Five of the ten publicly-owned U.S. newspaper companies have reported their fourth-quarter 2009 results; five more to go. (Those reporting so far are Gannett, New York Times Co., Media General, Lee Enterprises and McClatchy. We also have results from News Corp., but News publishes newspapers on four continents, and much of its revenue comes from films, television, cable, and book publishing. Its U.S. newspapers represent perhaps 10 percent of News Corp.’s total revenue and are not broken out for comparison.)

Based on these reports (representing about 42 percent of U.S. daily newspaper circulation), it’s clear that the industry in Q4 2009 saw its 14th consecutive advertising revenue decline; the last nine of those quarters were double-digit declines. And Q1 2010, the one we’re in, won’t be a winner: on the conference calls, nobody reported positive trends for January; a typical positive spin statement was that “we’re seeing a modest improvement in the declines” (Janet Robinson of the New York Times Co.)

Extrapolating from the reported numbers, I’m projecting that the NAA will report (sometime in March) a Q4 2009 ad revenue loss for the industry of about 16 percent (versus 28.3, 29.0 and 27.9 percent declines in the first three quarters), bringing total revenue for 2009 to about $28.4 billion, versus $49.4 billion in the boom year of 2005 — a cumulative decline of 43 percent.  The biggest impact continues to be in classified revenue, which will end 2008 at least 66 percent below its peak in 2000.

Based on the releases and statements on earnings calls with analysts, here are the details so far.

• Newspaper advertising revenue was still down across the board — 17.9 percent at Gannett’s publishing division, 20.5 percent at McClatchy, 16.4 percent at Lee, and 14.7 percent at New York Times Company. MediaGeneral doesn’t break out advertising revenue but reported publishing revenue as down 13.8 percent.  News Corporation reported 10.0 percent growth in newspaper revenue, including what it said was a 5 percent ad revenue gain at The Wall Street Journal’s print edition. (News said its Australian papers lost 5 percent in revenue.)
• Online revenue (usually reported as a component of publishing or advertising revenue), was a mixed bag: McClatchy, which has generally done well relative to the others in this area, reported 14.9 percent growth in online revenue. Lee’s online revenue dropped 8.4 percent; Media General’s rose 10.6 percent. Gannett doesn’t break out online revenue in its publishing division. News Corp mentioned 17 percent ad growth in its WSJ Digital Network. New York Times said its Internet revenues, including About.com and its newspaper sites, grew 10.3 percent and represented 15 percent of total revenue in Q4 2009, versus 12 percent in Q4 2008.
• Total revenue at all of the U.S. groups was still down double digits: Gannett 14.4 percent, McClatchy 16.5 percent, Lee 13.8 percent, Media General 14.1 percent, New York Times 11.5 percent. It will be interesting to see whether the forthcoming reports from other companies also fall into this cluster of losses in the low to mid teens. In any event, clearly the industry as a whole continues to decline precipitously even as GDP has grown for the second quarter in a row. Total revenue at News Corp., which encompasses films (Avatar among them), television, cable and book publishing, was up 10 percent.
• Quarterly profits were generally up, bolstered by the cumulative effect of multiple rounds of cost-cutting during 2009, as well as by low newsprint prices. Lee swung from a loss of $34.3 million in Q4 2008 to a gain of $67.7 million in Q4 2009; Media General improved from a loss of $85.5 million to a gain of $27.4 million; McClatchy sank slightly, from a profit of $27.0 million to $25.8 million; Gannett, which took a huge goodwill writeoff in 2008, zoomed from a loss of $5.2 billion to a gain of $259 million; at New York Times Co., profits rose from $27.6 million to $90.9 million. And News Corp., also weighed down by special charges in 2008, soared from a loss of $6.4 billion to a gain of $254 million.
• For their performance during 2009 as a whole, investors have rewarded the publishers with some bounce in their stock valuations, but that’s not saying much. While the stocks show impressive 52 week gains (McClatchy 689%, Lee 1,242%, Gannett 204%, Media General 315%, New York Times 151% as of Wednesday), all five are far down from where they were five years ago (McClatchy -92%, Lee -90%, Gannett -86%, Media General -81%, New York Times -73%).  Even News Corp., on a five-year basis, is down 16%, though it rose 111% in the last 52 weeks. And in most cases, these earnings announcement have been read as disappointments and greeted with selloffs by the market.

So much for across-the-board comparisons.  The earnings reports and calls provide further nuggets of intelligence about the companies individually:

McClatchy:

• CEO Gary Pruitt said in McClatchy’s earnings press release, “We’re seeing some evidence of a recovery in classified advertising.” But he added that in the first few weeks of January, “ad revenues are down in the low- to mid-teens percentage range and that is consistent with where we expect to see ad revenues in the first quarter of 2010.  In other words, McClatchy expects the Q4 decline of 20.5 percent to be followed in Q1 2010 by a decline of somewhat less than 15 percent, and considers that to be an “improving advertising trend.”
• Inevitably, the continuing revenue shortfall will lead to still more expense cuts. “With revenues down, expenses will also have to be down,” Pruitt said.
• Besides nearly $2 billion in long term debt, McClatchy also disclosed that at year-end, its pension plans were underfunded by $494 million in the “qualified” plan (their standard defined benefit plan, which is frozen), and another $100 million in the non-qualified supplemental executive-level plan. This accumulation of future obligations makes McClatchy one of the most-leveraged publishers out there. On Feb. 4, the company successfully brought to market $875 million in bonds designed to push the maturity date of a chunk of its debt out to 2017, but it will pay pay a hefty 11.5 percent interest on that debt.
• A bright spot at McClatchy is the growth of its online traffic (up 18.6 percent in 2009), and the fact that it leads the industry in the percentage of revenue derived from its web sites — online revenue is 16.2 percent of total newspaper advertising revenue. Asked about the possibility of charging for content, Pruitt said the company is “not ideological about this” and plans some experiments, but he added, “We tend to believe that the overwhelming majority model on the Internet will be a free, ad-supported model and in fact that has proven to be very profitable to us, so we feel that the model isn’t broken…We’ll learn from everyone; we wish them all luck.  If somebody cracks the code, we’ll copy them.”

