Facebook and Google have taken over not only an increasing share of the attention, but also much of the ad market. This has taken away another large chunk of the revenue that supports journalism, following classified ads in the unbundling of the business model that once made newspapers a thriving business.

The rise of subscription models and paywalls has begun to inject fresh money in some media houses, but those who aren’t subscribing to journalistic media could be left worse off. It’s no longer a matter of picking up a single newspaper copy at a newsstand; a paywalled news industry limits information to those able to make a long-term financial commitment, one that usually involves disclosing your personal data. And that personal data has become a commodity, being used to target everything from advertising to political manipulation.

At this year’s SXSW conference, I met Bell, who before founding the Tow Center, worked for many years as an award-winning journalist, digital pioneer, and later digital editor of The Guardian. She worries that we’re entering a period where the messages we receive are individually adapted, and we no longer have access to the same information.

“In a way, that’s what we think we’ve seen in the 2016 election cycle: Certain people getting certain messages, others getting different ones, and not really knowing where it’s coming from, who’s deploying it, and with no kind of transparency,” she said. “We are being made to feel a particular way by the media we’re consuming, and it is not an organic, cultural phenomenon, but a highly manipulated political phenomenon. Unless you can have free high-quality news, you don’t have an antidote; you really don’t have an antidote.”

More of our conversation, edited slightly for length and clarity, is below.

These pubs…bring people’s bare digital necks bared to vampires ravenous for the blood of personal data, all for the purpose of “interest-based” advertising.

With no control by readers (beyond tracking protection which relatively few know how to use, and for which there is no one approach or experience), and damn little care or control by the publishers who bare those readers’ necks, who knows what the hell actually happens to the data? No one entity, that’s for sure.

For one among many views of what’s going on, here’s a compressed screenshot of what Privacy Badger showed going on in my browser behind Zeynep’s op-ed in the Times:

What will happen when the Times, the New Yorker and other pubs own up to the simple fact that they are just as guilty as Facebook of leaking its readers’ data to other parties, for — in many if not most cases — God knows what purposes besides “interest-based” advertising? And what happens when the EU comes down on them too? It’s game-on after 25 May, when the EU can start fining violators of the General Data Protection Regulation (GDPR). Key fact: the GDPR protects the data blood of EU citizens wherever they risk having it sucked in the digital world.

The EU’s GDPR regulation stands to be one of the most potent regulations for user privacy, with impacts worldwide. (Wired’s Nitasha Tiku has a thorough writeup of its implications and potential.) Searls acknowledges that the Times and Facebook are putting user data to different uses. But he presses:

The sins are different; but they are still sins, just as apples and oranges are still both fruit. Exposing readers to data vampires is simply wrong on its face, and we need to fix it. That it’s normative in the extreme is no excuse. Nor is the fact that it makes money. There are morally uncompromised ways to make money with advertising, and those are still available.

But just as Facebook was warned about the potential for actors like Cambridge Analytica for years, third-party tracking on news organizations’ sites has been discussed before too. As publishers try to strengthen trust with the public, will it stick this time?

Melody Kramer did a Q&A with the Electronic Frontier Foundation’s Jacob Hoffman-Andrews about this topic last year for Poynter. She pointed to a few studies that had already evaluated third-party tracking on news sites, concluding that those external parties could continue to build detailed profiles on site visitors.

So where do news organizations go from here? Do we dare acknowledge it to users amid the Facebook fallout? The discussion continued on Hacker News and Twitter:

“The [web]sites of the world can agree to our terms, rather than the other way around.” https://t.co/IPT7YTmuKi Wouldn’t that be amazing?

— Jay Rosen (@jayrosen_nyu) March 24, 2018

Ok, so can we dig a bit deeper than this outburst of public outrage on the #CambridgeAnalytica thing maybe?https://t.co/q6HsNy2ii2 pic.twitter.com/GrY9IwqcN1

— Gabriela Jacomella (@gab_jacomella) March 26, 2018

Here’s the new principle for marketing on the internet.

1. Instead of guessing, let me tell you what I want.

2. In return you don’t spy on me.

Zillow works this way. So could everything. The net result would be more dollars spent. I’m absolutely sure of it.

cc @dsearls

— scripting.com (@davewiner) March 24, 2018

Thanks! For those who want to help make it happen, here’s the wiki https://t.co/loSqKbDkf2, the blog https://t.co/ztKgtSuaDJ, the tweets @VRM and our gatherings in the 1st week of April: https://t.co/nkUFOje4jW (free) https://t.co/GRxZL2rssk (cheap). Let’s do it! https://t.co/D0BL5mDkMD

— Doc Searls (@dsearls) March 25, 2018

It was five years ago this week that Mark Thompson took on the top job at The New York Times Company. It was an enterprise still wobbling from the effects of the Great Recession, its new paywall only a year old. The Huffington Post was trumpeting that it had surpassed the Times in digital traffic — a recognition of Google’s market power and of Facebook’s emergence.

The Times was a shrinking enterprise. It had shed revenues, profits, staff, and share price. It had also shed its previous CEO, Janet Robinson. Publisher Arthur Sulzberger’s pick of Thompson to replace her surprised many; despite having led the BBC’s ongoing transition to the increasingly digital world, Thompson had no publishing management experience. And he was a Brit, plucked out of London to head America’s flagship newspaper company.

Half a decade later, the Times is on surer footing, thanks in large part to its execution of Thompson’s mantra: subscriber-first. Most newspaper companies have now embraced revenue from readers (rather than advertisers) as a priority, but the Times is the global leader in that quest, with more than 2 million digital news subscribers. Still, the finish line for that transition is still some distance away.

Heading into 2018, Thompson can at least take a deep breath or two. After years of turning the Times’ business on its advertising/circulation head, he can now point to two words that have eluded its industry for a decade: revenue growth.

Year-to-date through September, the Times has managed to grow revenues 6.8 percent. Each of its three quarters has seen growth, at 5.1 percent, 9.2 percent and 6.1 percent. Repeating that feat in the fourth quarter may be more problematic, the company says, but even so, the Times will look back on 2017 as a turning point. It may not have built out a new business model for the 21st-century press, but it, along with the Financial Times, has served as the leading engineers. Consider these data points:

• Print advertising — which used to make up 75 to 80 percent of all Times revenue — now accounts for only 17 percent of its total. Within the next year or two, he told me, it will likely be the Times’ fourth-largest revenue contributor, behind print subscription, digital subscription, and digital advertising.
• The Times counts 2.1 million digital-only news subscribers, still growing post-Trump-bump at about 100,000 a quarter. Compare that to the Times’ still-strong (though declining at about 3 percent a year) Sunday print sales of 1.1 million, and we see a curious ratio. Digital payers now outnumber print payers about 2 to 1.
• Reader revenue — both print and digital — now makes up 62 percent of all Times revenue, as compared to about 44 percent when Thompson took the job in 2012. That crossover number serves as its most important one. As print advertising continues its epochal decline — even the Times was down 20 percent in print ad revenue in the third quarter, in the general neighborhood of many other newspaper chains — nearly everyone in the news publishing business is turning back to readers as their likeliest source of future funding. But the Times (along with other advanced nationals like the FT, The Wall Street Journal, and probably the privately held Washington Post) is among the few publishers who now see more revenue from readers than advertisers. Meanwhile, much of the daily press can’t imagine achieving overall revenue growth, because its reliance on print advertising counterbalances whatever success it may have in the digital transition.

