactions, because it’ll be unfamiliar.

John-Henry: Absolutely. To be honest, we’ve only seen Apple’s first presentation of the iPad. I’m sure there’s more in terms of UI that’s available that we haven’t yet seen, and there’s a lot more which can be created. There’s a lot of off-the-shelf UI which Apple offers, which is fantastic to use, and looking a little bit at the software developer kit, I can see that they are making more use of popup windows, much like we did in the Guardian app. But I’m sure that there are a lot more creative ways to use animation, to use different UI elements. If you scroll downwards, what happens? If you scroll to the left, what happens? There are so many different ways of handling the space. I’m very interested in the ability to offer readers a journey where there are surprises along the way — to get to that kind of model where you can have a templated experience which builds in interesting surprises for the reader. The ability to dig around and explore. But, you know, one has to get one’s hands on the software development kit and find out what can actually be done.

Josh: Last question. One of the concerns of a lot of journalists is that the move to digital media, they argue, has reduced people’s willingness to read long stories. This form factor is a lot closer to the one electronic device that is associated with long-form reading, the Kindle. Do you think that the form factor may encourage more people to read longer?

John-Henry: I would hope so. I would have thought so. I think there’s the other side as well, which is that as someone who’s designed special sections for the Guardian for years, that I hope it will bring a bit more craft back into the digital arena. Things like editorial illustration, careful use of photography, those sorts of things — I would hope there’d be opportunities to bring a bit more of that in. And that is very much associated with features and longer reads. There will also be different ways of approaching longer text — scrolling through or flicking over pages. With the high-resolution screen, the opportunity to do more interesting things with type. I think all of those things and the form factor offer up the opportunity to get longer reads back in.

Josh: Because for digital devices, the job of a news designer tends to be designing the templates into which an endless number of stories are going to flow. So maybe there’s an opportunity to have more individual designing of stories at the story level.

John-Henry: I would hope so. But I think that with that, there also comes the need for new models of newspaper structure. Maybe in the future there’ll be new tools. There’s no such thing as a kind of InDesign for digital in the same way. So I think there’s a lot of things that will be shaken up by the iPad and absolutely, you know, there’s a lot that newspapers are hoping for. They’re having a difficult time at the moment, but there are huge opportunities. Good newspaper apps require good design from the outset, then we need to find ways to craft stories too. iPad itself doesn’t provide the answers, the issues for designers and for newspapers as a whole require a lot of creative thinking about structure as well as investment in new areas. Touch interface and mobile devices like this provide great opportunities but there’s a lot to be done to make them work out.

Back in my college days, it only took a few Thursdays at the school paper to learn a newspaper-business lesson: Readers love coupons. Thursday was the day the UCSD Guardian had its package of deals ($1 off at Golden Spoon!), and issues flew off the racks.

But outside the world of undergrads hunting for a froyo deal, coupon use was already on the decline. Year-over-year since 1992, coupon redemption fell — until the fourth quarter of 2008, when things swung back. Both the number of coupons available and their redemption rates are now rising; from 2008 to 2009, redemption rose 27 percent.

I spoke with Matthew Tilley, director of marketing for Inmar, a company that handles the bulk of coupon processing in the U.S. He said more coupons means good news for newspapers. , overall, it’s good news for the newspaper business. “The predominant means for distribution of coupons is newspapers — and it’s growing.”

Inmar data says that 88.7 percent of all coupons appear in “free standing inserts” (FSI), the kind you typically find in your Sunday paper. From 2008 to 2009, the redemption rate for this kind of coupon jumped 36 percent. And of all coupons redeemed, 52.3 percent came from free-standing inserts.

(I asked Tilley to explain how FSI could make up almost 90 percent of all coupons but barely half of all coupons redeemed. He said redemption rates are skewed by coupons distributed near the point of sale — in-store coupons that appear next to or on a product, or those personalized coupons you receive at the supermarket register with your receipt.)

Internet coupons are on the rise, but they still represent only a tiny fraction of the market, less than half a percent. But of all coupons redeemed, they account for 1.5 percent. Redemption rates for Internet coupons are the fastest-growing in the business, up 263 percent from 2008 to 2009. Check out more highlights of the study in the slideshow above.

The New York Times’ announcement that it would be charging for some access to its website, starting in 2011, rekindled yet another round of debate about paywalls for online news. Beyond the practical question (will it work?) or the theoretical one (what does this mean for the Times’ notion of the “public”?), there remains another question to be untangled here — perhaps one more relevant to the smaller papers who might be thinking of following the Times’ example:

What is the underlying economic value of online news, anyway?

Media economist Iris Chyi [see disclosure below] has a few ideas about this problem. An assistant professor in the School of Journalism at the University of Texas, she has been researching the paid-vs.-free, print-vs.-online conundrum since the late ’90s. Her research has consistently found that even while online news use continues growing, its preference lags behind that of traditional media. In other words: Even as audiences transition from TV/print news consumption to the web, they still like the traditional formats better for getting news, all other things being equal.

Now, this seemingly makes no sense: How could a format as clunky, messy and old-school as print “beat” such a faster, richer and more interactive medium on likability?

Chyi believes she found the answer in the economic principle of “inferior goods.” The idea is simple: When income increases, consumers buy more “normal goods” (think: steak) and fewer “inferior goods” (think: ramen noodles). When income goes down, the opposite occurs (again, all things being equal in economics terms). Inferiority, in this case, isn’t so much a statement of actual quality as it is of consumer perception and demand. If we get richer, our desires for steak go up and our desires for ramen go down.

What does this mean for journalism? “Users perceive online news in similar ways — online news fulfills certain needs but is not perceived as desirable as print newspapers,” Chyi said.

She and co-author Mengchieh Jacie Yang make this point through an analysis of data on news consumption gathered from a random sample of U.S. adults; their findings are published in the latest issue of Journalism & Mass Communication Quarterly, the flagship peer-reviewed journal for AEJMC. (See the related news release, overall highlights, and the full-text PDF). Chyi and Yang summarize their key findings as follows:

This analysis, based on data collected by the Pew Research Center in 2004, identified a negative relationship between income and online news consumption: When income increases, online news use decreases; when income decreases, online news use increases, other things (demographics, news interest, and/or other news media use) being equal — suggesting that online news is an inferior good among users. In contrast, the print newspaper is a normal good.

Such findings, at first glance, may surprise media scholars as well as online news professionals. After all, in communication research, no news products have been labeled as inferior goods before. In addition, major U.S. media companies have invested heavily in their online ventures, offering an array of interactive features and multimedia content — most of which are unattainable by print newspapers. It is therefore difficult to understand why online news could be an inferior good. Yet, from an economic perspective, “goods are what are thought of as goods.” Any product’s economic nature is determined by consumer perception and response. Based on this particular data set, which consists of survey responses collected from a national sample of online news users by a major polling institution in 2004, online news is an inferior good among users.

Clearly, the use of 2004 data is a limiting factor here (although the authors explain why more recent Pew surveys couldn’t be used for this kind of question). Yet, if we accept these findings, we’re left to unravel two mysteries: Why is online news perceived as an inferior good in the first place? And what should that mean for the future of web journalism?

On the first question, there are at least several possibilities, as Chyi suggests. Maybe the computer screen just isn’t an enjoyable reading device. (And how might that compare with smartphones and e-readers?) Or maybe online newspapers still have content/design problems — think of all the ads for teeth whitening and tummy tightening, not to mention the general lack of contextual cues afforded by print. Or maybe it’s simply because online news is free — and, as behavioral economics research has indicated, sometimes consumers perceive higher-price products as more enjoyable. In any case, as Chyi puts its: “More research, as opposed to guesswork or wishful thinking, on the perception of news products is essential.”

Then there’s the second question: What does this suggest about the future of online news? Perhaps nothing too dire, as people still do pay for ramen noodles when it suits them — when the price, convenience, or alternatives make ramen noodles the preferred choice. This isn’t to suggest that consumers invariably will pay for online news, but rather that they might if the perception calculation is right.

The key here is to recognize that consumers are rapidly adopting online news not necessarily because they prefer the medium to print, but because online news is “good enough” — cheap, convenient, flexible, and sufficient to satiate our information cravings. (This takes us into territory related to disruptive innovations and fidelity vs. convenience — interesting stuff, but something for a later post.) But the danger is in taking a “platform-neutral” approach if that leads one to assume that content value remains constant between print and online — that, basically, you can charge for content either way. Chyi suggests that is like trying to market ramen noodles as steak: Newspapers do so at their peril.

So, what does all of this say about the Times and its paywall? Perhaps not much because, after all, “the Times is the Times.” Yet, the notion of online news as an inferior good highlights a few salient points for thought: (1) news usage doesn’t always correlate with preference, counterintuitive as that is; (2) publishers hoping to charge for niche content need to understand where their offering fits in the normal-inferior goods relationship, and how that should affect pricing and marketing strategies; and (3) there’s a critical need for R&D to help us grasp why consumers perceive online news as inferior, and how that perception might vary among different demographics of users and/or according to different types of news content.

In the meantime, enjoy your ramen noodles.

[Disclosure: Chyi and I have collaborated on several research projects through her Media Economics Research Group in the School of Journalism at the University of Texas — including a recent peer-reviewed article on newspapers' effectiveness in penetrating the local online market (PDF). Also, she's currently a member of my dissertation committee.]

Photo of ramen by Broderick used under a Creative Commons license.

The iPad’s big reveal: Apple unveiled its new tablet — the unfortunately named iPad — on Wednesday, a week before the Super Bowl, and the buzz was as least as big: The Internet practically broke under the weight of the hype for Apple’s latest product. Rather than bury you in opinions about the specs and perks of the iPad, I’ll focus on what people are saying about the gadget’s potential impact on print and online media, especially journalism. Here goes:

Let’s start with the runup. Print media folks had high hopes that the iPad would revolutionize their industries — even, as The New York Times put it, giving old media “a chance to undo mistakes of the past. In three smart posts, the tech sites TechCrunch, Gizmodo and Wired said the iPad could be a tool to change publishing, but, as Jason Kincaid in TechCrunch wrote, “someone will need to deliver the content.” Then there were the pre-emptive debunkers, who argued that the iPad would be “just another distribution platform,” merely a circulation tool for journalism, and a “massive distraction” for newsrooms.