Gannett:

• Gannett’s aggressive and almost continual cost-cutting during the year paid off with a leap in profitability, and perhaps most importantly, a major reduction in debt — $250 million in Q4, and $755 million for the year as a whole. Moreover, the rise in the stock market during 2009 means that Gannett won’t have to make any contributions in 2010 to its underfunded pension plans. As a result, Gannett’s balance sheet looks better, and its debt leverage ratio has dropped to 2.6 times, giving it some breathing room under its bond covenants of 3.5 times.
• Gannett cautioned, however, that not all of its cost reductions are permanent — some relate directly to the revenue declines and would come back if revenue trends turned upward; newsprint pricing remains low but is expected to rise midyear; and employee furloughs are not permanent.
• Some individual revenue categories remain seriously worse than the company’s overall 17.9 percent slippage in Q4, particularly classified.  In its U.S. papers including USA Today, classified as a whole was off 21.8 percent in Q4; within that category, employment was down 38.3 percent and real estate was down 28.4 percent.  The only classified category showing growth was legal advertising, up 14.5 percent — a result of foreclosure advertising, most likely.

Lee Enterprises:

• Lee was also in the “revenue is declining less rapidly” camp, reporting a drop of 13.8 percent for the quarter (it’s Q1 in Lee’s fiscal year), versus average drops of 20 percent in the prior three quarters.
• Lee continues to report positive results in its online enterprises, with unique visitor growth of 14.3 percent at its web sites.
• Lee’s classified ads also continue to be hammered, with employment revenue down 44.9 percent, automotive off 25.9 percent, and real estate off 21.6 percent. (“All other classified” was up 11.3 percent — there’s that foreclosure advertising benefit again.)

Media General:

• Media General touted a “sequential improvement” in the form of total revenue loss of 14 percent, compared with 18 percent in the previous quarter. In one of the brighter spots among the publishers, Media General said that “in the month of December, total revenues were essentially even with December 2008.” (We’ll take “essentially even” to mean that they were down in the low single digits; the slightest gain would have been headlined as such.)
• Media General’s newsprint consumption was down 57 percent for the quarter, but as with the other publishers, this is the kind of cost that will bounce right back up if business improves, creating a higher cost margin for regained revenue.

New York Times Co.:

• Times has been more careful about pruning expenses at the expense of strategic capabilities than most of the other companies; still, it was able to achieve cost reductions of 15.5 percent in Q4 2009 vs Q4 2008, and propel itself to a profit boost from $63 million to $136 million, quarter-over-quarter.
• Times also paid attention to its balance sheet, reducing debt from $1.1 billion at the end of 2008 to $769 million.
• But, Times execs were as cautious as their industry brethren about forecasting blue skies ahead. New York Times president and general manager Scott Heekin-Canedy said in the conference call (italics added) that “The general sense from our advertisers is certainly much more positive then a year ago this time. We have said in our statement that the visibility is still very limited, but we do know of advertiser intentions to improve their spending this year considerably, but they are very guarded in the way that they talk about it and trends that we saw last year of last minute commitments or last minute pullbacks still seem to be operative this year.”
• Asked variously about how things are going in the current quarter, the execs were circumspect, referring to “sequential improvements” in trends, and “stabilizing” revenue in some categories, rather than reporting any actual growth.
• As it is across the board in the industry, the classified picture at Times is dismal, with Q4 real estate revenue down 36.5 percent, employment down 35.3 percent, automotive down 21.1 percent, and “other” down 8.5 percent (no help from legal advertising here). For the year, the company’s total classified revenue was off 40.2 percent.

Photo by Amelia E used under a Creative Commons license.

Gawker Media is unveiling an innovative and unruly twist on traditional reader forums this morning. The new feature, part of an otherwise modest redesign across the company’s nine blogs, could transform tag pages, typically little more than archives of old posts, into commenter free-for-alls and transparent tip lines.

Readers are now greeted with a text box as large as the blog’s logo, inviting them to share news, videos, links, and trivialities. Tagging a message with #tips on Gawker, for instance, automatically sends it to the “tips” tag page, where anyone can follow the stream of submissions and Gawker writers will keep an eye out for news to promote on the front page. Same for #mac on Gizmodo, #snapjudgment on Jezebel, #DUAN on Deadspin, or any other tag. (If DUAN means nothing to you, then welcome to the impassioned world of loyal blog commenters. It’s short for Deadspin Up All Night.)

Gawker Open Forums is the name of this potentially wild mix of reader-controlled news and commentary. “I’m expecting chaos,” Nick Denton, the publisher of Gawker Media, told me on Gchat late yesterday. “But as the front pages of our sites become ever more professional, it’s even more important to allow anarchy to bubble up from below. The goal is to blur the line between our editors and commenter-contributors.”

Gawker’s tiered commenting system still applies, so only those readers bestowed with stars will have their content immediately visible on tag pages. Everyone else’s stuff will be a click away and subject to promotion by starred commenters, Denton explained: “We needed the class system in place before we opened the floodgates.”