Thompson and other Times executives don’t want to disclose much about their own future modeling. But one thing we know: The company can envision a future without print.

As Thompson told me last week, the Times “may well be facing a future where you should set printed revenue at zero, because it will not be a profitable exercise to make it.”

In five years, Thompson has reshaped the Times’ executive leadership. In early 2017, he elevated Meredith Levien to COO, with both revenue and product responsibilities now centralized. Early next year, Thompson will replace the Times’ retiring longtime CFO, Jim Follo. That will offer Thompson another opportunity to reshape a top job, perhaps looking for both dealmaking and digital business skills.

Of course, all that the Times has accomplished financially owes enormously to its newsroom. That journalistic bedrock — its value unexpectedly enhanced in this weirdest of modern American times — has served as the foundation for all the digital smarts of marketing, messaging, presentation, and distribution that now build upon it.

As Thompson told me last week in an interview in his Times office, he believes that overall press economics may soon grow even more unkind. “I think over the next five years it’s possible the competitive landscape will actually get in some ways more attractive for The New York Times, because I’m afraid I see a lot of casualties over the next few years because of the economics of the industry,” he says. “And, actually, I think for a period we could enjoy — well, we won’t be alone in this — but the survivors could enjoy a kind of last-men-and-women-standing sort of benefit for a bit.”

Thompson and I covered a wide range of topics in our conversation. Is 10 million subscribers a real goal? What about the Times’ global expansion? In a time of legacy bundles, skinny bundles, and no bundles at all, what’s he thinking about how the Times might rebundle itself for fun and profit?

Our conversation is condensed and lightly edited for clarity.

But the idea that you need a new generation of media for younger generations of consumers, I’m not even sure that’s true. And what’s intriguing is we literally — I’m pointing at a place that’s literally about 50 feet away, The Daily [the podcast which draws a strong audience of millennials] is a room two doors down. It’s kind of a dungeon.

That was the room for a period where the Snowden laptop was. That’s sacred ground.

The Sunday paper and the future of print

Creating new bundles of joy

The promise of Wirecutter

Thompson vs. Thomson

The marketplace is called TrustX, and DCN is launching it as a nonprofit public benefit corporation with the goal of providing more transparency in digital advertising. “It was clear that to move the needle on trust in the market, we needed to get in the game in a more direct way,” DCN CEO Jason Kint said in a statement.

In that release, DCN outlined the principles behind the marketplace:

• A guarantee to deliver only human and viewable advertising transactions;

• Total transparency about the cost of campaign delivery, thus dramatically reducing the mystery of lost media value so common in the complex digital supply chain;

• Cooperative development, testing and measurement of innovative ad monetization models and desktop and mobile ad units; and

• Advertising that improves the consumer experience and reduces the motivation to block ads.

In short, the advertising traded through the TrustX marketplace will be certified to meet the highest standards for performance, quality, security and privacy.

DCN said the marketplace is slated to launch in early 2017.

Even though all these outlets will be participating in TrustX, it remains to be seen how much ad inventory will actually pass through the marketplace. It’s also unclear how much of an impact the marketplace will have when most online ad dollars are spent on platforms like Facebook and Google and adblockers are becoming more commonplace.

Still, publishers and individuals who follow the ongoing issues surrounding online advertising expressed optimism about the system’s potential.

Trustx is a clear-sighted way for publishers to start dealing with the very real problems in the industry. Well done @jason_kint & @DCNorg https://t.co/uVJlypiO4R

— Tony Haile (@arctictony) September 26, 2016

Amazing, important step forward for digital advertising –TrustX from @DCNorg. Fully transparent, viewable, human, premium exchange. Bravo! https://t.co/YQ3IFpOoCq

— Michael Zimbalist (@zimbalist) September 26, 2016

“A smart exchange can lead to better performance, especially when combined with engagement and quality environment,” ESPN executive vice president of global multimedia sales Eric Johnson said in a statement. “But trust and transparency issues, as well as viewability and invalid traffic, have hampered our enthusiasm to activate a fully transactional marketplace for display. We want to change the conversation and feel that this DCN-led, solutions-based effort will align premium publishers and allow us to confidently participate in a better automated marketplace moving forward.”

— Give users control: Video skip button, thumbs up/down ratings
— Assure users of site safety: Provide guarantees that site and ads are secure, malware and virus-free, and won’t slow down browsing
— Don’t disrupt their flow with: Ads that block content, long video ads before short video content, ads that follow down the page, autoplay, slow loading (especially on mobile), pop-ups, or full page ads
— In short, implement LEAN principles (Light, Encrypted, AdChoice supported, Noninvasive ads), which address the a number of these key issues

Surprise, surprise: The types of ads readers dislike most are the ones that block or delay access to actual website content, overly long video ads before short videos, and ads that followed readers around on the site and they read.

For the other, more resistant third of users, the report makes the following recommendations:

— Polite messaging to turn off their ad blocker in exchange for viewing content
— Block content from users of ad blockers who do not turn off their blockers
— In short, implement DEAL (Detect, Explain, Ask, and Lift or Limit)

(DEAL is the primer the IAB Tech Lab released earlier this year for actions publishers can take to mitigate adblock use among readers.) It’s worth noting that a recent study by adblocking company Adblock Plus and marketing company Hubspot found that 32 percent of people surveyed said they wouldn’t turn off their adblockers, and 28 percent said, if blocked from reading the site’s content unless they turned off adblockers, they were more likely to stop visiting that site entirely.

Other tidbits from the IAB-commissioned study:

— Some people in the study were totally confused about what adblockers actually are: 40 percent thought they were using an adblocker, but when asked to clarify and confirm the name of the adblocker they were using, turns out 26 percent were really using adblockers.

— 15 percent used adblockers on their phones (these users were not confused — they were asked to confirm the name of the blocker they were using).

— Adblock users were more likely to be men, between 18 and 34.

The full report is available here.

This is according to a new survey from AdBlock Plus and marketing company HubSpot, which quizzed both users and non-users of adblocking plugins on why they use (or don’t use) the tech. While the likes of PageFair regularly release macro data on adblocking trends, there has been less data about the motivations of users themselves. HubSpot surveyed 1,055 people in the U.S., U.K., Germany, and France, 70 percent of whom were adblocker users.

Here are a few highlights from the survey:

— Users’ main justifications for adblocking? A tie: People say they want to be in control over their browsing experience, and they like the convenience. It seems that for most people installing an adblocker in their web browser is no different from installing a password manager or a Chrome extension that blocks all mentions of Pokémon Go: It’s a way to optimize and be in command over the experience.