After the announcement, the overwhelming reaction from the tech world was one of disappointment. The Guardian has a roundup, and you can itemized lists of iPad beefs by the web giants Mashable, Gizmodo and Gawker, as well as new-media-watcher Steve Yelvington. But there were a lot of people wowed and encouraged by the iPad announcement: A lot of them were old media people — publishers, as this MediaWeek roundup especially shows. As MediaCritic’s Scott Rosenberg observed, the iPad demo played largely to the delight of those who want to mimic the paper experience, but those who see the web as bringing in a new relationship with news seemed to expect more.

Wired and The Big Money gave us a medium-by-medium look at the iPad’s potential impact, and neither was blown away by its possibility for newspapers and magazines. Between the roundups of Poynter and Alan Mutter and the thoughts of Nieman Journalism Lab director Joshua Benton, we have a pretty good spectrum of sensible takes from media-watchers from a variety of backgrounds.

A few points in the discussion worth highlighting: A number of tech writers — Twitter engineer Alex Payne, Rafe Colburn and j-prof C.W. Anderson — have noted that the iPad is fundamentally a closed platform, designed more to secure market share for Apple than to perpetuate the web’s openness. (They’ve got a point.) Second, quite a few others have pointed out that the iPad is a content consumption device, not a content creation one. This has several implications: It appeals to a different audience than most new tech products (the casual, “lean-back” user, says Jason Fry; the content-inhaling youth of the world, says David Carr). It makes content creation critical (see TechCrunch and Wired), and, as NYU professor Jay Rosen put it, it turns the nature of the Internet from the “read write web” back into the “read only” web.

Ultimately, the iPad’s utility for journalism is going to come down to the quality of content that news organizations create for it. Is that content going to be regressive, trying to recreate a print experience and neutering the power of a new tool? Or is it going to be rich, web-native and innovative, giving users an experience and value they haven’t had until now? (Will Bunch, Judy Sims and Alan Jacobson make similar points quite succinctly and eloquently.)

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How leaky will the Times’ paywall be?: The biggest topic in journalism B.T. (Before Tablet) was The New York Times’ proposed paywall, and specifically, parsing the impact of Times execs’ statement that anyone coming to a Times article through “another Web site” will get free access to that article, without it counting toward their metered tally of page views. NYU professor Jay Rosen was the first to draw attention to the implications of that provision, concluding, “That looks a lot less like a pay wall to me. It isn’t a metered system if I can access the Times via the link economy without limit.”

In that case, Reuters’ Felix Salmon argued, online subscribers would be paying not for the Times’ content, but for how they got to it. Or, as Josh Young put it, the Times is “charging for being ignorant of all doors but the front.” (Some more great back-and-forth on why the Times would want such a flimsy paywall can be found in the Notes and comments of Rosen’s piece.)

Silicon Valley Watcher Tom Foremski and Times contributor Robert Wright acknowledged the paywall’s leakiness, too: Foremski proposed getting linkers to run the Times’ ads, and Wright wanted to add micropayments to the paywall. Steve Yelvington pointed out another big hole in the Times’ metered model: cookies.

Felix Salmon and Gawker’s Gabriel Snyder did the math and found it doesn’t look good for the Times; The Big Money’s Frederic Fillouxwas more optimistic about the numbers, provided the Times only charges the heaviest users. (Salmon is also disappointed that the Times has given up on the dream of being so essential that it can make big bucks from a free site.) If you want to do some number-crunching of your own, the Nieman Journalism Lab’s Jonathan Stray has a nifty little tool for you.

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Newsday’s 35 online subscribers: Based on sources from an internal meeting, The New York Observer reported the number of subscribers of Newsday’s website since the Long Island newspaper — the nation’s 11th-largest newspaper by print circulation — put up a paywall three months ago, and the tally shocked a lot media observers: 35. MediaDailyNews detailed Newsday’s overall decline in numbers since the wall went up in late October.

Several people — not least Newsday’s own execs — quickly noted the paper’s unique case: It’s owned by Cablevision, and subscribers of the print edition or Cablevision’s cable or broadband access get free access to the site. (The paper estimates that amounts to 75 percent of Long Islanders.) As Steve Yelvington noted and Newsday hinted to paidContent, the paywall is much more about giving a free perk to cable and Internet subscribers than actually netting paid website customers. So it doesn’t make much sense to apply this scenario to other similar-sized papers. That being said, 35 is an astonishingly low number, to say the least.

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Foursquare’s possibilities for news orgs: Foursquare — a fast-growing, mobile-based social network based on sharing your location — announced its partnership with the free daily paper Canada Metro, the company’s first partnership with a news organization. Metro will add location-specific coverage to Foursquare users, who could receive alerts when they’re near those spots.

On the social media blog Mashable, Jennifer Van Grove described Metro’s Foursquare content as a travel guide book that “unlocks the best a neighborhood has to offer. She calls the relationship symbiotic (mobile utility for Metro, print exposure for Foursquare and local businesses). With mobile news access exploding, this could be part of a future-of-journalism recipe: The tech blog ReadWriteWeb has an intriguing vision of the type of location-aware news and tips that might be possible through services like Foursquare.

Last week, Lehigh j-prof Jeremy Littau said that Foursquare can allow journalists to map out pertinent facts about their communities and help residents explore their neighborhoods. And Sean Blanda advised The New York Times (and other news organizations) to learn from Foursquare’s system of rewarding users.

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Taking action in Haiti: Last week’s discussion about whether reporters in Haiti should become involved in the story they’re covering (in this case, particularly reporters serving as doctors) continued into the weekend. The Society of Professional Journalists reiterated its stance that journalists should “avoid making themselves part of the stories they are reporting.” This prompted a barrage of angry Twitter posts by Jeff Jarvis. Tyler Dukes listed them and fired back at Jarvis, while Gazette Communications’ Steve Buttry joined Jarvis’ attack on SPJ. NPR’s “On the Media” brought in a few more takes, and St. Petersburg Times media critic Eric Deggans proposed a middle way: It’s OK to help, but turn the cameras off when you do it.

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Reading roundup: If your head isn’t already spinning from the loads of iPad commentary I’ve thrown at you, there are a few pieces from the past week that are well worth a read: First, Alan Rusbridger, editor-in-chief of the British newspaper The Guardian, deftly outlined the state of journalism and argued against paywalls for news orgs in a lecture on Monday. Here’s the summary, the full text (it’s long) and a smart response by Jason Fry questioning Rusbridger’s anti-paywall argument.

Second, The New York Times’ Nick Bilton points out how ingrained sharing, filtering and aggregating have become in the way we live on the web. It’s one of those short, simple pieces that neatly captures a concept that many of us had noticed but hadn’t sharply articulated yet.

Finally, the Knight Digital Media Center’s Michele McLellan — also a fellow at the University of Missouri’s Reynolds Journalism Institute — has a mind-blowingly thorough taxonomy of local news organizations across the country. This is definitely a post you’ll want to save for future reference.

So, it’s official: There is an Apple tablet, and it’s called the iPad. And, at least to these Apple-friendly eyes, it looks really, really nice. I can feel my credit card getting warm already.

But for future-of-journalism junkies, the question was never whether or not Apple could come up with a sexy new device. The question was whether it could have an impact on the news business. Phrases like “save the news business” and “alter the economics and consumer attitudes of the digital era” have been tossed around an awful lot in the last few months.

So what did we learn today about how the iPad will impact journalism? Here are my first thoughts:

— It will have a real impact on consumer behavior. This thing’s going to be popular — I suspect it’ll sell at multiples of the Kindle (assuming Amazon ever decides to tell us how many Kindles they sell). And the form factor will be attractive in a lot of contexts, and that’ll likely increase the amount of news and information that people consume. Anyone who loved the Kindle will love this (unless they’re e-Ink junkies), and the iPad will also appeal to big crowds who would have never thought of a Kindle — gamers, mobile workers, YouTube addicts, and more.

— I don’t think the iPad changes the paid-content equation. The dream of the news business is that a device will come along that will convince people to pay for digital news. That was the dream of the Kindle — people will pay $10 a month to “subscribe” to all the news we give away for free on the web! And while that dream has dimmed on the Kindle, the same ideas kept popping up on the road to the iPad. As Brad Stone and Stephanie Clifford wrote in the Times:

People who have seen the tablet say Apple will market it not just as a way to read news, books and other material, but also a way for companies to charge for all that content. By marrying its famously slick software and slender designs with the iTunes payment system, Apple could help create a way for media companies to alter the economics and consumer attitudes of the digital era.

Or as a Wired headline writer put it: “Apple Event to Focus on Reinventing Content, Not Tablets.”

But the iPad, as we know it today, doesn’t change any of the fundamental economics of news commerce. On the iPhone, you can sell news apps through the App Store; you can upsell specific pieces of content to people within your apps; and you can sell advertising within those applications. (Apple takes chunks of the revenue from those first two options.)

On the iPad, you can…do those same three things. The only thing that has changed is the size, and that big beautiful screen. Will people who weren’t willing to buy news on an iPhone be sold on the idea just because the text is bigger and the photos are prettier? I’d be surprised. The commerce proposition hasn’t changed.

It was telling that the first website Steve Jobs used to show off the iPad’s web browser was The New York Times. (Apple and the Times have a longstanding mutual appreciation.) Showing nytimes.com before showing off the Times’ iPad app illustrated the big problem device-as-savior advocates face: As long as a device is a great web browsing machine, and websites remain free, it’ll be difficult to push people into the walled garden of an application. Not impossible — difficult. And If you’re willing to put up a paywall on your website, then you have issues to consider much larger than the iPad.

I didn’t see anything today that made me change my opinion that device-based dreams of a news deus ex machina are wishful thinking, and that the difficult revenue decisions will have to be made pan-platform.

— The iPhone app ecosystem isn’t changing radically. There are a lot of news organizations that have invested in building nice iPhone apps. That investment will also have value on the iPad, because native iPhone apps should work fine on the iPad — particularly relatively simple ones like news apps. And revising apps to be sized to the iPad’s screen likely won’t be difficult, given how previous changes to the SDK have gone.

One thing that the iPad does do is give user-interface designers many more pixels to deal with, and among newspapers’ core skills remains the ability to display organized text and information in a pleasing and useful way. On the iPhone, the limited real estate meant you were stuck with a rigid world of user-interface possibilities, which is why nearly every newspaper iPhone app looks roughly interchangeable with another. But as the New York Times iPad app showed, with its Times Reader-esque interface, there’ll be a lot more room for experimentation, and that should be fruitful.

— One big winner: advertising. Mobile advertising has been deemed the next big thing for a long time now, and while it’s seen plenty of growth, it’s been living a confined existence. Ads in iPhone apps have mostly been locked into small banner ads secured to the bottom of articles and lists of articles. And the web has shown that banner ads stuck in the same place over time are extraordinarily easy for consumers to ignore. Nobody makes much money in that scenario.