In 2007, he was already musing aloud about wanting to “reintroduce an element of anarchy” to his sites in a system that sounds exactly like what he’s implementing today. Denton is obsessive about the comments across his blogging empire, which tend to be more active, informed, clubby, and acerbic than comments at sites with similar traffic. That’s both an asset — generating discussion, news tips, and even several current staff writers — and a liability, as evidenced by an exchange Denton favorited on Twitter this morning: “I am so intimidated by those commentors; so smart and snarky!” wrote Richard Oosse, adding that he “fled” Gawker as a result.

Though the hashtag formulation is borrowed from Twitter, integration with the microblogging platform won’t happen for another month. Then, tweets that include, say, @gawker and #stalker will make their way directly to the appropriate tag page. That has nice potential for real-time news submissions beyond just celebrity sightings and beyond Gawker Media.

Denton said his writers are “a bit nervous, to say the least, afraid that competitors will see all our tips.” This is how he addressed the issue in an email to staffers last night:

And yet we’ve always insisted that tips and letters to the editor are sent in by email and mediated by our editors; that discussions stay on topics that we determine; and that our writers are the only ones who can initiate stories on the site. No longer.

Tips, particularly sensitive ones, will still be accepted by email and phone. But Denton expects news to emanate from the tag pages, too. “News and discussion have been so segregated on the web. You think of the 1990s era discussion forum software. Really hasn’t changed. Maybe we should think of journalists as the instigators and moderators of discussion.” Later he added, “News follows from discussion as much as discussion follows from news. Successful sites — and useful publishing software platforms — will bring the two together so they can feed off each other.”

Still, the predominant use of Gawker Open Forums will undoubtedly be as, well, open forums. Denton said he hoped the new feature would provide an outlet for readers who want to talk about topics that aren’t being blogged about at the moment. “Readers love chatting — off-topic, especially,” he wrote. “That’s annoying when the discussion is triggered by a post, but now readers can just head off to a tag forum.” He suggested that one active forum might be #nickdentonsucks.

In our chat, I tried suggesting that one motivation behind the new system was web traffic. “Forget about the pageviews,” said the man who pays bonuses for them. No, he said, it’s this: “I enjoy the idea that this is something that newspapers absolutely can’t do online. They’re institutionally incapable of handing so much power to readers.”

As follows, Denton attempts to explain why the chaos that’s about to break out across the Gawker Media blogs is all Mark Zuckerberg’s fault:

Nick: btw, interesting factoid
  did you know Zuckerberg’s original idea for Facebook was rather different?
  Dark Facebook
  a page on which people could write about you
  rather than one on which you trumpet your own achievements, hot parties, and the like
  I guess F—— Company was that dark facebook for internet companies earlier in the decade
me: so is this dark gawker?
Nick: well, gawker is always a bit dark
  in that the truth is usually shaded, too
  nobody’s quite as smart and good-looking as they appear in their press releases — and their Facebook profile pages.
  Zuckerberg kind of gave me the idea
  couple of years ago we were both invited to the News Corp executive conference in Monterey
me: what’d he say?
Nick: he told me about the original plan for Facebook — the dark facebook on which you were defined not by yourself but by others
  Imagine what the gawker.com/tag/harveyweinstein page looks like once we open it up
me: like a facebook wall populated by your enemies instead of your friends
Nick: well, a facebook wall that your friends and your enemies fight over

I can’t vouch for that story, obviously, but if you take all of Denton’s musings together — and sorry for quoting so liberally, but he’s eminently quotable — you start to see something like a pure theory of news: unvarnished truth, uninhibited commentary, free flow of information, reader as writer, writer as reader. I’m not saying Gawker Media is really there yet, and I’m not calling Nick Denton the next Joseph Pulitzer or William Randolph Hearst, but if those guys pioneered yellow journalism, Denton may be creating something we’ll come to know as dark journalism.

Here’s the full memo that Denton sent to the lead editors of his blogs last night:

The commenters — since we opened up our properties four years ago — have influenced our sites more than is acknowledged and sometimes more than is comfortable.

Their vocally expressed disdain has drummed out writers; their wit has preserved editorial personality even as our front pages have become more professional; they’ve steered the discussions, often way off-topic; but just as often they’ve suggested better headlines and story angles; former commenters such as Ryan Tate and Richard Lawson have written themselves into paid writing jobs; and reader-tipsters have supplied many of our best stories.

And yet we’ve always insisted that tips and letters to the editor are sent in by email and mediated by our editors; that discussions stay on topics that we determine; and that our writers are the only ones who can initiate stories on the site. No longer.

With the launch of Gawker Open Forums, we’re allowing readers to post tips, sightings, game cheats, amateur pap shots and spy photos directly from a form on the front page. Readers can also initiate discussions on any topic they choose simply by including a Twitter-style hashtag in their post. And commenters can expand on a story, or rebut a post, just as now.

We have no idea what uses people will make of these forums. But we suspect that many of them will be mischievous. And that’s fine — because we like mischief too.

For all the criticism of Curley and the AP, he had a few really smart observations about the economics of news. Regarding the AP’s competition, which ranges from free news sites to CNN’s new wire service, he was realistic:

Our pricing has to be competitive. There are going to be more competitors. There are going to be fewer people who can afford us. This is a moment of tyranny in the marketplace. There are quality providers, and there are those who aren’t going to be able to sustain the revenues. We don’t expect to have the market share that we used to have.