— Users don’t hate all ads. They just hate the annoying ones: Adblocking has been called “the biggest boycott in human history,” but it’s also a boycott against autoplay videos, fullscreen mobile ads, and creepy banners that follow you around the web (which, it’s worth noting, tend to be the ads that make publishers the most money). 64 percent of users say they block ads to strip their browsing experience of disruptive ads. The most annoying of these, according to people surveyed, are ads that take over their screens (73 percent), ads that follow users from their desktop computers to their phones (65 percent) and ads in video games (49 percent). Over 80 percent of people said they would like the ability to block all types of ads on their phones. The silver lining: 68 percent of people said that they’re fine with ads, “but only if they are not annoying.”

— The younger you are, the more likely it is that you actively whitelist certain sites. Young people are most likely to install adblockers. But according to the the survey, 65 percent of young people stay they will whitelist sites at least some sites. Just 51 percent of people 45-54 and 43 percent of people over 55 said the same.

— No, they won’t turn off their adblockers: For many people, the desire for control over their browsing experience trumps publishers’ need to make money: 32 percent of people said they wouldn’t turn off their adblockers under any circumstances, while 30 percent would do so only if they couldn’t access certain websites otherwise. Still, people said that if a site forced them to turn off an adblocker before they could read it, 28 percent of people said they were more likely to stop visiting that site entirely. Sorry, Forbes.

For those who don’t know it, Meeker — formerly of Morgan Stanley, at VC firm Kleiner Perkins since late 2010 — each year produces a curated set of data reflecting what she sees as the major trends in Internet usage and growth. It may be the only slide deck that qualifies as an event unto itself.

And a chunk from the 2014 version:

What’s useful about Meeker’s deck is that its core data serves as a punctuation mark on some big, ongoing trends. The kind of trends we all know are happening, but whose annual rate of progress can be hard to judge. Like, say, the continued demise of print.

The Meeker slide that always interests me most is the one where she shows how American attention is divided among various forms of media — and how that division lines up with where advertising dollars go. How much of our attention goes to television, say, versus how much of our advertising goes there?

It’s not absolute dogma that the two — audience attention and advertising dollars — will always be equal. But it makes sense that they would tend toward parity. More people listening to the radio should lead to more companies advertising on the radio, or vice versa.

So let’s travel back in time. Here’s Meeker’s chart for 2011:

The two things that jump out at me: Print gets a lot more advertising than it gets attention. And mobile is the opposite. You’d think that would equalize with time.

Here’s 2012:

Equalization! Or at least the path to equalization, proportionately. Print loses attention, but loses ad dollars a bit more quickly; mobile gains attention, but gains ad dollars a bit more quickly. (Sizable margin of error here, it’s worth saying.)

Here’s 2013:

The print story remains the same: down in attention and in ad dollars. But note there is still a wide gap between the two — print still gets far more ad dollars than its hold on the American attention would seem to “deserve.”

Here’s 2014:

The mobile growth everyone anticipated is happening — moving from 4 percent to 8 percent in 12 months’ time. And print continues to lose both time spent and revenue.

And here’s the new 2015 chart (it’s slide 45):

First: Nice new aquamarine! Maybe Meeker became a Dolphins fan last fall?

On the positive side, print’s share of attention remained steady at 4 percent. You’ll note, though, that when the numbers get that small, you’d need roughly a 25 percent decline in attention share to drop from 4 percent to 3 percent. So steady doesn’t necessarily mean steady — it just means a pace of decline less than that. (And of course we don’t know if that 4 percent is really 3.51 percent of 4.49 percent either.)

The ad-side trend, though, is unchanged — down another two points from 18 percent to 16 percent. And, of course, there’s still a long way to fall from there.

Note, too, that mobile advertising had another huge jump, from 8 percent to 12 percent. But given that 85 percent of all new digital ad revenue goes to Google or Facebook, that money isn’t exactly a boon to publishers.

Let me wrap up by copying what I wrote two years ago, since the overarching trends haven’t really changed since then:

Print advertising is not coming back. It will fall further. Substantially further. All newspaper planning for the coming few years needs to reckon with that basic fact.

Mobile continues its rocket rise, and there’s still lots of room for ad revenue growth. And now it’s even eating away at the Great American Time Suck, television. Mobile is eating the world, and most news organizations make only a pittance off it.

Lots more interesting stuff in Meeker’s complete deck.

At Mashable, a massive layoff after the company failed to sell itself.

At Yahoo, an upcoming sale of its news-producing assets, portending great uncertainty for journalists employed there.

At Medium, a new way forward focused more on curation and licensing its platform for publishers and less on original content creation.

The list of cutbacks — at The Huffington Post, at Gawker, at Al Jazeera, at International Business Times, and at Salon among others — keeps growing. And each round poses new questions for a news business struggling to find a way forward in this millennium. After all, even if the old world of news faded (like its readers) into older age, at least we could point to the cohort of digital-native outlets with a bit of optimism.

I feared this day would come — the new digital news companies bumping into a wall. Remember the Pew study that found that more than 5,000 new, fairly decently paying journalism jobs had been created by digital news startups?

I often contrasted that increase with the great losses suffered by the local and regional newspaper industry. Those losses now stand at more than 25,000 across the country, with more jobs lost (though unreported by parent companies due to publisher edict and editorial fear) every week.

Now, if the new news companies join their legacy peers in searching for sustainable business models — just as would-be Yahoo suitors talk about the company as “legacy digital media turnaround” — we’re entering new territory.

Is this the apex of the new news? It may be — at least for a while.

Is what we’re seeing a real cratering? No. BuzzFeed investor Ken Lerer is correct on this; all the whispered schadenfreude reflects BuzzFeed envy as much as anything. (BuzzFeed has disputed the FT’s 2016 reporting, while its 2015 miss has been confirmed by Recode’s Peter Kafka.)

It is, though, a significant recalibration. If people expect these companies to have figured out how to replace the legacy news companies and navigate this new world, they’ve got to think again. There is no secret sauce in news publishing.

What we have gained: a wealth of new national news and analysis, often spirited, occasionally groundbreaking, and instructive to a news craft that needs shaking up. Most of that remains in place, and we can hope it will continue to do so.

But overall, we’re seeing the economics of text-based (not print, but text) content turning more generally dismal. Well-funded startups like Vox Media and Mic have all been talking up video, or even TV itself.

Vox has said it wants its eight brands to be thought of as eight networks, in part spurred by Facebook’s big video distribution push. The big prize here, described today by Lindsay Nelson, Vox Media’s global head of brand strategy, at London’s FT Digital Media 2016 conference is mobile video. She made a major point: The ad rates for mobile video are now matching those for desktop video.

Mic CEO Chris Altchek told me that he believes more than half of its content would be in video form by mid-2016. The newly reconfigured, slimmed-down Mashable will focus on — guess what — video. In its case, CEO Pete Cashmore’s “pivot” is to commercial video more than editorial video, but it’s still the pictures business that seems the new shiny object.