But the iPad’s screen opens up a world of new possibilities — from sensible text ads to site takeovers (app takeovers?) to interstitials to more. Will consumers love all of those? No, probably not. (I won’t.) But they sell for a good deal more than banner ads, and that could generate additional revenue for news organizations.

— Surprisingly little on magazines. A lot of the talk in tablet land focused on magazines — several mag companies have been working on their own tablet concepts, and the design flexibility of the magazine page seems like a natural match for a bigger-than-a-phone screen and form factor. The magazine subscription model even seems like a natural match for something like the Season Pass you can buy for TV shows in iTunes. But magazines weren’t mentioned at all. Several magazines have moved in the one-iPhone-app-per-issue direction, and those apps will be much more impressive on the big screen, but magazines are in the same boat as newspapers: waiting for the iPad ecommerce revolution to arrive.

It’s important to remember we’re seeing the first iteration of the iPad, which won’t even ship for two months. It took a year for the iPhone to get its App Store; when the phone debuted in 2007, everyone thought it was awfully nice, but it wasn’t sending news organization scurrying to hire Cocoa Touch developers. It took two years for the iPod to get its iTunes Store; the iPod’s impact on the music business only took off when the store arrived in 2003. So there could easily be an announcement in six months or a year that makes the iPad’s impact real.

But until then, the iPad looks like a great product that will please consumers more than it’ll change the game for news organizations.

Unfortunately, no one knows for sure whether it will. It’s all estimates, assumption, and guesswork — even if it’s relatively well informed, carefully researched guesswork. We just don’t know how readers and advertisers will react.

But now, with the debut of Paywall!, our revenue game, all that guesswork can be your guesswork. It allows you to explore the situation at the Times or at any other news site.

As several people have recently pointed out, a paywall is a delicate revenue balancing act. Readers who hit the paywall and choose not to subscribe represent lost potential advertising revenue.

The calculator starts with numbers that attempt to model the Times’ online traffic distribution as best I can estimate it (see references below) and what seem like generous assumptions. If 60 percent of the site’s most loyal readers subscribe at $10 per month and no readers are lost, a paywall allowing 50 free page views per month should net about $500,000 per month in extra revenue. But this number is very fragile. It goes negative if the subscription rate drops just 7 percent, or the Times loses 6 percent of its readers, or if the monthly subscription is just $3 cheaper.

My estimates of the Times’ situation are certainly off by some amount; these figures are by no means definitive. But the Times must use estimates too, because no one can anticipate reader response. The lesson of Paywall! is not the final revenue number but its great sensitivity to many factors. Modest changes in site traffic or a few percentage points difference in subscription rate can quickly turn a profit into a loss — or vice versa. Whatever else it may be, putting up a paywall is not a move without risk.

How to estimate your paywall revenue

How do you play? First, hit “Turn Paywall On!” From there, “Views before paywall” is the most fun slider, and the number that many paywall discussions focus on. This sets the number of free pageviews (not the same as stories) that are allowed for each reader before requiring them to subscribe. As the number of free views decreases, the net revenue jumps as each audience segment hits the paywall, then falls from lost ad impressions. Somewhere, there’s a sweet spot.

The key to paywall revenue projections is to understand how different portions of the audience are affected differently. The model used in this calculator breaks the audience into five distinct segments. These can be given names such as “Fly-By” and “Daily,” but for accounting purposes each segment is completely described the number of unique visitors (readers), the number of pageviews per month, and the fraction of readers who will subscribe when they hit the paywall. (Of course, in the real world, people aren’t so neatly divisible into segments.)

The main graph shows these five segments as five bars. The height of each bar is the number of pageviews per month for that segment, and the width is the number of readers. Each pixel on this graph corresponds to a fixed number of pageviews times users, and therefore the same amount of advertising revenue. Ads shown to unsubscribed readers are in blue, ads shown to paid subscribers are in red, and ad sales lost due to non-subscribers stopping at the paywall are in gray.

The scroll bar at bottom of the graph zooms the display for better viewing. The calculator starts zoomed in for clarity, but by zooming all the way out you can see that only a very small fraction of readers will be affected by most paywalls. The crux of the paywall issue is that these are also the most valuable readers, the ones that a publisher can least afford to turn away. In terms of ad revenue, one Loyal may be worth a hundred Fly-Bys.

Ad revenue is captured in the “CPM per view” slider, measured in dollars per 1000 pageviews; it can be thought of as the per-ad CPM times the number of ads on each page. Some pages have higher CPM than others, so this value is an average across all pages actually served.

When a reader hits the paywall, several different things can happen. They may subscribe; they may come back next month when they have free views again; or they may never come back. The “Subscribed” and “Never came back” sliders model this.

“Subscribed” is the fraction of the most loyal readers who subscribe when they hit the paywall — that’s the width of those red “paid” bars on the graph. This figure is necessarily a guess, and the real world subscription rate will also vary by segment, with loyal readers far more likely to subscribe. That’s why there are segment-specific subscription rates in the boxes at bottom. The slider up top sets the maximum possible subscription rate, the rate for a segment with a relative subscription rate of 100 percent. Paywall revenue is very sensitive to subscription rate, because every non-subscriber also represents lost advertising impressions.

“Never came back” represents the fraction of the audience that simply disappears when the paywall goes up. Some regular readers will hit the paywall and switch to a source of free news — but even readers who wouldn’t hit the paywall may be lost, because the existence of a paywall can discourage linking. In the Times’ case, they’ve said that articles arrived at via links from other sites won’t count towards paywall metering — but that might just encourage people to browse Times content through an aggregator instead of the front page, which still amounts to a loss of casual readers. In any case, this slider subtracts readers from all segments in the same proportion.

Below the graph are the audience segment definitions. Each of five segments is described by the number of unique readers in that segment, the number of monthly pageviews of each of those readers, and the subscription conversion rate relative to the most loyal readers. The subscription rate slider and the relative subscription rate are multiplied to get the final subscription rate for each segment. A bit tricky, I know, but I wanted to make it possible to visualize global changes in subscription rate with one slider.

The number of pageviews for each segment is also calculated; note that the Loyal and Fly-By readers both represent a large fraction of pageviews. Again, this is the difficulty with a paywall.

Is a paywall worth it?

I’ve run through many different scenarios with this calculator, and the conclusion always seems to be the same: A tuned paywall can make money for a large free site, but the details matter greatly. Reader reaction is key; small variations in response have big effects on net revenue.

Perhaps a subscription system will increase revenue — but perhaps not, and probably not enough to transform the economics of news publishing. “This is not going to be something that is going to change the financial dynamics overnight,” as Times publisher Arthur Sulzberger himself said. This ambiguity means that paywalls will not “save” the classic newsroom model, at least not for general interest news production.

But the figures can also be read the other way around. Imagine you were a news site considering switching from subscriptions to a purely ad-supported model. In that interpretation, free-to-the-consumer news seems just as financially viable as paid news — or just as fragile. This may mean that free news is here to stay, which would be good news for those who think it’s important that the public consume journalism.

This is a tough time for journalistic organizations, and theorizing doesn’t pay the bills. But perhaps this tentative conclusion will help by reframing the discussion towards delivering a more valuable product more cheaply, rather than valiantly trying to return to what was.

References

I have used the best estimates I could find of The New York Times monthly business as the default values for knowable figures in the calculator. For unknowns, such as the subscription rate for each segment, I made wild guesses and tried to err strongly on the side of values that are optimistic in terms paywall revenue.

The distribution of users between segments is the key parameter. I didn’t have detailed numbers from the Times itself, so I used the audience profile from another daily paper, helpfully provided by Damon Kiesow of The Nashua Telegraph. This defined the percentage of readership and relative monthly page views for each segment. The New York Times and The Nashua Telegraph are obviously less than identical, so caveat emptor.

The best public audience distribution data for the Times are from Quantcast, who estimate that 25 percent of visits come from 1 percent of readers. The Quantcast data are not directly usable in paywall calculations because they measure visits, not pageviews, but the concentration of visits in the top 1 percent of readers closely matches Kiesow’s analytics when sliced on visits, and the basic pattern reported by Steve Yelvington for local news sites.

Based on an “internal memo,” Business Insider reported last week that NYTimes.com received 14,849,000 unique visitors in December 2009, and that visitors viewed an average of 18 pages each. I created the final segment profiles by scaling the segment distribution data to these aggregate numbers.

Next up was CPM per pageview. The Wall Street Journal reported $100 million in NYTimes.com ad revenue for 2008, or $8.3 million a month. When divided by total page views, gives a CPM per page of about 31. Since there are typically three ads of various sizes on an NYTimes.com page, this estimate seems in line with industry averages of $10-$15 CPM per ad.

The relative subscription rates for each segment, I just made up — trying to be very generous. Only 2.4 percent of all readers subscribed at existing U.S. news sites with paywalls, according to a recent survey. The default numbers in the model represent 10 percent total subscription, when the subscription slider is at 100 percent.

If you have better information, or are willing to contribute analytics data on any of these parameters from your own news site, please send it along and I’ll update the model for everyone’s benefit.

The Times’ paywall proposal: No question about media and journalism’s biggest story this week: The New York Times announced it plans to begin charging readers for access to its website in 2011. Here’s how it’ll work: you can view an as-yet-unidentified number of articles for free each month before the Times requires you to pay a flat, unlimited-access fee to see more; this is known as a metered system. (If you subscribe to the print edition, it’ll be free.) Two Times execs answered questions about the plan, including whether you can still email and link to articles (you can) and why it’s different from TimesSelect, the abandoned paid-content experiment it tried from 2005-07. Gabriel Sherman of New York’s Daily Intel, who broke the rumor on Sunday, has some details of the paywall debate within the Times.

There’s been a ton of reaction to the Times’ plan online, so I’ll tackle it in three parts: First, the essential reading, then some other worthwhile opinions, and finally the interesting ephemera.

Four must-reads: It makes sense to start with New York Times media critic David Carr’s take on the plan, because it’s the most the thorough, cogent defense of the Times’ paywall you’ll find. He argues that Times execs “have installed a dial on the huge, heaving content machine of The New York Times,” giving the site another flexible revenue stream outside of advertising. If you’re up for a little algebra, Reuters’ Felix Salmon has a sharp economic analysis of the paywall, arguing that the value of each article will become much greater for subscribers than nonsubscribers. For the more theoretical-minded, CUNY prof C.W. Anderson has some fascinating thoughts here at the Lab on how the paywall turns the Times into a niche product and what it means for our concept of the “public.” And as usual, Ken Doctor thoughtfully answers many of the practical questions you’re asking right now.