Speaking broadly about the market for journalists and journalism, Curley was candid:

The truth is, again, the market for news is growing. But the reality is — and none of us can create some fantasy picture here — there is an oversupply, at least in the short term, of us. And so that is creating some differences in the market, and I see these being resolved by innovation and creativity over time.

Oh, there were silly remarks, too, like his misuse of the word “crowdsourcing” and his flat declaration that “we’re all done with random search.” (If that sounds like an ad for Bing, consider it another sign of a looming partnership between Microsoft and the AP.) Others will be interested in his explanation of how the AP will change the licenses for online distribution of its content.

Some comments that I reported on Friday aren’t contained in this recording, which covers Curley’s opening remarks and a question-and-answer session that followed. (Those additional comments are from a separate small-group chat with Curley after his speech, and my source has asked me not to post that audio.) You can download the audio, listen to it below, or read the transcript after the jump.

[See post to listen to audio]

Here’s the full transcript:

Thank you, Tom. I must say that I feel particularly emboldened to be introduced by someone from The Economist. I have been interviewed by The Economist twice this year, and nothing has made The Economist yet. So I’m feeling I can get away with whatever I want. Secondly, I understand that Gov. Palin has been in Hong Kong recently, and I further understand that she was paid something like $300,000 to appear in Hong Kong. Whatever happens today, you’re getting a bargain. [laughter]

You know, the attendance at journalism sessions and press club meetings these days is a record just about anywhere in the world, and that can be for only one reason. Well, maybe two. One, you’re coming to see how long you’re going to be employed. And, two, is there any hope? I can’t answer the first one, except for the people at the AP, and they’re fine. I can give you a little hope.

And I come with a message of optimism. I must say that for the first time in a decade, when the full sweep of the Internet impact became clear, I now see how we can get to other side, and I now see the leaders of the media organizations having resolved to get to other side. And so I’d like to talk to you in that regard today. No one is promising streets paved with gold or an easy on-ramp to the digital era. In fact, we have only just begun when it comes to figuring out what we have to do. But there is a sea change in attitude, and it starts with the realization that goes like this:

First of all, more people are seeking news more times a time in more places than ever before. And if you understand that, you understand that the market for content is growing. At the same time, the value of that content has been devalued. It’s now at the lowest level, I think, in history. And that’s what we’re about to change. And people have announced a number of different approaches, and many are beginning a number of experiments around what’s generically called pay models, some of which will work and some of which will go to the experimental dustbin.

But the reality is that all of us know that our content is valuable, and what we do, and the sacrifice that you make in asking the tough questions of people around the world, and the risks that people take, especially those front-line journalists, you’re now seeing a response. We deserve to be paid, and now it becomes a manner of trying to figure out how to do that. So the first change is an attitude change, and I can tell you that the CEOs of the media companies — in the United States, at least — have decided to stand up and say, this is the moment. We are not going to be taken to the cleaners. Our content is not going to be monetized by others, and it won’t be. We intend to participate in that stream, in that revenue stream.

The second is the new business models. People are willing to change, and now there is talk of several different business models, and I’ll be talking about some of those ways in a few minutes.

The third is that there is a willingness to do research and experiment, and there are serious budgets for research and experimentation, even during this dire economic setback and even given the fact that resources are strained. So they know that they have to change, and they intend to change right now.

It’s been said that the big mistake that we made, the orginal sin of the Internet, was to give our content away for free. That is not true. We have to engage. The public is consuming content on the web. We have to be a part of that or we will become irrelevant. That was not the mistake we made.

The mistake we made was not imagining more than one product. We took all the good stuff we created, whether for broadcast or for newspapers or even a couple of magazines that have the good sense never to quote me [laughter], and then took it all and put it on the web without much thought. Oh, the number of links, the lightness or heaviness of the page, how much multimedia. Oh, we went through handwringing sessions over that. We didn’t have enough multimedia. The links were too heavy. Or we had too many pictures, and it wasn’t loading fast enough. We spent endless amounts of time over those issues, and they were largely all irrelevant. What we should have been thinking about is a whole different stream of products. And so we are. And so that’s what you’re going to see evolve over the next few years.

You’re going to see what I consider to be a base. I know when it comes to AP, what we’re talking about is that there will be a base license. And you want our content, you display it, use it in your regular product, that’s fine. And display it on the web, that’s fine, that’s one price. If you want to take it and use it with syndication, if you want to use it with email services, if you want to use it and try to draw traffic through other aggregation plays that you’re involved with, there is an upside. And we expect to participate in that upside. So that would be one other way to go.

There are a number of premium products that can be imagined or content verticals, especially, seem to be robust areas of opportunity for growth. And, finally, price can be reserved, and there can be exclusives given, perhaps on a time-based measure, those who get access to that content and the rich multimedia or the metadata that comes with it, might get an exclusive for, oh, 20 or 30 minutes. And we think all those things have value. And those are the product streams that we’re imagining and beginning to create, some of which will be rolled out next year.

The key to that is what we call a news map or a guide to the authoritative source of news, which is to say, who breaks the news? You know, we’re all done with random search. Random search has worked well for the aggregators and the certain portals who have taken our good work and run off with it and given us pennies on the dollar and not paid us appropriately. We’re also done with the people who have taken our content and done crowdsourcing with it, put us in with others that have destroyed our brand reputations and have made these series of links that have been part of the self-referring loop and taken the audience away from the content sites that are broken.

AP members, more than 1,400 of them, have already agreed and are participating in a news registry that will work with editors as well as technology. It will still be curated by editors, and we will provide the links on a real-time basis to breaking news. If a story is broken by The Financial Times, we will take you to The Financial Times website, not The Times of India, even though the Times of India may optimize for search engines more so than The Financial Times of London.