Why? It’s not primarily that customers are demanding more video. It’s that video ad rates continue to hold up far better than for ads placed alongside all those tiresome words. If the advertisers demand more video inventory, then the content side must produce more video.

Certainly, this age of almost-convergence is a wonderful one for consumers. We get to have our useful video packaged with our useful stories, and toggle back and forth. But in the world being born, video content trumps text, and more mere scribes, of all ages and of all digital skill levels, are finding themselves unwanted. The ad tail is wagging the new digital news dog, at a quickening pace.

Take the trend to a logical progression. If VR moves into the mainstream of news delivery, how many digital news companies will dial down the text and the video and make VR a format of choice for delivering the news?

The big point: While convergence should allow journalists the luxury of using the best tool — words, video, audio, interactives — for the right storytelling job, it’s video driving the business and the jobs, more and more.

Now, let’s put this turndown in digital news startups in perspective. The new U.S. digital news economy, looked at with some envy by Europeans who care about the news business, is now mature. It happened quickly; less than two handfuls of companies have followed the digital dictum of “Get Big Fast,” fueled by enthusiastic venture funding. Now those funders are newly cautious.

“It’s definitely a trend, claims taken” one major new media investor told me this week. “Next phase: consolidation.”

Axel Springer has been a big player globally, and especially in the U.S., where it can count investments in 15 digital media companies (including Mic and Ozy) in addition to its $400 million buy of Business Insider last year. That consolidation is taking many forms. I noted it last summer when Vox Media added Recode to its stable. Further, NBC Universal’s investment of $200 million each in BuzzFeed and Vox signaled maturity. The old guys hedged, buying into the new guys.

Now, all that audience growth must turn into money, into some kind of sustainable profit over time. Almost universally, those running these newer companies say, when asked about their profitability: “We could be profitable if we wanted to be.” That sounds silly, but it offers the ring of truth. Translation: If we stopped plowing all this money into international expansion or video build-out, we could turn nicely into the black.

But there are now other factors at work.

Big is relative. Yes, the digital startups have gotten big by publisher standards — but they’re small compared to Google and Facebook. Those companies have formed an effective duopoly, taking in more than 40 percent of the still-fast-growing digital ad business in the U.S. (and probably more in Europe). The two companies are built for mass, and their size means that even ad rates driven down by programmatic buying can be made up by sheer scale.

Against that scale (and against their targeting technology that moves farther ahead of the competition day by day), all original content publishers — legacy and newer — suffer. That’s part of what we’re seeing in the BuzzFeed slowing and general worries about how much ad monetization can be wrung out of the big newer media audiences.

Let’s note two other factors. First, this slowdown in new digital news media comes amid the best American economy in a long time. These companies have been built for growth in good times; what further happens when the next recession inevitably comes?

Secondly, this year’s three-ring American political circus has greatly benefited all these sites that have paid hyper-attention to all things Trump. As Politico’s Joe Pompeo laid out in February, the new media players have made the most of their opportunity.

Reader data supports that 2016 boom. While the size of the U.S. digital audience is essentially static (up two points year over year) the amount of time spent on political news has ballooned.

Three years ago, political news accounted for 816 million monthly minutes of usage, according to Comscore. In February, it accounted for 2.36 billion minutes — almost a tripling. February was a high-water mark, but political news hit one billion minutes in June 2015 and has grown steadily since.

Over that time period, total minutes spent on digital — thanks to smartphones — increased markedly, but political news minutes greatly exceeded even that growth.

Let’s face it. This extraordinary political news year won’t last, likely replaced by a relatively boring second Clinton administration. News fatigue, anyone? As that political time spent shrinks, who and what will replace it?

Which brings us back to legacy media. Watching the new guys’ growth had left me wondering how they would fare when the world got tougher. We’re now seeing that play out in real time.

I have hoped that legacy news media DNA — newspaper companies understanding their long-term role in supplying the democracy’s news, even in hard times — would act as a counterweight to the whims of venture-backed news companies.

On a national/global level, if not a regional one, that seems to be the case. The Digital Dozen — those national/global companies I’ve identified, like The New York Times, The Wall Street Journal, The Washington Post, Bloomberg, AP, Reuters, The Guardian, Axel Springer, the BBC, and more — are most mindful and respecting of that heritage and mission, even as they struggle mightily. They, too, are testing more video, but they try not to let the new overwhelm their essential reasons for being. It’s a slog — a tough one to work through and a tough one to report on. The news mission touchstone looms larger in importance, as we see digital news companies retrench.

In part, we’ll see what kind of next mating of old and new media now moves forward. Is Business Insider now better positioned as a part of deep-pocketed, longterm-looking Axel Springer, than it would have been as independent? Will BuzzFeed and Vox Media (which recently merged some ad sales with investor NBCU under the rubric of Concert) be buffered by their old media partners?

It’s impossible to say exactly what’s next in news. These big “startups” have lots of life in them, and we’ll see how they reckon with difficulty. In the meantime, what’s new is old, in part, and that’s a fresh revelation in these digital times.

The Times reported on the event, of course: “The electronic newspaper (address: http:/www.nytimes.com) is part of a strategy to extend the readership of The Times and to create opportunities for the company in the electronic media industry.” The story ran on Page D7.

Happy 20th birthday to https://t.co/sYpRHsjbKc which went live on this day in 1996. https://t.co/yU78iM8u6r pic.twitter.com/GFGFGbUdsI

— NYT Archives (@NYTArchives) January 22, 2016

(The eagle-eyed will notice that the online version of the story gets the address slightly wrong, with only one slash after the “http:” rather than two. Today’s web browsers can deal with the omission; those of 1996 couldn’t. The print version — which is where people would have been reading it, naturally — got it right.)

The Times’ had begun publishing on AOL in 1994. In 1995, the Times created The New York Times Electronic Media Company to develop the paper’s digital presence, and that fall it launched the first beta of the Times’ website.

Martin Nisenholtz was president of the Times Electronic Media Company and joined the company in 1995 to launch the website. In a 2013 interview for the Riptide project, Nisenholtz — who came to the Times from an advertising and interactive media background — explained how the paper approached the new website (see this video starting around 9:30 in):

My thinking was, The New York Times should maybe approach the web, in some ways, the way Yahoo did. Yahoo was a kind of directory, and I thought, “Well, jeez, the Times could do, in essence, what Yahoo was doing. It could find the best stuff for people.” The journalism of The Times, probably, was not — at that point, in any event — very interesting on a PC. It was just very, very clunky. But I realized very quickly that was just not going to happen.

What The Times wanted, for good reason in some ways, was to publish the journalism of The New York Times on the web. In fact, that’s what I think, probably, 99 percent of the people who would use The New York Times on the web would expect from it.

Now, of all the things, of all the decisions that have been made, I think that one is the most seminal. The idea to publish what was, in essence, the newspaper instead of going in a different direction at the outset.