Other thoughtful opinions: Poynter’s Bill Mitchell poses a lot of great business questions and wonders how the Times will handle putting the burden on its most loyal online-only users. Steve Yelvington reminds us that we’re not going to learn much here that we can apply to other papers, because “the Times is fundamentally in a different business than regional dailies” and “a single experiment with a single price point by a single newspaper is just a stab in the dark.” Before the announcement, former Editor & Publisher columnist Steve Outing, Forrester Research’s James McQuivey, and Reuters’ Felix Salmon gave the Times advice on constructing its paywall, almost none of which showed up in the Times’ plans. Two massive tech blogs, TechCrunch and Mashable, think the paywall won’t amount to much. Slate’s Jack Shafer says people will find ways to get around it, NYU’s Jay Rosen echoes C.W. Anderson’s thoughts on niche vs. public, and CUNY’s Jeff Jarvis doesn’t like the Times’ sense of entitlement.

The ephemera: The best stuff on Twitter about the announcement was collected at E&P In Exile and the new site MediaCritic. Steve Outing and Jason Fry don’t like the wait ’til 2011, and Cory Doctorow is skeptical that that’s even true. Former E&Pers Fitz & Jen interview a few newspaper execs and find that (surprise, surprise) the like the Times’ idea. So does Steven Brill of Journalism Online, who plans to roll out a few paywalls of his own soon. Dan Gillmor wants the Times to find out from readers what new features they’d pay for, and Jeff Sonderman makes two good points: “The major casualty of NYT paywall is sharing,” and “Knowing the ‘meter is running’ creates cautious viewing of the free articles.”

—

Apple’s tablet to go public: Apple announced that it will unveil its “latest creation” (read: its new tablet) next Wednesday. Since the announcement came a day after word of the Times’ paywall plans broke, it was only natural that the rumors would merge. The Daily Intel’s Gabriel Sherman, who broke the story of those Times plans, quoted Times officials putting the Times-tablet-deal rumors to rest. The Wall Street Journal detailed Apple’s plans for the tablet to do to newspapers, magazines and TV what the iPod did to music. Meanwhile, Columbia j-student Vadim Lavrusik and TechCrunch’s Paul Carr got tired of the tablet hype — Lavrusik for the print industry and Carr for tech geeks. (The Week also has a great timeline of the rumors.)

—

MediaNews goes bankrupt: Last Friday, MediaNews Group — a newspaper chain that publishes the Denver Post and San Jose Mercury-News, among others — announced it would file for bankruptcy protection. (A smaller chain, Morris Publishing Group, made the same announcement the day before.) For the facts and background of the filing, we’ve got a few sources: At the Lab, MediaNews veteran Martin Langeveld has a whole lot of history and insight on MediaNews chief Dean Singleton. News business analyst Alan Mutter tells us about the amazing fact that Singleton will come out of the filing unscathed but Hearst, which invested in MediaNews to save the San Francisco Chronicle, stands to lose $317 million in the deal. And MinnPost reports that the St. Paul Pioneer Press was the only MediaNews paper losing money.

Looking at the big picture, Ken Doctor says that bankruptcies like these are just a chance for newspapers to buy time while adjusting their strategy in “the fog of media war.” Steve Outing takes a glass-half-full approach, arguing that the downfall of old-media chains like MediaNews are a great opportunity for journalism startups to build a new news ecosystem.

—

How much do Google News users read?: An annual study by research firm Outsell and Ken Doctor on online and offline news preferences made waves by reporting that 44 percent of Google News users scan headlines without clicking through to the original articles. PaidContent noted that Outsell has a dog in this fight; it openly advocates that news organizations should get more money from Google. Search engine guru Danny Sullivan was not impressed, giving a thorough critique of the study and its perceived implications. Syracuse j-prof Vin Crosbie also wondered whether the same pattern might be true with print headlines.

In a similar vein, BNET’s David Weir used comScore numbers to argue that Google, Yahoo and Microsoft support big newspapers, and Jeff Jarvis made one of his favorite arguments — in defense of the link.

—

Heartbreak in Haiti: I’d be remiss if I didn’t mention the journalism and media connections to the largest news story in the world for the past two weeks — the devastating earthquake in Haiti. Several sites noted that Twitter led the way in breaking news of the quake and in raising money for relief. The money aspect is new, but as Columbia j-prof Sree Sreenivasan noted last June, Twitter came of age a long time ago as a medium for breaking global news. That’s what it does. The coverage also provided an opportunity for discussion about the ethics of giving aid while reporting.

—

Reading roundup: In addition to being out in front of the whole New York Times paywall story, Gabriel Sherman authored a nice, long think piece for The New Republic on the difficulties of one of America’s other great newspapers, The Washington Post. For what it’s worth, Post patriarch Donald Graham thought it was “not even a molehill.”

Over at Snarkmarket, Robin Sloan uses the economic concept of stock and flow to describe the delicate balance between timeliness and permanence the world of online media. It’s a brilliant idea — a must-read.

Finally, a promising new site named MediaCritic, run by Salon veteran Scott Rosenberg, citizen journalism advocate Dan Gillmor, and Lucasfilm’s Bill Gannon, had its soft launch this week. It looks like it’s going to include some nifty features, like Rosenberg’s regular curation of Twitter commentary on big media subjects.

The internet has deeply problematized local journalism’s vision of its public…Online, all publics appear fragmentary. There is always an element of the public that cannot be networked. There is always a fraction of this uncaptured public only a mouse-click away…Insofar as journalistic authority rests on its claim to give the public flesh, such a claim is no longer tenable — if it ever was. Insofar as local journalism’s image of the public is grounded in a vision that sees the public as a unitary, structural, or even interlocking entity that journalism can either confidently speak to or call into being, the authority of journalism has become deeply problematic.

The questions about newspaper paywalls, then, are more than simply economic questions. They are more than simply questions about “will the model work?” and “can we balance the ratio between clicks and advertising dollars that maximizes our paywall’s effectiveness?” There are also questions about how journalists see themselves, and whether they can live with the answers that a paywall provides.

In its article claiming that The New York Times was “close to announcing that the paper will begin charging for access to its website, [through the kind of] the metered system adopted by the Financial Times, in which readers can sample a certain number of free articles before being asked to subscribe,” New York Magazine took a trip back in time to the days of TimesSelect, the Times’ last major attempt to charge readers for content:

The Times’ last experience with pay walls, TimesSelect, was deeply unsatisfying and exposed a rift between Sulzberger and his roster of A-list columnists, particularly Tom Friedman and Maureen Dowd, who grew frustrated at their dramatic fall-off in online readership. Not long before the Times ultimately pulled the plug on TimesSelect, Friedman wrote Sulzberger a long memo explaining that, while he was initially supportive of TimesSelect, he’d been alarmed that he had lost most of his readers in India and China and the Middle East.

Its easy to attribute Friedman’s displeasure to vanity, and to some degree, it’s probably just that simple. But his attitude is a window into a larger newspaper mindset, one that sees the news provided by newspapers through reporting as creating the common language by which “the public” informs itself about issues of public relevance. As creating the public, as it were. It’s a world where “All the News That’s Fit to Print” is more than just an outdated slogan. It’s a world where the slogan is true.

I wrote last month that the emerging consensus about paid journalist content seems to be, “most people won’t pay anything for traditional journalism, but a few people will pay something, most likely for content they (1) care about and (2) can’t get anywhere else.” In other words, people will pay for niche content. Any sort of paywall — even the metered kind, like the Times is said to be proposing — is ultimately making a wager on the argument that it is enough of niche product that a wealthy enough niche of readers will pay for it. Putting up a meter represents the ultimate compromise between visions of news that are “mass” (“we want everyone to read this”) and niche (“we want to be unique enough that we will get unique people to pay”), because it ultimately amounts to a tax on the heavy users. (I have a sneaking suspicion that it is this compromise between the Times’ vision of itself as the crucible of the public and a vanity product that rich people will pay for that Jay Rosen was referring to when he tweeted that the alleged NYT plan “fit the mold” of previous attempts by the paper to strike the proper balance.)

In the days of advertising-funded journalistic content, there was no contradiction between the number of readers you had, your profitability, and the degree to which you could claim to print “all the news” that mattered. (This ignores, for the moment, the fact that even in the glory days of the industry business and circulation managers targeted particular demographic slices. But that was a decision largely hidden from editors and journalists, who could continue on under the illusion that they were writing for everyone.) These days, however, there is just such a distinction. In the world of the networked public sphere, putting up walls around your content ultimately moves you out of the center of the public network, which means you’re less linked to and less read. Putting up walls around your content means you can charge the niche but must sacrifice the illusion that you speak for and to everyone.

So there’s more to the New York Times’ decisions on meters and paywalls than just the question of whether the strategy will succeed economically. There are questions about how the internet has already changed the Times, and how the dawning world of niche-reader taxation will change journalists’ ideas about what they do and who they write for. And there are questions about how we ourselves see the “public” we are a part of. We live in a world where were our “nicheness” has never been more obvious, and one of the great questions in the years ahead is whether we are still capable of seeing ourselves as a part of something more. In order to do so, I think we need to radically rethink what we mean when we say the word “public.” Down with structural notions like “public spheres,” or even phrases “networked publics!”

These topics get us away from issues directly related to The New York Times, though, and might be better addressed in a future post.

There’s a school of thought that says video is the future of information, that rich media is the endpoint of the evolution of text. I don’t know that I buy that, since text still has so many advantages over video: its scannability, its searchability, how much easier it usually is to create and polish. But some of those edges might be temporary, as technology evolves to solve away some of video’s problems.

SpeakerText, a new startup, is trying to become one of those problem solvers by directly tying videos to their corresponding words.

Cofounder Matt Mireles, 29 and an occasional commenter around here, used to dream about being a war correspondent for The New York Times Magazine. But “reading Romenesko and getting depressed” pushed his interest more toward the intersection of journalism and technology.

Here’s his argument: It’s relatively easy for the value of a piece of text content to be shifted from its creator to someone else. Let’s say your news organization breaks big news. What happens next? Other people start writing about your big news — summarizing it, excerpting it, putting their own spin on it. Maybe also linking to it — but a lot of those links don’t get clicked on, and the “credit” in terms of eyeballs ends up spread around a lot of different sites, not just the one doing the original reporting. Or, as SpeakerText cofounder Matt Mireles puts it: “Text is easily commoditized.”