And so that ability to create a news registry is one of the base steps, and we now have, as I said, more than 1,400 organizations participating in that news registry. We will launch and test the first product from this news map and the news registry in six weeks with ten organizations — nine newspapers and one sports statistics provider, a joint venture we have with News Corp., called STATS. And we are creating a news registry.

The key to what we have done is you have to begin by protecting your content. We, especially the United States, have been asleep. We could have done this in 1977, when a copyright law was passed, but we had natural protection by virtue of geography. And so we didn’t have to create copyright protection. The Digital Millennium Copyright Act of the late ’90s came and basically enabled Google and the Google wannabes to do what they are doing, and it’s time for us to take back the night. And it’s time for us to get control of our content, and so we shall do that.

We will put certain marks on all the content that’s working with us. They will include protocols: We will work with you, we won’t work with you. You’re licensed for this, you’re licensed for the full stream. And we will, again, make that available widely to all the participating news organizations. We just had a world summit of news agencies and agreed to extend it to them as well as all the content organizations.

We call this program at AP, 3P: protect, point, and pay. The protection part is to put in the rules that govern the content. These content markers can be stripped, but when the marker is stripped, it calls home, and it tells us, if somebody is stripping the marker on a regular basis, we can then act, either with protocols that restrict the content going there or legally, through legal means. And we intend to set up a service bureau that monitors the usage of content, when it’s downloaded, how it’s used and as well as whether the content is being used in a licensed or unlicensed fashion.

The next part is the point and to point to those who are breaking stories. So if you’re a part of an organization that is breaking stories, you are going to be rewarded. You are going to get the traffic that you deserve because your reporters have been aggressive enough to break the stories or to write in such a way or to produce multimedia in such a way that your content is attractive. It will come to you. It will not go to the free riders. It will not go to the others.

And finally, is the pay piece. And the pay piece is pretty exciting. So if you put the new products with new ideas in terms of how to go to market, you can begin to see that this market for content that is growing might be a market where we, the providers, the producers, start to get paid one way or another, through licensing, through behavioral contextual advertising, through just a fee for having access to that content. Or fee for services, for providing all these backend services that we’re providing, we expect to be able to get some fees for our services.

And also through our own self-referring network. If you go on to Google, normally the top 10, of the top 10 items appearing on Google, 9 of the top 10 will be part of a Google self-referring network. Everything in there is linked to some other part of Google. It’s really a brilliant business approach, and God bless them. And all that money has come to them, all 22 billion. Folks, they can share.

And now there’s something called competition. And I think we stand at an enviable moment where Microsoft and Google have decided to go to war, and we who produce content can start to figure out whether there’s an opportunity for us to help that sharing in a way that reverses the outflow of money from media and takes it back. And so that’s the efforts that we expect to see unfold over the next, especially, 3 to 15 months, and iI think you’ll see a lot more efforts and a lot more announcements that are a lot more bullish from media companies than you have in the last decade. And so that’s the reason for my optimism.

The other part is that we don’t expect to do any of this alone. We expect to do this with partners. And we expect to set up partnerships that we hope are enduring but at least will follow certain principles. We expect real-time metrics. We will no longer work with people who won’t work with us in real time.

Secondly, we are not talking about being luddites, throwing up the moat, and hoping to hold on by taxing negatively consumers who might try to access our content digitally. That is not what we’re doing. We fully understand we have to engage with the new audiences. We fully intend to engage. And we fully intend to use all the tools and ideas of the moment.

AP, in July, conducted an experiment during the Supreme Court nomination hearing for Justice Sotomayor. We began a blog. A blog is kind of an old idea, but we put a couple of twists on it. We worked with Twitter to help get the feedback. We took questions from consumers that they want answered of senators or of Justice Sotomayor. And when the question made sense, we tried to get it answered. We worked with Yahoo as a base, as a center of gravity. We don’t have our own commercial website, and we don’t see going there. But we do know we have to engage with consumers, and we do know we have to engage in a way that is up to what they want on a real-time basis. So we put those pieces in place.

We got a dozen newspapers to work with us, including The Los Angeles Times and The Washington Post, among them, and we ended up driving more than double the traffic that these news organizations have seen as a result of this experiment. Yahoo’s traffic was 27% greater than it normally is, and the traffic to the Sotomayor blog on AP was three times greater than the traffic to the regular Sotomayor story that AP did. So it is possible for us old organizations, 146 years old, in our case, to be reborn and to understand these techniques and to drive the audience.

What we need to do, then, is get paid. We estimate that if we were able to monetize, get the revenue we deserve from all that, then that would have exceeded $200,000 for one week’s extra effort. So that’s the type of thing we have to capture. and we expect to do that with partners, and we expect to do this on an ongoing basis.

Very soon AP will create a new desk called the nerve center. It will be a desk that engages with social media, and we expect to be changing our filing protocols. Filing protocols are a set of standards by which AP copy is filed around the world. We have 15 editing desks, and we expect everybody to get the news out under a certain set of protocols. Right now we have a protocol system. It’s AP, it’s got to be simple: one, two, three. One is to get a headline out. Two is the first paragraph of about 135 words, written in broadcast tense, not newspaper tense. And then three is whatever else you do with the story. We’re going go to zero to four. Zero will be borrowing from broadcast and have a promotional element to it, so that we will start promoting even before we move the story. Four will be a full multimedia effort. So these are the things that we see doing. We see them on an ongoing basis, and we see all our editing desks being empowered to work with these techniques and having that work through a new desk called the nerve center, so that we will engage with the social media networks.