I think that, certainly, publishing the newspaper on the web is what was expected. It’s what the consumer expected. It’s what was logical. It was low risk, in many respects. It didn’t cost very much because we already had the content. It made a world of sense.

But, in some ways, some fundamental ways, it kept the Times from truly being a great innovator, because it didn’t allow for something startlingly new. [laughs]

At launch, the Times’ website was free for users in the United States, but the paper decided to charge readers who accessed the site from abroad. For $1.95 a pop, users could also download stories to their computers and the site also offered “a customized clipping service” that let users set up email alerts by topic.

From a business perspective, Nisenholtz said, the Times’ focus was squarely on online advertising, so the paper wanted to build as large an audience as it could on its website, and after about 18 months it decided to stop charging readers outside of the United States for access to the site.

We got, I want to say, about 3,600 subscribers. One of the things I like to say is we ended the experiment on Bastille Day, and that day, I believe it was in 1998, we got more registered users in about an hour than we had subscribers in the last 18 months.

The fact is that, at that time, in a general news context, given the quality of the product that we were building in a narrowband context, very crude technology, we absolutely, I think, made the right decision to build the audience because, as I think we’ll get to later, we’ll see that a lot of the economics of going pay have to do with conversion rates off of your loyal base, the people who are coming to you every day.

Times publisher Arthur Sulzberger, speaking at a 1995 Nieman Foundation conference on public interest journalism in the “On-Line Era” called the paper’s digital efforts an “experiment.”

“We don’t know where this is going. In the end, it’s going to have to pay for itself,” Sulzberger said. “We do know that. In the end, it’s going to have to pay for itself. And there’s not a lot of ways to make money.”

Sulzberger went on to say that he expected it would take some time for the Times to figure out how to make money online, but ultimately he thought it would be feasible:

I don’t need to make money this year, and I don’t need to make money next year. And I’d like to lose a little less money the year after that…But at some point, and some point not very far down the line, we’re going to have to start seeing a financial return. And I don’t think that’s going to be as difficult as we think it is today, because I think the ethos and ethics of the web are changing.

I guess I’m betting on that, aren’t I? Am I wrong?

He wasn’t wrong, but it took the Times a while to get there.

The Times’ initial assumption was that it would be able to support its web operations by selling display and classified ads on its website. An onslaught of competition from online companies hampered the Times’ (and other newspapers’) advertising business both in print and online, upending the news industry’s business model.

Though the Times quickly abandoned its first attempt to charge for its journalism online — and had only middling success with its mid-2000s effort TimesSelect, killing it after two years — it eventually came back to the strategy for good in 2011 when it launched its metered paywall. Print advertising revenue is still critical, making up 73 percent of the Times’ total ad revenue in the third quarter last year, but the paper is looking increasingly to digital subscriptions for revenue growth.

Last year, the Times said it had signed up 1 million paying digital subscribers, and in October it said it aimed to double its digital revenue to $800 million by 2020. One of the keys to that initiative will be digital subscriptions; just today Mashable reported that the Times is experimenting with cheaper subscriptions for iPhone users. It’s also trying to reach new audiences by optimizing its reporting for different mediums, especially on mobile, while also offering higher quality advertising products. In addition, the Times is attempting to reach more subscribers internationally by adding foreign-language editions.

Though the Times’ digital output has obviously grown immensely since 1996, it’s still experimenting with how it will continue to report and tell stories online — and it can all be traced back to that day 20 years ago when the Times debuted on the World Wide Web.

“At the time, nobody really could know ultimately how important this was,” Nisenholtz said in an interview in December with the Times’ corporate site. “We all had a sense that something important was happening, but at the time there were actually very few users. So it was a bet on people getting online and buying more PCs.”

Those of us who watch the news media business have questions, too. As we head deeper into the annual bloodletting that is news media budgeting for the new year, here are 10 of my top questions that I think we’ll talking about into 2016.

Business Insider has smartly carved a middle niche in what we thought was an oversaturated (Dow Jones, Thomson Reuters, Bloomberg, FT, etc.) business news market. Within that market, it can count tens of thousands of fervent, habituated readers. So expect a meter that will aim to capture the top 1 percent or so of BI habitués, with a lower-than-the-Journal price point — maybe $99 a year.

Even more interesting: Who will follow suit? Might BuzzFeed, Vox Media, or Vice test premium subscriptions? And might Quartz, BI’s peer in business news innovation, do some testing of its own next year?

5Can local papers find a way to get digital reader revenue unstuck?

McClatchy CEO Pat Talamantes offered a blizzard of numbers (and found a very engaged financial analyst audience) on the company’s Q3 financial conference call Wednesday. He could cite lots of digital growth in revenue, and minimized the worst — if expected — news. McClatchy lost money — $1.1 million — for the quarter and reported overall revenues down 7 percent. Given the continuing woes of print advertising, that number wasn’t surprising.

McClatchy, though, was also down 2 percent in audience (or circulation) revenues. One culprit, as pointed out by an analyst: a 5.2 percent decline in Sunday print. Talamantes also talked some about digital-only circulation: It’s at 77,000 for all the McClatchy papers, just a little more than Tribune’s total count, and The Boston Globe’s tally as a single paper. Almost all those numbers have stayed stuck during 2015. Into 2016, newspapers have three options: (1) reexamine the product offer; (2) price it up for those who have agreed to pay, and (3) figure out new ways to segment audience and market like hell.

A little McClatchy math: At 77,000 subs, that represents 0.2 percent of the company’s 45 million unique visitors across the country. Compare that to The New York Times, which is at a little less than 2 percent of its uniques, and we see in a nutshell the growing divide between the fortunes of the national and local press.

6Is Berlin the next best test of convergence?

You remember convergence. It seemed crystal clear: The route forward demanded both traditional local print and broadcast skills combined in what we can multimedia, multiplatform publishing. (I guess we’re there. But we don’t hear those words much anymore.)

But then all the American newspaper/broadcast companies, one by one — Belo, Scripps, Media General, Tribune, Gannett — swore off the notion of convergence, and split their newspapers from their TV properties. Once-promising convergence experiments, from Tampa to Phoenix, fell by the wayside.

Now, ever-energetic Axel Springer is testing a major convergence of its own: WeltN24. I’m told the company’s new newsroom will be ready soon, and that 2016 will represent the big test of news convergence, as the staffs of its national quality daily Die Welt and its recent acquisition n24 merge.

7When will IBM declare it’s a media company?

On Wednesday, IBM bought the digital assets of The Weather Company. Wired’s Klint Finley well describes how IBM can use the power of Watson (remember those recent Bob Dylan ads on TV) to change the nature of “weather news.” Watson and its next-gen natural language cognitive computing systems can — and I believe will — change how news itself can be produced and presented. This is a beginning of Big Data, tamed for lots of little news (and other) uses. It also reminds us: Every successful publisher will also soon have to be a data science company to succeed.

8Will the Post become the fourth “national newspaper” in 2016?