But the same isn’t quite as true for video content. It’s a lot harder to satisfyingly summarize a piece of video for a blog post. (Not impossible — harder.) It’s also a lot less excerptable: If you’ve posted an hour-long video, and the juicy stuff is 39 minutes in, it’s not always easy to direct people to that spot without recutting the video.

SpeakerText tries to tackle those problems by linking points in a video with their transcripts, allowing text to be a navigational tool to locate specific points in a video. (You may have seen The New York Times do something similar for major Obama speeches.)

Here’s an example of how SpeakerText works, using a video of the NYT’s Bill Keller we wrote about back in October:

Pressing play will start both the video and the movement of highlighted text down the accompanying transcript. If you click at any point in the transcript, the video should jump to that point. This has obvious use for speeches, lectures, interviews or anything else that combines multimedia with a lot of words.

And SpeakerText also allows video to be shared at the quote level. For instance, in that Keller video, the one line lots of people seized on is where he seems to (maybe?) confirm the existence of a new Apple tablet device, calling it “the impending Apple slate.” With the tool, I can link directly to that quote, 8:24 in.

Room for improvement

It’s not perfect. For one thing, it doesn’t yet work with all video providers; we at the Lab use Vimeo as our video player, which doesn’t work with SpeakerText, so I had to reupload the Keller video to YouTube to make it work. The time-tagging isn’t perfectly precise; I had a few tags that seemed to float a few seconds away from the exact moment I tied them to.

As for the transcriptions, you either need to provide them yourself or pay for them to be created by the anonymous armies of Amazon’s Mechanical Turk. I love Mechanical Turk — I use it to do all the video transcriptions on this site. But its transcriptions can be spotty — from misplaced commas and incorrect proper names to varying interpretations of whether every last “um,” “er,” and “uh” should be considered worthy for the permanent record.

But the biggest hassle is that the connections between the transcripts and the video must be manually, by time-stamping the text. Mireles suggests having an intern do it, but being internless, it was a bit of a slog. For an hour-long video, time-stamping at the sentence level would be a big pain.

Mireles told me that technology to automate the time-stamping is available for purchase and is part of the plan as they move from boot-strapped startup to investor-fueled.

Applying the tech to government meetings

And that brings us to SpeakerText’s efforts to raise that money. Mireles is seeking investors, in part with the idea that a future SpeakerText Pro (which would allow a website’s branding to be part of the player) and enterprise-level deals with major video vendors would generate a revenue stream. The technology, if it evolves, would also seem to be a potential purchase for one of the big video platforms.

But the company is also seeking money from the Knight Foundation as part of the 2010 Knight News Challenge. The idea is based on using SpeakerText’s tech to generate sharable and linkable video transcripts of government meetings.

“Who goes to these city council meetings and legislative meetings? Classically, that’s newspaper reporters,” Mireles told me. “They listen to everything and filter out quotes into a story, and that’s the public record. What I’d like to do is create a framework where all government business is easily searchable, quotable, linkable, and sharable.”

Such an idea would obviously require a lot more than SpeakerText’s transcription-tying tech — a whole bunch of cameras, to start — but it’s a worthy vision of how technology could work to open up all the information locked inside video files to the text-reading world. In the meantime, SpeakerText might be a useful tool for online journalists working with word-heavy videos.

PREDICTION: No other newspaper companies will file for bankruptcy.

WRONG. By the end of 2008, only Tribune had declared. Since then, the Star-Tribune, the Chicago Sun-Times, Journal Register Company, and the Philadelphia newspapers made trips to the courthouse, most of them right after the first of the year.

PREDICTION: Several cities, besides Denver, that today still have multiple daily newspapers will become single-newspaper towns.

RIGHT: Hearst closed the Seattle Post-Intelligencer (in print, at least), Gannett closed the Tucson Citizen, making those cities one-paper towns. In February, Clarity Media Group closed the Baltimore Examiner, a free daily, leaving the field to the Sun. And Freedom is closing the East Valley Tribune in Mesa, which cuts out a nearby competitor in the Phoenix metro area.

PREDICTION: Whatever gets announced by the Detroit Newspaper Partnership in terms of frequency reduction will be emulated in several more cities (including both single and multiple newspaper markets) within the first half of the year.

WRONG: Nothing similar to the Detroit arrangement has been tried elsewhere.

PREDICTION: Even if both papers in Detroit somehow maintain a seven-day schedule, we’ll see several other major cities and a dozen or more smaller markets cut back from six or seven days to one to four days per week.

WRONG, mostly: We did see a few other outright closings including the Ann Arbor News (with a replacement paper published twice a week), and some eliminations of one or two publishing days. But only the Register-Pajaronian of Watsonville, Calif. announced it will go from six days to three, back in January.

PREDICTION: As part of that shift, some major dailies will switch their Sunday package fully to Saturday and drop Sunday publication entirely. They will see this step as saving production cost, increasing sales via longer shelf life in stores, improving results for advertisers, and driving more weekend website traffic. The “weekend edition” will be more feature-y, less news-y.

WRONG: This really falls in the department of wishful thinking; it’s a strategy I’ve been advocating for the last year or so to follow the audience to the web, jettison the overhead of printing and delivery, but retain the most profitable portion of the print product.

PREDICTION: There will be at least one, and probably several, mergers between some of the top newspaper chains in the country. Top candidate: Media News merges with Hearst. Dow Jones will finally shed Ottaway in a deal engineered by Boston Herald owner (and recently-appointed Ottaway chief) Pat Purcell.

WRONG AGAIN, but this one is going back into the 2010 hopper. Lack of capital by most of the players, and the perception or hope that values may improve, put a big damper on mergers and acquisitions, but there should be renewed interest ahead.

PREDICTION: Google will not buy the New York Times Co., or any other media property. Google is smart enough to stick with its business, which is organizing information, not generating content. On the other hand, Amazon may decide that they are in the content business…And then there’s the long shot possibility that Michael Bloomberg loses his re-election bid next fall, which might generate a 2010 prediction, if NYT is still independent at that point.

RIGHT about Google, and NOT APPLICABLE about Bloomberg (but Bloomberg did acquire BusinessWeek). The Google-NYT pipe dream still gets mentioned on occasion, but it won’t happen.

PREDICTION: There will be a mini-dotcom bust, featuring closings or fire sales of numerous web enterprises launched on the model of “generate traffic now, monetize later.”

WRONG, at least on the mini-bust scenario. Certainly there were closings of various digital enterprises, but it didn’t look like a tidal wave.

PREDICTION: The fifty newspaper execs who gathered at API’s November Summit for an Industry in Crisis will not bother to reconvene six months later (which would be April) as they agreed to do.

RIGHT. There was a very low-key round two with fewer participants in January, without any announced outcomes, and that was it. [Although there was also the May summit in Chicago, which featured many of the same players. —Ed.]

PREDICTION: Newspaper advertising revenue will decline year-over-year 10 percent in the first quarter and 5 percent in the second. It will stabilize, or nearly so, in the second half, but will have a loss for the year. For the year, newspapers will slip below 12 percent of total advertising revenue (from 15 percent in 2007 and around 13.5 percent in 2008). But online advertising at newspaper sites will resume strong upward growth.

WRONG, and way too optimistic. Full-year results won’t be known for months, but the first three quarters have seen losses in the 30 percent ballpark. Gannett and New York Times have suggested Q4 will come in “better” at “only” about 25 percent down. My 12 percent reference was to newspaper share of the total ad market, a metric that has become harder to track this year due to changes in methodology at McCann, but the actual for 2009 ultimately will sugar out at about 10 percent.

PREDICTION: Newspaper circulation, aggregated, will be steady (up or down no more than 1 percent) in each of the 6-month ABC reporting periods ending March 31 and September 30. Losses in print circulation will be offset by gains in ABC-countable paid digital subscriptions, including facsimile editions and e-reader editions.

WRONG, and also way too optimistic. The March period drop was 7.1 percent, the September drop was 10.6 percent, and digital subscription didn’t have much impact.

PREDICTION: At least 25 daily newspapers will close outright. This includes the Rocky Mountain News, and it will include other papers in multi-newspaper markets. But most closings will be in smaller markets.

WRONG, and too pessimistic. About half a dozen daily papers closed for good during the year.

PREDICTION: One hundred or more independent local startup sites focused on local news will be launched. A number of them will launch weekly newspapers, as well, repurposing the content they’ve already published online. Some of these enterprises are for-profit, some are nonprofit. There will be some steps toward formation of a national association of local online news publishers, perhaps initiated by one of the journalism schools.

Hard to tell, but probably RIGHT. Nobody is really keeping track of how many hyperlocals are active, or their comings and goings. An authoritative central database would be a Good Thing.

PREDICTION: The Dow Industrials will be up 15 percent for the year. The stocks of newspaper firms will beat the market.

RIGHT. The Dow finished the year up 18.8 percent. (This prediction is the one that got the most “you must be dreaming” reactions last year.

And RIGHT about newspapers beating the market (as measured by the Dow Industrials), which got even bigger laughs from the skeptics. There is no index of newspaper stocks, but on the whole, they’ve done well. It helps to have started in the sub-basement at year-end 2008, of course, which was the basis of my prediction. Among those beating the Dow, based on numbers gathered by Poynter’s Rick Edmonds, were New York Times (+69%), AH Belo (+164%), Lee Enterprises (+746%), McClatchy (+343%), Journal Communications (+59%), EW Scripps (+215%), Media General (+348%), and Gannett (+86%). Only Washington Post Co. (+13%) lagged the market. Not listed, of course, are those still in bankruptcy.

PREDICTION: At least one publicly-owned newspaper chain will go private.

NOPE.

PREDICTION: A survey will show that the median age of people reading a printed newspaper at least 5 days per week is is now over 60.

UNKNOWN: I’m not aware of a 2009 survey of this metric, but I’ll wager that the median age figure is correct.

PREDICTION: Reading news on a Kindle or other e-reader will grow by leaps and bounds. E-readers will be the hot gadget of the year. The New York Times, which currently has over 10,000 subscribers on Kindle, will push that number to 75,000. The Times will report that 75 percent of these subscribers were not previously readers of the print edition, and half of them are under 40. The Wall Street Journal and Washington Post will not be far behind in e-reader subscriptions.