Finally, while I’m here, I also want to say something that I think is really important when you come to the Foreign Correspondents Club of Hong Kong and for all of us when go out in our work. And that is, in this era, we really have to stand up and understand that we have to take up the cause even more vigorously for a free press everywhere we can. You know issues here far better than I, so I will not belabor them, but I do want to call attention to, one, a growing trend, especially among sports leagues, to try to take control of the venues in a way that takes the content creation away from us. We have really got to work together. The big guys in sports have all organized. They’ve gotten their lawyers. And we in the media have organized as well to fight these efforts, and we have to take whatever means necessary, including going to court. We have been to court a number of times, and we have been successful. But this is an area where we have to start guarding. So whether it’s government or sports leagues, at a moment where the digital world is opening up opportunities, it’s opening up, also, some possibilities for those who would take back transparency and put it back in the shadows. and so we need to campaign.

And the second, leads me to this. I urge all of you to come up with tactics that makes sense. What we have decided to do, as a coalition of news organizations in the United States, is to try to get one thing done a year. Pick one thing and get it done, get it fixed, put the spotlight on it. So it’s not a generic call for sunshine or a generic call for the free press. We’re all happy to do that, and we should. But let’s be effective, too. Let’s figure out what we have to do to get something done because at this moment, the stakes are high, and it’s too easy for the pretenders to walk away and say, oh, it’s OK. So all these things, we have to double-down. This is no time — now the economy is tough, there are a lot of excuses that we can have — but now more than ever, every journalist at every level has to double-down and figure out how to be effective and to get it done.

With that, I thank you and, again, I’m delighted to be a part of this. And that Sarah Palin check can come any time. AP’s running a little under budget this year. Thank you.

Question and Answers

[Question about news websites like the BBC that provide news for free.]

Well, here’s what’s going to be different. Anybody who wants our content is going to have to agree to our principles. So we will not grant a license unless the licensee agrees to participate under the terms and conditions that we want. So further re-syndication will be restricted, and we’ll be working with all the large organizations to do it in an intelligent way. And, again, this is not about throwing a moat up and trying to hope that the Internet world passes us by. I assure you we are not that stupid. We really want to figure out how you’re going to market. We want to help you go to market, and want to be a part of it. But if you want to take our content, put it in an email, re-syndicate it, frankly, we’re going to ask for additional fees, and we want an upside. So in the past, it’s been a capped or fixed license approach. So I expect over the next couple of years there will be some wonderful negotiating sessions, and I look at some of my sales people over there [laughter], knowing full well who will take the burden of these conversations, tell them how much I appreciate what they do.

But this is a moment, and it’s not just about AP. It’s about all of us. And what you hear when you talk to the media leaders now is that if we don’t do it now, we are toast. So we are going to stand up, and we are going to go for it. And will we have all the answers immediately? I assure you we won’t. Will we make mistakes? I will only speak for myself and say, yes. But we have to try, and try we shall.

[Question about what he says to young journalists regarding job security in the industry, referencing Global Post's model of journalists on retainer.]

A: Well, I’m much more optimistic than no job security and deep cynicism. The truth is, again, the market for news is growing. But the reality is — and none of us can create some fantasy picture here — there is an oversupply, at least in the short term, of us. And so that is creating some differences in the market, and I see these being resolved by innovation and creativity over time. Whether Global Post is one of them, that will be determined or not. But I can tell you that in the United States, in cities that have lost large amounts of coverage, that organizations are being formed. Some of them are being supported by philanthropic groups right now. Some of them are being supported by investors with a particular cause in a given area. And so you will see a lot of this experimentation. There won’t be gaps in the market for long. The gaps will be filled. And i would look at how those gaps are being filled.

The problem with the blogosphere right now is that there are only a few that can emerge at a level where it makes sense or they get paid. And I think that will be an area will there be a lot of growth, successful growth. I think the new methods of the Internet technology will do a sorting there, and there will be more people who will be able to make more of a living, before long, not overnight, through some of those efforts. So there will be a sorting out, and I would not advise somebody to just start blogging, no matter how good they are. Speaking again for myself, I benefited by having a couple of tough editors in my life who whipped me and whipped my writing and who guided me in the middle of the night to some better decision-making. And i worry right now that the pipeline for those journalists will be, right now is too small. And then all of sudden, once we start figuring out how to get paid better, there’s going to be more demand, and there will be a bit of a surprise on the upside, and we will be taking people who were not as trained as we would normally have.

So I think there will be some bumps along this road, but I’m pretty optimistic. Writing is a great skill. It helps you in any number of fields. And you really do have to know two things: It helps to be at least bilingual, and it certainly helps to do multimedia and be comfortable with the new cameras which are emerging and the production of multimedia content. So those are some pieces of advice i would give to young people.

[Question about why consumers would go to the AP's news portal if it "offers less content for more money than Google."]

Again, I may not be as stupid as I look. We are not creating a portal, we are not creating a site. We expect to be working with others who are investing billions in these efforts. But we expect to be working with people who will work with us, respect our principles. And we expect to be part of a very large ecosystem. The Sotomayor experiment, again, was indicative of the direction that we chose. We did not do it ourselves. We went out, we got a half dozen newspapers to experiment with, and then we had others [?].

She had an important ruling in a case: The New Haven Register joined the network, Miami Herald joined the network. There was interest in this. So what you’re seeing is an ability to put these networks together. We have, at AP, already networked. We have taken an old newspaper cooperative and used mobile as a way to create our first product of the digital cooperative. We have 1,400 newspapers that work with AP. You can customize, you can put in your local zip code, and you can get the local news for that zip code. So you have national, and you have local. These are the types of things we are doing, and we’re doing it with others. We have reached out to the magazine industry. We have reached out to the networks. We are just not looking at this as self-indulgence at all. This is very different. It’s about a network.