This year, Jeff Bezos’ Washington Post strategy crystallized. Those who were hoping he would create a new model for local sustainable, high-quality journalism end the year have been disappointed. While the Post does a creditable job in the D.C. area, Bezos’ strategy is profoundly national — and then, likely, global. His bolstering of national news coverage, largely represented by 2014 investments, has been followed by low-priced subscriptions. Tens of millions of Amazon Prime customers now join Kindle Fire owners as able to get six months free and then pay a few dollars a month. The Post launched a vast national network, working with newspaper partners. The Post is putting more fish (lots of stories) into the Facebook Instant Articles pool than most publishers. The new Post game plan is mass, and building huge audience — and then, like Amazon, monetizing it down the line.

We’ll see the impact of those forays next year. Already, the Post nips at The New York Times’ heels in monthly unique visitors, if not time of engagement (“Is The Washington Post closing in on The New York Times?”). In the meantime, I think we can acknowledge that the U.S. now has four “national newspapers.” The Post looks like it will join the Times, The Wall Street Journal, and USA Today as we look how the most important legacy newspapers make their digital transition. Among those, we’ll watch these two questions: How close does the Journal get to Dow Jones CEO Will Lewis’ 3 million subscriber goal? And: Which new product forays now in testing at the Times will hit the 2016 marketplace?

We’ll also watch one other big national “newspaper” launch. The Boston Globe will soon launch Stat, its ambitious life sciences product. The business aim: build a national/global product that can establish a new profitable business, while continuing to bolster and reinvent the regional Globe.

9How many will follow Advance’s 2012 move to cut days of print publication?

Three years ago, Advance shocked (“The newsonomics of Advance’s advancing strategy and its Achilles’ heel”) its communities and peer publishers by cutting back print production and distribution in New Orleans and Alabama, a strategy it then took to most of its markets. Few of those peers have followed suit, suspecting that breaking the daily print habit would simply speed up the decline of their businesses.

Now, Gannett, the U.S.’s largest newspaper company, is testing one significant market with three-a-day-a-week printed papers. The Salinas Californian has now adopted the strategy, as explained by publisher Paula Goudreau:

According to market analysis, the median age in Salinas is 28.6 years, compared to 35.2 for California and 37.2 nationally. Data show that 44.8 percent of the Salinas population is aged 24 or under, a demographic that prefers to get its information almost exclusively from mobile devices. The Californian’s digital audience has grown across multiple platforms, especially across mobile with mobile page views trending more than double last year’s, up 121 percent.

That’s the audience angle. The advertiser angle points to the same kind of math Advance performed:

For the past couple of years, nearly 90 percent of the print advertising dollars in the Californian have been aimed at Wednesday, Friday and Saturday editions.

Yes, it’s a relatively small — and maybe unusual — market. Print circulation is at about 6,000 daily and 9,000 on the weekend, down from 7,700 and 11,000 just three years ago. So is this a big Gannett test? No, says Gannett spokesperson Amber Allman. “[It’s] not based on a broad strategy,” citing the same local-specific factors as Goudreau. Indeed, I hear Gannett CEO Bob Dickey doesn’t think much of day-cutting overall.

Still, with the economics of local print deteriorating quickly with print advertising’s decline, we may well see more such cutting next year.

10Will we see news particle theory in practice?

I have no doubt we’ll laugh in 2025, when we look back at the current Stone Age of digital news presentation. While we’re beginning to see some semblance of news judgment in the smartphone home pages of the Times, Guardian, and Post, among a few others, most digital pages on both phones and desktop are still fairly flat. They may be doing a better job of telling us the news of the day, or the moment, but they show far too little context and relevant related information. It’s not that editors don’t want to include context; the tools just haven’t been available, despite worthy experiments like Circa.

“The Future of News is Not An Article”, Alexis Lloyd’s post, lays out a much smarter — and likely attainable — future.

“The form and structure of how news is distributed hasn’t been questioned, even though that form was largely developed in response to the constraints of print (and early web) media,” writes the creative director of the New York Times R&D Lab. “Rather than look to large tech platforms to propose the future of news, perhaps there is a great opportunity for news organizations themselves to rethink those assumptions. After all, it is publishers who have the most to gain from innovation around their core products. So what might news look like if we start to rethink the way we conceive of articles?”

Her one-word answer: Particles. “In order to leverage the knowledge that is inside every article published, we need to first encode it in a way that makes it searchable and extractable. This means identifying and annotating the potentially reusable pieces of information within an article as it is being written — bits that we in The New York Times R&D Lab have been calling Particles. This concept builds on ideas that have been discussed under the rubric of the Semantic Web for quite a while, but have not seen universal adoption because of the labor costs involved in doing so. At the Lab, we have been working on approaches to this kind of annotation and tagging that would greatly reduce the burden of work required.”

This notion may seem abstract, or reserved for techies, but it’s not. In fact, if news companies can unlock the deep and wide value of their related content — and relevant archives — their digital products will become greatly more valuable to news readers — and thus able to be priced higher.

Look at the signatures at the bottom of this new Times document and you can see the impact of a year’s changes. CEO Mark Thompson, now moving into his fourth year at the company, has built his own team, and the 10 signatories inked their futures in what we’ll call the 2020 memo. Editor Dean Baquet, chief revenue officer Meredith Levien, and executive vice president for digital products Kinsey Wilson were among those laying out “Our Path Forward,” first in writing, and now in a series of sessions in the Times building with hundreds of staffers.

“We’ve talked to a dozen groups already,” Thompson told me Wednesday. “And we’ve got another dozen to go.”

As media watcher Jay Rosen tweeted:

I just read the new New York Times strategy memo. (No link available yet.) The best thing about it: the tone of institutional confidence.

— Jay Rosen (@jayrosen_nyu) October 7, 2015

The Times does show a confidence, though a budding one. After an often harrowing decade of challenge and change, the Times can move forward assertively, if perhaps not with a much business swagger — the future is still too uncertain a place for that.

As we get to the 2020 memo’s most important number, let’s recall a big one that has hung in media minds from midsummer on: 1 million. The Times officially hit the 1 million digital subscriber mark in August. On one hand, it’s a breathtaking number: What odds could you have gotten back in 2011, when the Times announced its new paywall to a skeptical world, that it would find a million people to pay only for digital access within four years? On the other, it’s just a start. But either way, it’s a number that demonstrates the Times’ new leadership in the news industry and gives it standing to figure out its next future.

The 2020 memo first generated one big headline: “Times sets goal of doubling digital revenue — to $800 million — by 2020.” Then one factoid circulated widely: 12 percent of Times readers deliver 90 percent of its digital revenue. Which led to Baquet’s point of clarity: “We need to focus on our loyal readers.”

The clear link between the two is in the report: “To get there [doubling of revenue], we must more than double the number of engaged digital readers who are the foundation of both our consumer and advertising revenue models.”

Thompson connects the two this way: “I think what’s happened over the last 12 months is a growing understanding — from data science and machine learning — that time spent is one important measure, and that frequency is a very important attribute and very significant predictor of subscription and retention.”