UNKNOWN, as far as the subscription counts go: newspapers and Kindle have not announced e-reader subscription levels during the year. The Times now has at least 30,000, as does the Wall Street Journal (according to a post by Staci Kramer in November; see my comment there as well). There have been a number of new e-reader introductions, but none of them look much better than their predecessors as news readers. My guess would be that by year end, the Times will have closer to 40,000 Kindle readers and the Journal 35,000. During 2010, 75,000 should be attainable for the Times, especially counting all e-editions (which include the Times Reader and 53,353 weekdays and 34,435 Sundays for the six months ending Sept. 30.

PREDICTION: The advent of a color Kindle (or other brand color e-reader) will be rumored in November 2009, but won’t be introduced before the end of the year.

RIGHT: plenty of rumors, but no color e-reader, except Fujitsu’s Flepia, which is expensive, experimental, and only for sale in Japan.

PREDICTION: Some newspaper companies will buy or launch news aggregation sites. Others will find ways to collaborate with aggregators.

RIGHT: Hearst launched its topic pages site LMK.com. And various companies are working with EVRI, Daylife and others to bring aggregated feeds to their sites.

PREDICTION: As newsrooms, with or without corporate direction, begin to truly embrace an online-first culture, outbound links embedded in news copy, blog-style, as well as standalone outbound linking, will proliferate on newspaper sites. A reporter without an active blog will start to be seen as a dinosaur.

MORE WISHFUL THINKING, although there’s progress. Many reporters still don’t blog, still don’t tweet, and many papers are still on content management systems that inhibit embedded links.

PREDICTION: The Reuters-Politico deal will inspire other networking arrangements whereby one content generator shares content with others, in return for right to place ads on the participating web sites on a revenue-sharing basis.

YES, we’re seeing more sharing of content, with various financial arrangements.

PREDICTION: The Obama administration will launch a White House wiki to help citizens follow the Changes, and in time will add staff blogs, public commenting, and other public interaction.

NOT SO FAR, although a new Open Government Initiative was recently announced by the White House. This grew out of some wiki-like public input earlier in the year.

PREDICTION: The Washington Post will launch a news wiki with pages on current news topics that will be updated with new developments.

YES — kicked off in January, it’s called WhoRunsGov.com.

PREDICTION: The New York Times will launch a sophisticated new Facebook application built around news content. The basic idea will be that the content of the news (and advertising) package you get by being a Times fan on Facebook will be influenced by the interests and social connections you have established on Facebook. There will be discussion of, if not experimentation with, applying a personal CPM based on social connections, which could result in a rewards system for participating individuals.

NO. Although the Times has continued to come out with innovative online experiments, this was not one of them.

PREDICTION: Craigslist will partner with a newspaper consortium in a project to generate and deliver classified advertising. There will be no new revenue in the model, but the goal will be to get more people to go to newspaper web sites to find classified ads. There will be talk of expanding this collaboration to include eBay.

NO. This still seems like a good idea, but probably it should have happened in 2006 and the opportunity has passed.

PREDICTION: Look for some big deals among the social networks. In particular, Twitter will begin to falter as it proves to be unable to identify a clearly attainable revenue stream. By year-end, it will either be acquired or will be seeking to merge or be acquired. The most likely buyer remains Facebook, but interest will come from others as well and Twitter will work hard to generate an auction that produces a high valuation for the company.

NO DEAL, so far. But RIGHT about Twitter beginning to falter and still having no “clearly attainable” revenue stream in sight. Twitter’s unique visitors and site visits, as measured by Compete.com, peaked last summer and have been declining, slowly, ever since. Quantcast agrees. [But note that neither of those traffic stats count people interacting with Twitter via the API, through Twitter apps, or by texting. —Ed.]

PREDICTION: Some innovative new approaches to journalism will emanate from Cedar Rapids, Iowa.

YES, as described in this post and this post. See also the blogs of Steve Buttry and Chuck Peters. The Cedar Rapids Gazette and its affiliated TV station and web site are in the process of reinventing and reconstructing their entire workflow for news gathering and distribution.

PREDICTION: A major motion picture or HBO series featuring a journalism theme (perhaps a blogger involved in saving the world from nefarious schemes) will generate renewed interest in journalism as a career.

RIGHT. Well, I’m not sure if it has generated renewed interest in journalism as a career, but the movie State of Play featured both print reporters and bloggers. And Julie of Julie & Julia was a blogger, as well. [Bit of a reach there, Martin. —Ed.]

—

[ADDENDUM: I posted about Martin's predictions when he made them and wrote this:

I’d agree with most, although (a) I think there will be at least one other newspaper company bankruptcy, (b) I think Q3/Q4 revenue numbers will be down from 2008, not flat, (c) circ will be down, not stable, (d) newspaper stocks won’t beat the market, (e) the Kindle boom won’t be as big as he thinks for newspapers, and (f) Twitter won’t be in major trouble in [2009] — Facebook is more likely to feel the pinch with its high server-farm costs.

I was right on (a), (b), and (c) and wrong on (d). Gimme half credit for (f), since Twitter is now profitable and Facebook didn’t seem too affected by server expenses. Uncertain on (e), but I’ll eat my hat if “75 percent of [NYT Kindle] subscribers were not previously readers of the print edition, and half of them are under 40.” —Josh]

Photo of fortune-teller postcard by Cheryl Hicks used under a Creative Commons license.

Because it’s my job, I’ve followed pretty much everything Steve Brill has said in public about Journalism Online, the pay-for-news firm he launched in April with Gordon Crovitz and Leo Hindrey. From the start, they’ve been offering infrastructure and consulting for news organizations that want to charge for access to their websites. But as you’d expect with any new venture, the pitch has changed over time. Here are some tweaks I’ve noticed:

Ditching the term “paywall”

Brill has always been clear that he isn’t advocating a subscription-only approach for news sites. Some content will be free, some will be available only to those who pay. But whereas Brill used to use the term “wall” to describe subscription content, he’s now abandoned that language. “We’re not putting up any kind of a paywall,” he’s been saying, most recently in a heated interview on WBUR. “It’s not a paywall,” he said at a Yale conference last week.

That’s a semantic distinction but one that naturally raises the question: What type of stuff will be subscription-only? I posed that question to Brill at Yale, seeking specific examples, but he wouldn’t say much beyond “unique” and “premium” content. (Steve Outing recently prompted an interesting thread on what, exactly, premium content is.) I didn’t come away with a clearer idea of what his clients intend to charge for, just that I shouldn’t call it a paywall.

Embracing the metered model

Journalism Online will power any type of payment system that publishers choose, but Brill’s thinking has shifted on which strategy is best. Last year, he drafted a memo for The New York Times that championed micropayments and subscriptions for the newspaper’s entire website. In June, he told me, “We don’t think micropayments are going to be a huge part of this deal.” These days, he’s been talking up the metered model employed by The Financial Times, which offers 10 free articles a month before users are required to pay.

Brill’s firm claims trademarks on the names of six models — he calls them “dials” — that news publishers could employ:

— High Activity Pay Points (metered model)
— Selected Content Pay Points (partial paywall)
— Time-Based Pay Points (charge for new content)
— Enhanced Service Pay Points (charge for special features)
— Market Access Pay Points (charge based on user’s location)
— Preview Activity Pay Points (allow previewing of paid content)

Broadening the target audience

In the spring, Brill told me the goal was “to get the 5 or 10 percent of your most committed readers to pay.” This summer, he expanded that target in an interview with CNN: “The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion.”

At Yale last week, he said “10 or 15 or 20 percent” of a news site’s unique monthly visitors might be willing to pay. I don’t presume to know what a realistic goal is, though that’s obviously crucial to the success or failure of paid-content plans. I do know that one study found “core loyalists,” who visit 2 to 3 times a day for 20 days a month, represent 25% of visitors to newspaper sites. So if you’re probing Brill’s estimates, there’s your starting point.

Exaggerating his firm’s success

“We now have over 1,200 affiliates,” Brill said on the radio yesterday, making it sound like 1,200 publications are ready to charge their readers for digital content. Asked to clarify, he said, “Companies representing or owning over 1,200 publications have all signed letters of intent.” We know that includes Guardian News and Media, which doesn’t appear likely to charge readers. Most of the other companies that have signed non-binding letters of intent remain a mystery, which makes the whole thing increasingly mysterious.

Brill is certainly under no obligation to disclose his clients, but the more he touts a dubious figure, the more skeptical I grow. Here’s a harder statistic, reported by Poynter: Between 5 and 15 publishers will start testing Journalism Online’s infrastructure “in the next month or so.” The firm’s own business model is dependent on at least some of its 1,200 affiliates pulling the trigger: Journalism Online is taking a 20% cut of subscription revenue.

The New York Times reported on its front page in September that hoki, an unattractive sea creature best known as the primary ingredient in the Filet-O-Fish, is at risk of depletion. Naturally, the New Zealand companies that farm hoki by the metric ton weren’t pleased by the article, which pointed to “ominous signs of overfishing.”

Time was, the subject of a critical news story could write a letter to the editor, issue a press release, maybe demand a correction. Not content with those options, the New Zealand Seafood Industry Council took an approach I hadn’t seen before: buying Google ads for keywords like new zealand hoki and hoki new york times.

The ads sought to target people discussing or searching for more information about the story. Here’s one that appeared in Gmail atop a message about hoki and the Times:

Now, I don’t really care who’s right in this dispute, though I should note the Times only apologized for using the trade association’s photograph without permission. The ads linked to a page that purports to set the record straight about hoki fishing and includes emails exchanged with Times science editor Laura Chang.

That was itself a feat of public-relations genius: Because the council’s hoki page was originally a straightforward description of the fish and its uses, the Times had linked to it in the third paragraph of the article (at right), and 78,000 people clicked though, according to Sarah Crysell, a spokeswoman for the council. Taking advantage of that incoming traffic, the group transformed its hoki page into a rebuttal of the Times story.

The man behind the effort — and similar campaigns for other clients — was Jim McCarthy of CounterPoint Strategies, a boutique PR firm in New York and Washington. He’s an aggressive guy who will run your ear off about “holding the media accountable for their deliberate falsehoods” and “arrogant reporters who have a one-sided agenda.”

That animus turns out to be a key element of McCarthy’s strategy: In addition to buying Google AdWords for combinations of keywords like new york times, hoki, and new zealand, McCarthy also targeted searches for the story’s author, William Broad.

“When you include their name in the search, it draws attention to it and lets the reporter know that you mean business and you’re going to hold them responsible,” McCarthy told me over the phone. For another seafaring client, the National Fisheries Institute, he bought Google ads against the names of three Vogue reporters — and their editor, Anna Wintour — who wrote about high levels of mercury in fish. “Someone inside of Condé Nast tried to outbid us for those search terms,” McCarthy said, though I can’t confirm the story. An example of one of the ads is at left.