[Follow-up question about what he means by the "news registry."]

It is not a website. The news registry is a governance structure that has rights and protocols and lots of lawyers and technology people behind it. AP has spent a great deal of money creating and developing Internet technology going back to 2003. We used to be a satellite where we took everything and we broadcast that one product the same way to everybody. And we have become a multimedia, two-way database, and so we are able, we now allow editors and journalists to self-program how they get the AP content through the AP database. And we expect, now, with some associations with certain other portals and certain social network sites, to engage. But, again, we will do it with a set of protocols that we will put in place.

You opt in, and you tell us what your rules are. And you can work with AP doing it all under the terms and conditions you’ve set, or you can have the server at your building. Like, I can’t imagine, for instance, that some news organizations like Reuters would want us to have their Internet deal. So we would expect that if they work with us, the server would be at Reuters, etc. So you can customize it on your own or do it otherwise. We expect for those smaller or mid-sized organizations, that we will provide a service bureau, a dashboard of content, and usage metrics that they can use in building a case for their advertising. And we will have legal support for those who want to engage in activities against the free riders or the pirates.

[Question about the appeal of these initiatives to AP members from a member at a China-based news site.]

Well, great, OK, so I would say, here are four things. One, first of all, the quality of the content is everything, and the level of content and the responsiveness and the number of story breaks in terms of market share has grown, not decreased, over the last couple of years. Two, I do think you’ll see these protocols and these approaches being driven internationally, and if you’re breaking stories, you can be part of the index and the curated piece that would drive the self-referring network and traffic to you very directly. Three, I think that we will begin to see more customized products, and there’s no question that Asia, in general, and the larger China would be top of the list there. So it is our hope that our fledgling Chinese-language translation service moves out and that perhaps there are specialty products that can be created there. Finally, not exactly knowing where you’re going with your content, but I think the multimedia opportunities that we’re putting together and the partnerships that we see could benefit and drive additional revenues to you and hopefully to both of us. So I’d be glad to work specifically on those with you.

[Question about how the AP is responding to the "mini-rebellion" among members who are complaining about price while competitors like CNN emerge.]

Jim, we had more of a rebellion from metro editors last year. We have cut prices to broadcasters and U.S. newspapers $75 million. So that’s one response. The other response is that we see all these new business opportunities as something that they can use to drive revenues as well. So our outreach with the news guide, which would— We’re told that the number one thing that they want, that a news organization wants is credit for when it breaks a story. And this solves that problem. Right now, they don’t get credit, so that’s the number one problem that will get solved. The number two thing is they want traffic from the self-referring network. You heard what i said about the Google self-referring network. It works really well for Google. We’re talking about creating our own self-referring network, and we know that the traffic increase will exceed 20% as a base within that network once we put it together. So that’s another aspect for that.

Our pricing has to be competitive. There are going to be more competitors. There are going to be fewer people who can afford us. This is a moment of tyranny in the marketplace. There are quality providers, and there are those who aren’t going to be able to sustain the revenues. We don’t expect to have the market share that we used to have. We are hopeful that we will be able to sustain the relationships among the places that you have suggested by, number one, breaking more stories than anybody and also with a reputation for accuracy and, two, customizing products. We have one network that was raising some questions about our pricing, and we went back, and we looked: AP correspondents appeared on that network 144 times in the last 10 months, and that was a service that they got without being charged extra for. That helped changed that conversation. So, again, it’s going to be customizing for specific needs. That is the era that we live in. It is not one product fit all. It is that multi-tier product system. And I think all of us in media made a mistake a few years ago by not understanding that sooner, and that is what we have to change.

[Question about how the AP is different from Factiva.]

Did you say Factiva? First of all, we create real-time content. We have the journalists out there. That’s archives. So I think the archive providers are going to be challenged by the technology going forward. One of the partners that we’re in negotiations with is going to make a serious play for real-time archives, and one of the new products that we’re talking about is making our database and our historical database, including some video and film that we have going back to 1903, more easily available. I can tell you that one of our partners now has 50,000 dead-end— or 50 million dead-end searches a month, trying to get historical stories from us. That looks like a heck of a market if we opened that up and made it available. So that is one of the major new products that we see, and we think that’s a significant positive revenue stream going forward.

[Question about how consumers will benefit from the AP's plans.]

Well, this is the moment for the consumer. I think, first of all, John, keep reading. But for the last 10,000 years or so, it has been mass media one way or another, the other way. And certainly, going back to the [?] age and looking at the stories being told there, somebody put the paintings there and drawings for all of us to interpret. We’ve gotten a little bit more transparent since then, but now you’re talking about two-way and choice and being able to self-program and self-edit. Some people are excited by the Kindle. I find the iPod life-changing. And books available. I carry two iPods, and if one of them blows on a trip to China, I have an opportunity, I have insurance, I have a backup. So I really think this is the moment for the consumer.

The downside is, wow, you have to work at it right now. And I guess I would say my hope is there would be some editing functions and you will be able to get a richer source of information that you want customized for you for a bit of a price, maybe less than what you’re paying now, maybe a little bit more, depending. But you will be able to get the stuff that you want, that’s more driven to [?] and something that you create. And I think that’s the big payoff.

[Question about Curley attending a conference hosted by the Chinese government and the implication of that decision on the AP's support of a free press.]