Let’s delve beneath those headlines to the numbers. Let’s do the math on the Times’ big new strategy and see how the Times’ modeling took them to this plan.

That $800 million is a big number, but it seems smaller in context. Currently, the Times generates something more than $400 million in digital-specific revenue a year. To achieve a doubling, the Times must achieve a compound annual growth rate (CAGR) of 12.5% from now to 2020. Importantly, that’s what its digital revenue growth rate must be — not its overall revenue growth, which has been stuck in the neighborhood of zero (“The newsonomics of zero”) for quite a while.

How ambitious is 12.5 percent? Somewhat. The strategy would require the Times to maintain its recent growth rates in both digital advertising and digital subscriptions for the next five years. Consider these recent numbers:

• Digital ad growth rate: In the second quarter, the Times could announce a digital ad growth rate of 14.2 percent. In the first quarter, it came in at 10.7 percent. If 12.5 percent is a new benchmark, then, the first two quarters fall evenly on both sides of it. (We’ll see the 3Q results soon, on Oct. 29.) Look back at 2014 and we see the momentum. Solid digital ad revenue growth began in early 2014, and by the second half of the year, it could show gains of 17 percent in Q3 gain and 19 percent in Q4.
• Digital subscription growth rate: In the second quarter, its digital-only subscription revenue grew 13.8 percent. The first quarter was even better: 14.4 percent. Its 2014 results show similar growth numbers in the teens.

Given that context, we might say that a 12.5 percent benchmark for doubling seems doable. It’s in the ballpark of what now seems possible.

Before we assess what the Times will need to do to make those numbers, let’s look at that second and ultimately more important fact: 12 percent of Times readers deliver 90 percent of its digital revenue.

Stop and take that in.

I began looking at similar numbers last year, and at first I found them astounding. Ask any publisher how well they’re doing in digital, and two numbers immediately tumble out of their mouths: their monthly unique visitors and then monthly pageviews. It’s a business numerically inclined to mass, despite the fact that in the ultimate infinity of news reading on the web, mass matters less and less to most publishers. (Google and Facebook — the new mass media of our day — can successfully work that model.)

My own broad math for newspaper’s digital audience valuation tells a similar tale:

• Reader revenue makes up about about 30 percent of most daily newspapers’ overall revenue. Who contributes that revenue? The huge majority of it comes in from print subscribers. Then there are the all-access (print + digital) subscribers. And then the digital-only subscribers. At most American dailies, that last group makes up only 1 percent or so of their total digital audience; that number is now about 3 percent for The New York Times.
• When we count digital revenue, of course, we count digital ad revenue. There, though, the story is parallel. In my talks with publishers, they tell me that between 40 and 66 percent of all pageviews are generated by just 10 percent of the digital audience. Further, some significant percentage of those heaviest readers are — guess what — also print subscribers.

The takeaway: While the overall digital audience — measured by “unique visitors” who may hit (purposely or otherwise) a measly one page per month — often exceeds the print audience by 20× or 40× or more, it’s only a small part of the audience that meaningfully supports the business and its future. At the Times, that number is 12 percent. Given how few digital-only subscribers local dailies can count, for many of them that number is 10 percent or less.

Of course, then, it makes sense for the Times — and probably everyone else — to focus on the most engaged digital readers. The 2020 memo pledges to do that, but what does it mean?

Mark Thompson ticks off a list of things that heightened attention to new engagement means. Smarter, more personalized presentation to the most engaged. Direct marketing that takes into better account current engagement level. Different kinds of related news presentation that reinforce time spent — and make that time spent worthwhile.

I asked him if it meant moving around resources to back the doubling-of-highly-engaged readers goal. He said he didn’t look at it primarily as a resource quesion. If successful, habituation means pulling the newsroom, the Times’ 50 data scientists, and engineers together around the goal of serving the best customers better. Expect habituation — measured by time spent and frequency, among other measures — to become a major internal metric.

Focusing more on the more engaged won’t mean doing less to find new audiences. The Times has moved strongly, but with more nuance than its reborn rival The Washington Post, to test Apple News, Facebook Instant Articles, and the other new mass distributors. It will continue to do so, but will also emphasize internal top-of-mind attention to better serving the best readers.

As we see the connection between more engaged readers and the $800 million goal, what’s on the short list that Times needs to do over the next four years to get there?

What the Times needs to do: Digital advertising

Let’s look at one benchmark for digital ad growth.

According to PWC, overall digital ad growth will run at a CAGR of 12.1 percent through 2019. If the Times needs 12.5 percent to double then, it needs to keep its share of the digital ad market level.

On the optimistic end, Meredith Levien’s major restructuring of the sales organization and strategy is matching that number. One big bet for 2016 and beyond is T Brand Studio (“What are they thinking? Times aims to double its branded content business”). Branded content remains a growth engine and could bring in 15 to 20 percent of overall digital ad revenue as it scales. Branded content, though, is such a new field, with competitors still entering, that its performance is a tough one to bank on.

Then there’s video. Ad rates remain high, and the Times remains ready to take yet another stab at producing high-enough-quality, low-enough-cost video to win big audiences and serve ’em up to advertisers. Expect a big new push in 2016.

The biggest question mark, as it is for almost everyone: mobile.

The advent of ad blockers on iPhones only puts an exclamation point on the mobile ad opportunity question for now. The nature of ad buying and selling will certainly change greatly over the next four years, in ways that no one can yet forecast well.

Given all those factors — many beyond the control of the Times — we can bet that the Times won’t achieve a steady-as-she-goes 12.5 percent annual growth rate. It could well be higher or lower, and could veer more wildly before — someday? — stabilizing.

What the Times needs to do: Digital subscriptions

“Right now, reader revenue seems more predictable [than digital ad revenue],” says Mark Thompson.

Here, the Times feels like it has already climbed a steep learning curve — and it has.

That 1 million subscriber number provides not just confidence, but also oodles of data. The Times has come to understand much more about the who buys what when and at what price points — and about retention, the secret sauce to the digital sub game.

As it moves forward, consider two factors: volume and pricing. Despite some of us (including me) expecting the Times’ digital subscriber total to plateau more quickly than they have, they’ve kept growing nicely. Over time, the company has tested numerous marketing approaches, just recently offering free digital day passes to anyone buying a print newsstand copy, a technique long used in the U.K.

The Times has already picked much of the higher-paying, low-hanging fruit. Loyalists — sold on the Times brand — will pay full price, and can probably be priced up selectively. As the Times passes 1 million, though, its increases in digital-only subscription volume haven’t been matched by increases in digital-only subscription revenue.

In the chart below, we see the Times’ great progress in volume since the introduction of its paywall. We can still see a steady 20 percent increase in year-over-year volume. (Click to enlarge.)

Comparatively, revenue growth comes in at about two-thirds of volume growth, or 13 percent. That tells us that as the Times continues to grow digital reader revenue, it’s having a tougher time maximizing each subscribers’ spend. That’s not unexpected, and it offers opportunities in product, in pricing, and in removing friction from the sign-up process. All are in progress.