Targeting reporters where they hang out online is McCarthy’s grating specialty. He went after ABC News, on behalf of the Formaldehyde Council, with ads (like the one at right) on Mediabistro’s TVNewser. “It was virtually a guarantee that they and all their competitors were going to see it,” McCarthy told me with more than a little relish. He has attempted to place similar ads on Romenesko, but the Poynter Institute declined to run them. (Crysell said the council hired McCarthy, in part, because “New Zealanders are far more modest in the way we express ourselves.”)

McCarthy calls his strategy “media accountability.” That’s spin. He’s representing his client’s interests like any other PR firm. But doing it with Google AdWords and links is a novel strategy that feels more effectual than a letter to the editor.

Hoki photo used with the permission of the New Zealand Seafood Industry Council.

“The idea that you can do ‘more with less‘ is, in my view, one of the four great lies,” Keller told his staff. “What you can do with less, is less. But if you are smart and careful, you can limit the harm.” To that end, Keller said the Times is looking to streamline its copyediting and page design. He ruled out eliminating sections and said layoffs, if necessary, would be based on merit.

On the digital front, Keller said again that a decision on charging for the Times website would come soon. He described the company’s predicament:

First of all, the website earns a lot of money from advertisers — and that, by the way, has started to grow again at a healthy rate. If you charge readers to reach your content, some of them will stop coming to the site. If enough of them stop coming to the site, you lose more in ad revenue than you gain from direct payments. That’s a risk that can be minimized, but it can’t be ignored.

If you DO decide to go to a pay model, there are many intricate questions about how you charge, how much you charge, whether you do it alone or in some partnership with other papers, and how fancy a technical infrastructure you build.

It would only be natural for the Times Co. to consider every option, but that’s the first time I’ve seen anyone there mention a “partnership with other papers” — like, say, Steve Brill’s Journalism Online — as an option. Also, the Times has more than 70 blogs, and Keller said those “consuming considerable effort and expense with little reward” might be cut.

Here’s a full transcript of Keller’s remarks, which was posted on an internal Times server and passed along to me. Don’t miss Keller’s knock on the newly redesigned CNN.com, which he said “has hardly any news”:

Good morning. Welcome to another episode of Throw Stuff at Bill. This year we’ve added one innovation to the Throw-Stuff methodology. As usual we’ve offered foreign and domestic bureaus the ability to join us by conference call, but this year they have the ability to e-mail me questions in real time, and the questions will pop up on the laptop in front of me. Whether I have the ability to find the incoming questions, let alone answer them, remains to be seen.

In a fairer world, this would be a time for celebration. Since we last met here, The Times has won just about every prize in the world of journalism — for the brilliance of our reporting and photography, for the beauty of our graphic design, for the ingenuity of our online storytelling. We have put important but invisible subjects onto the public agenda — the dangers of distracted driving, for instance, and the alarming rates of brain damage in football, to cite two examples where our work has mobilized a government response and may well end up saving lives. We have lived up to our obligation to hold powerful institutions accountable, and to help our readers navigate the complications of life in hard times. Our reporters have unearthed scandal from Washington (the Ensign family, for instance) to Afghanistan (the Karzai family). On the big running news stories of the day — the health care debate, the attempts to rescue the economy, the strategy in Afghanistan, the political ferment from City Hall to Capitol Hill — we have been the great indispensable source. In short, when so much of our competition is in retreat, our journalism has remained astonishingly good, and readers know it.

Almost miraculously, twice this year we have had correspondents freed from captivity in Afghanistan — although in one case the rescue came with a heartbreaking price — and we have used those experiences as opportunities to bear witness. David Rohde’s seven-month hostage ordeal became a gripping narrative of life inside the place we’ve come to call Talibanistan.

We’ve launched a new local news project in the San Francisco Bay Area, with another on the way in Chicago — experiments that may become an important revenue source, but in any case are a sign of new life in print. All of this and much more should be abundant cause for pride.

But the subject that looms over all of us is the impending loss of 100 jobs — with the anxiety and sadness that brings in the short run, and the fear it arouses about the long run. So let me focus today on four questions that I’ve been hearing around the newsroom — and then turn to you for anything else that’s on your mind.

The four questions are:

Why now?

What’s the plan?

Will we get some relief by charging for our journalism online?

And, where will it all end?

Let me acknowledge up front that I operate under three constraints. For starters, I can’t foresee the future. There are also some things in the here and now that I just don’t know. And there are some things I know but can’t say without calling down the wrath of our lawyers. Within those limits I will be as candid as I can be, and I trust that in return you’ll regard this as a discussion within the family, not material for your Twitter followers or Facebook friends.

First, why now? Why, after pay cuts and furloughs that were supposed to carry us through the hard times, are we suddenly talking about buyouts and layoffs in 2009?

Of course, the possibility of another staff cut has hovered over us, really, since the last staff cut, but none of us expected it to happen before next year, and all of us hoped that with the recession bottoming out we had a chance of avoiding a staff cut altogether. Yet here we are.

The fact that we were suddenly faced with buyouts and layoffs does NOT mean that the business of the company has taken a sudden turn for the worse.

On the contrary, the national economy has begun growing again, and, as Janet and Arthur noted two weeks ago in their report on the 3rd quarter results, we have the first, tentative signs that advertising may be stirring back to life, modestly in print and more significantly online. Things seem to be looking up a little. But they are not looking up enough to support a newsroom of 1250 journalists in the years ahead. While advertising may rebound, there is still a lot of advertising that is unlikely to return to the levels of our financial heyday. Look at it this way: Advertising used to account for about 70 percent of the revenues of The New York Times. That number is now approaching 50 percent. We’ve made up for some of the lost advertising by increasing the price of the printed newspaper and by cutting costs, but there’s a limit to how deep you can cut and how much you can demand from your customers. Thus the decision to cut 100 jobs — to create a newsroom staff level that we hope will be sustainable for the long haul.

Once the decision was made to have a staff cut, the reason for doing it now rather than waiting until next year amounted to a simple, hard fact of life: under the Guild contract, anyone who is working here on January 1, 2010, is entitled to all of his or her paid vacation. By making the cuts before the end of the year, the company saves those costs. In practical terms, that means if we wait until next year, to get the same saving we would have to cut more jobs than the 100, probably another ten jobs. Certainly, I’d rather make these cuts later. In fact, I’d rather not make them at all. But if we have to face this, I’d rather face it and get it over with, and move on.

Next question: What’s the plan? How do we shrink the newsroom staff by 100 jobs? Much as we hoped to avoid it, we have not had our heads in the sand. The masthead has been at work on a variety of contingency plans to minimize the damage to a great news report in the event we had to cut staff. The idea that you can do “more with less” is, in my view, one of the four great lies. (You can Google the other three, starting with “the check is in the mail.”) What you can do with less, is less. But if you are smart and careful, you can limit the harm.

We’ve had a lot of experience in cutting budgets — and there are basically three things you can do:

First, you look for any slack in the system, any way to do what we do more efficiently, more economically. In the early days, when we began imposing tighter discipline over management of the newsroom, that meant booking travel through Expedia rather than American Express, it meant looking for cheaper meals and lodging, it meant somewhat less frequent moves of correspondents from one bureau to another, it meant having correspondents work from home rather than commuting to an office. We now run a much tighter ship than we did a few years ago, which has enabled us to save money without compromising coverage.

This time, in our quest for new efficiencies, we’re looking hard at how we move copy — from reporter to publication, whether in print or on the Web. We suspect we can save some slots by streamlining the process.

Could we for example combine some of our copy desks and save a few FTEs by gaining economies of scale and scheduling without compromising the rich, specialized expertise that resides in our cadre of copy editors? Or consider how pages get made. We have skilled designers who draw our pages, paginators who execute those designs and other production staffers who calibrate the tone and color of the pages. We’re looking at whether we can streamline some of that work. Susan Edgerley, Fiona Spruill, Patrick Laforge and Allan Flippen are deep into a study of how we handle copy, and I expect to reach some conclusions in the next week or two. Those are the kind of questions we’re examining, under the general rubric of doing things more efficiently.

Besides looking for slack, you look for things you can stop doing, or things you can do less often. Are there things that aren’t essential to the news report, features that we can live without? In the early days of newsroom cost-cutting, that meant things like stock tables and the Sunday TV book — essentially lists of raw information that were easily accessible on the web. More recently it meant doing away with the City weekly and the regional weeklies. Of course, along the way we have created new things, too. The regionals and City section gave birth to the new Metropolitan section, with zoned pages for the suburbs, and I don’t think I’m alone in regarding it as a tremendous success.

This time, one thing we are doing is taking a close look at our long roster of 70 or so blogs and our online verticals, as we call our focused packages of online content. We think we can save some slots there. Many of our blogs serve a valuable journalistic purpose. Many draw a lot of traffic to the website. Some of them are experiments that deserve more time to prove themselves. We don’t want to lose the inventiveness we have achieved by letting a thousand flowers bloom. But if we find instances where a blog or a vertical is consuming considerable effort and expense with little reward, we’re prepared to do some pruning.

In the days since we announced the plans for a staff cut, I’ve heard some speculation about other things we might be targeting. Since Metro took a hit last time, my friends in Metro wonder if they are in for another round of particular pain. I’ve heard similar rumbles from writers and editors in the features sections — Dining, Home, Travel, Styles and the rest. One of the armchair experts quoted by the public editor wondered why we don’t eliminate the Sports section. I’d like to be as clear as possible: none of those things is on the table. I can’t think of a better reminder of how much our readers count on Metro than our deep and distinguished coverage of this week’s election campaigns, or a better reminder of what we bring to sports fans than our dazzling coverage of the World Series.

I don’t know who will take the buyouts, and I don’t want to suggest that any department is completely immune, but believe we can get to 100 slots without anything so drastic as reducing Metro coverage or downsizing the Sports section — and I believe it would be unwise, at a time when we are asking readers to pay a premium price for our work, to give them conspicuously less of it. Indeed, that’s a point of view you will find echoed enthusiastically by our friends on the business side, who understand that we are more than ever dependent on satisfied subscribers for our revenues.

And, by the way, I think it may be time we stopped referring to sections as “core” or “not core.” The newsroom is a more complicated ecosystem than that. Consider this: although we are a national newspaper, New York is our biggest circulation area, a hugely desirable market for advertisers, and, you might say, our soul. That underscores the importance of Metro. But it’s not just about Metro. Covering New York is the work of Bizday reporters on Wall Street, of our theater, music and art critics, of our fashion reporters and our Dining and Real Estate sections. Folks, we’re all in this together.