So you can take the approach that we aren’t going to talk and we aren’t going to work. I don’t think that’s a very smart approach. I think people know who I am and what I stand for, and iI testified last week at a U.S. senate committee on openness and access to government, and my stands are known. I have given, I think, what was called a very strong freedom of the press speech in China in advance of the Olympics when it looked like they weren’t going to be as open as they were. And so this is part of the Olympic platform that they engage with the world, and this conference is part of that, to keep engaging. I think it’s in all our best interests to keep that conversation going and to stand up for the values that we believe in. You don’t have such freedom to get there, and I hope to have the opportunity to figure out how to say that so that you can travel more freely and that our people can travel more freely. Looking at what’s happened in China since 1972, when AP reopened its bureau, things are far better in 2009 than they were in 1972. I am pleased to salute China for its total progress, and if you look at what’s happened in the last 60 years, there are a lot more people in China living better, and they deserve a lot of credit for that.

And so I think that, I hope to be a good guest, but again, I will look for the one opportunity to say what has to be said. We’re not fully there. And I say that in the United States. It’s a good conversation to have. We have governments in the United States that would like to keep more things secret, a lot more things secret than they should. And so it’s a battle to be fought everywhere in the world by all of us.

For all the angst over online appropriation of newspapers’ work, information actually flows in all directions, right? Blog posts inspire newspaper articles, newspapers lift from other newspapers, and radio stations do the rip-and-read. So when a blogger uncovered a major zoning violation in her Brooklyn neighborhood last month, it was only natural that the New York Post would pick up the story. But credit the blogger? That would be a violation of policy.

The Post prohibits crediting blogs and other competitors for scoops, according to the reporter, Alex Ginsberg, who noted the zoning violation two weeks after it was reported by the blogger, who calls herself Miss Heather. “Post policy prevented me from crediting you in print,” Ginsberg wrote in a gracious comment on the blog. “Allow me to do so now. You did a fantastic reporting job. All I had to do was follow your steps (and make a few extra phone calls).”

The policy may have more to do with the Post’s rival, the Daily News, than with blogs, but it appears to apply across the board. In an email to Miss Heather, Ginsberg wrote, “The rule is this: if every detail, fact and quote can be independently verified, then we don’t have to credit anyone.” I put in a call yesterday afternoon to the Post’s PR firm, Rubenstein Associates, and this morning I emailed Ginsberg. I haven’t heard back from either.

[UPDATE, 1:28 p.m.: I just heard from Suzi Halpin, a spokeswoman for the Post, who told me, "The New York Post credits blogs, bloggers, and other media all the time, as our readers know." I'm a fairly regular reader, but I'll have to dive into their archives to recall how generous they are with hat-tips. It's possible Ginsberg is completely wrong about the policy or that it's more of an informal rule. Halpin wouldn't answer my follow-up questions or put me in touch with anyone at the Post.]

It’s hard, of course, to defend this rule on journalistic grounds, but it also seems like a marketing goof at a time when newspaper companies are seeking to “restore some balance to the industry’s crippled supply and demand equation,” as Paul Farhi recently put it. News Corp., which publishes the Post, has described the way Google handles its content as parasitic. How would the company describe relying on someone else’s work without credit?

1. Newspaper companies that attempt a pay wall imperil their value. Sorry to put on my French cuffs here, but this is an important point: With so many local newspapers on the brink, it’s fair to assume they have only one more chance to find a revenue stream in online subscriptions. And until they make that last attempt, investors can all be hopeful about the prospects of charging for news online.

That hope is currently priced into the stock of Gannett Co., The New York Times Co., News Corp., McClatchy, and every other publicly traded company with hobbled newspapers on their hands. If they try and fail to erect a pay wall, their already-flimsy valuations could evaporate as investors decide there’s no hope for newspapers to find a new business model.

And keep in mind that many of these companies would still like to unload some properties on private investors who are more bullish about the newspaper business (the Sam Zells of 2009). That’s a lot harder to pull off if it’s plainly evident the papers won’t be able to wring any subscription revenue from their onine readers.

2. Pay walls aren’t necessarily intended to generate revenue. It’s counterintuitive, but charging for the website may be an effective way to protect the print edition, which still provides 80-90 percent of income at most newspaper companies. In fact, MediaNews Group’s president, Jody Lodovic, recently told Editor & Publisher that while the company plans to erect pay walls, it doesn’t expect a windfall from them. “The whole idea is to stop the erosion from print to online and encourage people to become print subscribers,” she said.

It’s obviously not a great longterm strategy. But when we consider whether pay walls will work, it’s important to realize that newspaper executives may have a different definition of success here.

3. “It’s not pay wall/no pay wall.” That’s a quote from Alan Murray, executive editor of The Wall Street Journal Online, whom I interviewed last month on this topic. Murray’s point is that an effective model — or, at least, the Journal’s model — for charging online pinpoints exactly what content readers are willing to pay for and leaves the rest free. And in that sense, “pay wall” is a total misnomer. Not a serious suggestion, but maybe we should call it a pay window?

Last month, Times Co. CEO Janet Robinson said this about pay walls: “Our goal is to add substantial new revenue from our users, without materially affecting our leading display advertising business.” To me, that means the Times is not planning to charge for much or any of the content it currently produces but will ask select readers to pay for extra services that don’t yet exist. That’s like pay molding.

4. Even if pay walls are the future of newspapers, they aren’t the future of news. Newspapers face a very specific financial situation that’s driving their choice to charge for content or not. These companies are giant ships with dim prospects for quickly turning around in this economic tempest, so naturally they will turn to stopgap measures. It would be a mistake to read much more into it than that.