So, you cut spending by getting more efficient, by shutting down things that are not essential — and, frankly, by looking for people who, for one reason or another, are not pulling their weight. This is not a newsroom of slackers; we recruit selectively, and we have gotten pretty good at managing out people who don’t live up to our high standards. But when we are forced to cut staff, we look at performance.

As you know, we have offered voluntary buyouts, and I’d be relieved if 100 of you saw a buyout as being in your interest. But if we do not get enough buyout volunteers, and we do have to resort to layoffs, let me be very clear about one thing: we intend to use merit to decide who is laid off and who is not. Nobody in the newsroom is going to get laid off solely because they lack seniority, despite what you may have heard. Our contract with the Guild allows us to go out of seniority and make cuts on the basis of merit. That’s what we did last time, and it will be my priority this time.

One final point on coping with these cuts. This is a cut of about 8 percent in our staff. But some of that lost manpower will be offset because we will not be doing furloughs next year. We’ll each be working 10 more days next year than we did this year. I leave it to you whether that is a blessing, but it will somewhat ease the strain of losing so many people.

The third question that hangs over the newsroom is, what about the website? When will we have a new business model for our online journalism? Briefly put, what is the right mix of advertising revenue and subscription revenue to build the strongest business on the Web?

Jill and I have spent a lot of hours with our colleagues from around the building, including Arthur and Janet, who will make the final decision. I don’t think there’s a variation we haven’t considered, a competing website we haven’t studied, a scenario we haven’t run through a rigorous analysis. It’s taken longer than some of us expected, because, simply put, the answers aren’t as obvious as some people think.

First of all, the website earns a lot of money from advertisers — and that, by the way, has started to grow again at a healthy rate. If you charge readers to reach your content, some of them will stop coming to the site. If enough of them stop coming to the site, you lose more in ad revenue than you gain from direct payments. That’s a risk that can be minimized, but it can’t be ignored.

If you DO decide to go to a pay model, there are many intricate questions about how you charge, how much you charge, whether you do it alone or in some partnership with other papers, and how fancy a technical infrastructure you build.

I can assure you that we’ve covered a lot of ground, and I don’t think you have very long to wait for an outcome. We are indisputably the leader in quality online journalism, and, as the leader, we can afford the time to get this right.

Fourth and last on my list of preemptive questions: will we make it?

I confess to being an optimist by nature, but I’m no Pollyanna. I don’t kid myself that advertising will rebound to the billion-dollar levels of five years ago, or that we can count on digital advertising growing at 30 percent a year again. I don’t think this will be easy. But, yes, we will make it.

You’ve all heard my riff about supply and demand — the persistent, even growing demand for first-rate journalism, and the sadly dwindling supply. That’s no less true, and it is the bedrock on which my own optimism about this place is built. The demand for our work is evident in the print subscribers who pay good money for the glory of the daily New York Times — and who stick with us through price increases and their own economic hardships. It is evident in the floods of visitors to our website — numbers we believe to be much higher than the 20 million monthly uniques counted by Nielsen.

As for the diminishing supply of real, reported news that matters, every week brings another example. Here’s one that’s fresh in my mind. The other day some of us spent half an hour looking at CNN’s redesigned website. It is the second most heavily trafficked online news site. The redesign is cleaner and brighter. Just one thing: It has hardly any news. On Tuesday, when CNN television was treating Election Day with the usual bells and whistles, the home page of CNN.com did not seem to be aware that there was voting going on. The most striking news story on the page had the following headline: “Canadian folk singer killed by coyotes.” (Now, if it had been Joni Mitchell, or Leonard Cohen.…)

A lot of the people predicting (and in some cases unabashedly yearning for) the death of newspapers overlook the simple fact that a recession lowers the tide for all boats. Daniel Gross put it nicely in a contrarian essay last week on Slate:

“In case anybody has forgotten,” he wrote, “we’ve had a deep, long recession, a huge spike in unemployment, and a credit crunch. Consumers have cut back sharply on all sorts of expenditures. There are plenty of members of what I call the 40 percent club: businesses, many tethered to finance and credit, that have seen sales plummet by nearly one-half. These include automobiles, homes, luxury apparel, and diamonds. Many other components of consumer discretionary spending — hotels, restaurants, air travel — have fallen off significantly. Do we draw a line from trends over the last few years and declare that in 15 years there will be only a handful of hotels? I’m not sure why we would expect consumption of a purely discretionary item that costs a few hundred dollars per year not to fall in the type of macroeconomic climate we’ve had.

“Especially when you consider that rather than discounting the product, many newspapers (and magazines) have been jacking up prices aggressively.…

“This,” he concludes, “is the new emerging model — cutting costs, raising prices. It may still fail in the end. But we shouldn’t act as if the online-only crowd has it all figured out. Every month, several million Americans pay to have newspapers and magazines delivered to their homes — a trick most online publications have yet to pull off. In fact, in some regards, print-online hybrids like newspapers and magazines have outperformed online-only publications. The Web operations of the New York Times, Washington Post, and Wall Street Journal aren’t exactly slouches when it comes to selling online ads. And as poorly as the stock of the New York Times has performed over the past decade, most people would have preferred owning it to the stock of Salon.com, or TheStreet.com.”

Maintaining the excellence of the news report has always been a priority of the newsroom and a commitment of the Ochs-Sulzberger family. Because of the growing dependence on circulation revenue, it is more than ever a business imperative as well as a journalistic mission. If we cut the staff to the point where our readers see quality in decline, they will no longer be willing to pay a premium price for it. That’s not just an argument that I will make. It’s an argument the business side will make more passionately than ever.

To that I would add that the recession WILL end, because they always do. Consumers WILL resume spending, maybe not at the profligate bubble-fueled pace of the ’90s, but they will spend. Advertisers WILL advertise and a lot of them will continue to see huge advantage in advertising to the educated, discerning, successful people who read the NYT, in print AND online.

And, last but not least, on my list of reasons for optimism is that we have demonstrated, as a company and as a newsroom, a tremendous ability to adapt, invent, including the game-changing, game-SAVING decision to make The Times a national newspaper, including the luscious franchise of the T magazines, including the font of journalistic invention that is our website, including a cascade of ideas from the newsroom in recent months.

As you know, Jill and I have spent a lot of our time the last few weeks immersed more than ever in our digital journalism, and it is invigorating to spend time with the amazingly inventive producers, product managers, software-builders and others — many of whom have chosen to be at this place rather than in some online startup because they believe in the work as much as those of us who come from the world of ink on cellulose.

Most of you know me well enough to know that standing up in front of crowds is not my VERY favorite thing to do, but there is one reason I relish these occasions. They give me an opportunity to say something that doesn’t get said nearly often enough, and it is this:

The value of The Times, ultimately, is the people here who, through thick and thin, manage to create journalism that is fearless, intelligent and rich — literally in a class by itself. Even during these tense weeks since we announced the news that we would have to have another round of staff cuts, just look at the glorious news reports we have published, day by day, hour by hour. I’d like to end with a simple but deeply felt thank you to everyone here who works their hearts out to create and support the singular mission of The New York Times. It’s an honor to work alongside you.

Now, I welcome your questions or comments.

The new Chicago News Cooperative, unveiled on Thursday by former Chicago Tribune managing editor Jim O’Shea, will begin life as a nonprofit, but will change over to an L3C after Jan. 1, when a new Illinois law takes effect, according to a Tribune report.

The L3C is a hybrid corporation that straddles the line between for-profit and nonprofit enterprise. Vermont last year was the first state to pass a law allowing formation of L3Cs, and Illinois this month became the most recent. Several other states are considering similar legislation, as is Congress.

The Chicago News Cooperative doesn’t appear to have investors yet. But it does have a major donor in the John D. and Catherine T. MacArthur Foundation. And it has a paying customer in the New York Times, which is planning a beefed-up Chicago-area edition, much like the Bay Area edition it announced earlier this month. There, the Times will partner with Warren Hellman’s nonprofit Bay Area News Project.

Speculation and interest in the L3C model in journalism has run high. Some have looked to the L3C model as a solution for newspapers because it allows a corporation to take on investors who are willing to accept varying rates of return — or possibly none at all. Foundations would be assured that their investment would qualify as a program-related investment — a crucial distinction under tax law — while socially responsible investors might be willing to settle for, say, a 3 percent return.

While CNC will partner with a newspaper, it remains unclear whether the model can be applied successfully to newspapers themselves. Jay Hamilton, director of the DeWitt Center at Duke University says newspapers may be reluctant to switch because of the legal uncertainties involved. Others who have written about the potential for L3Cs include Poynter columnist Bill Mitchell. Perhaps the most attractive aspect of the L3C is that it automatically designates the company’s activity as a “program-related investment.” Those are magic words for a foundation, which must prove to the IRS that its grant furthers its mission and also benefits society.

While L3Cs are relatively new in the United States, they’re old hat in the United Kingdom, where they’re called community interest companies. Although Vermont remains the only state to authorize the L3C, L3Cs formed in Vermont can operate in any state or territory.

UPDATE, Wednesday, 7:48 a.m.: Many thanks to Sally Duros, who has written extensively about L3Cs, for spotting our mistake in the first graf: It’s a low-profit, limited-liability company.

I’ve been skeptical of the impact of Kindles and Kindle-like devices on newspaper business models. And I think that’s been borne out — we learned earlier this week that The Los Angeles Times has only 2,700 Kindle subscribers, which produces roughly the revenue required to pay for one reporter.

But the Nook also has the potential to differentiate itself from the Kindle to newspaper publishers — none of whom are particularly happy about their financial arrangements with Amazon. Amazon gets to set the prices newspapers sell for, and it keeps 70 percent of the revenue.

I emailed B&N’s P.R. people to ask whether the revenue share might be any different for the Nook, and where pricing power would rest. I got what amounts to a “no comment.” (“Barnes & Noble has strong relationships with publishers including newspapers and magazines…we’re reaching out to all of our publishing partners to work together,” etc.)

I also asked what other newspapers were among the “more than 20″ that would be available for subscription on the Nook. (The announcement mentioned only the big four: The New York Times, The Washington Post, The Wall Street Journal, and The Los Angeles Times.) B&N declined to say.

Can anyone on the financial side of a soon-to-be-Nooked newspaper tell us about Barnes & Noble’s approach? Are they offering a revenue share better than Amazon’s?