Finally, expect the Times to grow into the global shoes it has laid out for itself. One indication of that global reach is its reporting corps; it can now claim the largest number of full-time international correspondents in its history (75), housed in 30 bureaus.

Already, more than 100,000 digital-only subscribers live outside the U.S. — about 12 to 13 percent of the overall total. Some of those pay a lower price. We can expect major moves in serving and attracting non-U.S. audiences, with pricing to match, beginning next year.

All those moves, based on experience, fuel the Times’ optimism about the future of reader revenue.

So how likely is the Times to meet that $800 million 2020 goal? I think we can give it pretty good odds. In fact, Mark Thompson might be being a little conservative with that the number. That would be smart: A goal to double is simple to grasp and meaningful to the marketplace. And as any experienced CEO knows, it’s much better to underpromise and overdeliver than the alternative.

What will 2020 indeed look like? Where will be on print/digital revenue crossover and the relative decline of print? How much of our reading will we do in Times apps or on platforms elsewhere? Those are a few of the many questions we’ll need to ponder as we think about the big question: Will $800 million in digital revenue in 2020 be enough to support the Times in the journalistic style to which we’ve become accustomed?

Now the important news is coming from up north.

The tablet, born as and symbolized by the iPad, is an instrument like no other for publishers. After the web had played havoc with the business models and reader habits of newspaper and magazine readers, it arrived, promising to be a vertical counterpoint to the horizontal desktop and laptop. It could display pictures wonderfully and text cleanly. It could be held in one hand, just like something printed on paper. Behind brown-paper-covered walls in secret offices, the Journal, the Times, The Guardian, and a few others scurried to be among the first to take advantage of the new platform. The products met with some nice reviews and made a small difference in top-line revenues, as news reading and ad buying increased marginally.

Today, tablets seem to have settled into early middle-age hood, valued, but a third-place player overall to web and smartphone use, bringing in about 12 to 15 percent of news publishers’ traffic. Except in Montreal.

There, La Presse, Quebec’s second largest daily, remains a true believer in the tablet dream. Its La Presse+ product, which drew a fair amount of attention when it launched in April 2013, is now getting a second wind. Its success, its leaders say, is such that daily print will disappear sooner than later.

Is this kind of tablet success, as many publishers have said, some weird French Canadian thing of no application to them? That assumption will soon get a big test. The Toronto Star, Canada’s largest local newspaper (the national Globe and Mail, whose innovations I recently profiled, just beats it in weekday print-plus-digital circulation), has adopted the La Presse tablet platform and plans to launch its own tablet product in early fall. The Star serves the fourth-largest city in North America and, of course, publishes in English.

This week, let’s look at La Presse+, what’s it’s done, and what it may do in Quebec. Next week, we’ll take a close look at The Star’s plans, how they align with La Presse’s, and where, importantly, they differ. Together, they form a fascinating north-of-the-border story. It’s impossible, though, to watch that story and not wonder what might happen south of the Canadian border, as U.S. daily newspaper publishers rely more on consolidation and cost-cutting than cutting-edge innovation.

Importantly, La Presse isn’t betting as much on a device as on a deep belief. The gating principle here isn’t the technology or the platform — it’s whatever works to engage readers of news. In that respect, in the digital age, there are only two things so far that produce engagement, or time spent reading: the tablet — and the newspaper.

“We want to be on any platform that allows us to provide engagement,” says Pierre-Elliott Levasseur, executive vice president of La Presse. So far, that involves at least a six-inch screen: “Less than that, it doesn’t work. We’re working on a phablet product now.”

La Presse+ is gorgeous, taking advantage of all the capability that Steve Jobs built into tablets, including photos, videos, and immersive advertising.

“This is what we told our staff, and it almost sounds like a pitch,” says Levasseur, and indeed it does. “You take video, with its emotion, magazines with their reproduction quality, great graphic design, and then the best of the newspaper depth and breadth, combined with the best of the web, which is instantaneity and interactivity [La Presse+ counts 26 kinds of interactivity within the product], and then you realize that even 25- and 30-year-olds will use this product, because it’s the best way to tell the story,” says the 44-year-old. “With this product, we have improved our demographic profile.” La Presse is washing out some of that baby boomer gray: “Fundamentally, the problem with newspapers is the aging demographic.”

While it may be a pitch, it’s one that delivers. Even for those unable to read French, the La Presse+ experience translates.

The math behind it, though, stymies some observers. From the beginning, La Presse+ has been free. No meter. No subscription. No circulation revenue. Its revenue comes all from advertising.

As Levasseur explains, “It enables publishers to move your low-digital-value, low-ARPU [average revenue per user] readers to a high-value, high-ARPU platform. Our CPMs are very high.”

The audience and ad metrics seem stunning:

• Engagement: La Presse+ claims engagement numbers, as measured by time on site, that rival or exceed what we saw in the halcyon days of print: 44 minutes on weekdays, 50 minutes on Sundays, and 73 minutes on Saturdays, the traditional big weekend day of newspaper reading in Canada. Overall, the company now says it has a weekly tablet readership of 453,957.
• Ad rates: Levasseur compares half-page print rates of $42 CPM (cost per thousand readers) to $68 for a half screen on La Presse+. He contrasts those numbers with far lower yields on desktop (about $13-14 CPMs) smartphones (at $2-3 CPMs). ARPU math that serves as the foundation for the strategy. Five months ago, La Presse+ launched a content marketing initiative, which now takes advantage of the product’s superior storytelling chops.

Those are the big head-turning numbers, but the lessons extend further.

• Staffing: La Presse staffed up in technology to 140-plus from a meager crew of 15 in 2009. That’s been its major investment, which it says came in at about $40 million Canadian. La Presse is privately owned by Quebec’s Gesca, a subsidiary of Power Corporation of Canada, a major diversified financial services company with a long history of influence in Canadian politics. Its news focus is now squarely on La Presse+; the company sold off six regional papers in March.

  Levasseur says other staffing remained fairly stable, with roughly the same number of journalists employed now as pre-La Presse+. Knowing that La Presse+ had to have a stronger features/lifestyle presence and a seven-day publishing schedule — it’s a morning edition product — the company staffed up by one or two dozen to enable those additions. (La Presse published a Sunday paper until 2009 and now prints six days a week.)

• iOS dominance: Heavy users of digital newspaper news skew heavily to Apple products, and, here, La Presse+ is no different. More than 80 percent of the product’s “opens” and of the time spent using it, come from the iPad. (Opening is the digital equivalent of circulation; meaning the day’s edition is both downloaded and opened.)
• Readership: Those tablet buyers form the sweet spot for La Presse+. The targeted age demographic: 25-54. Currently, 65 percent of La Presse+ readers range between 25-54. That compares to 46 percent of print readers in the same age range, with that readership of course skewing older. Levasseur says 14 percent of those using the product had never read La Presse in any form previously; 27 percent may have been on smartphone apps or website, but hadn’t read the paper. Again, this is the low engagement/low ARPU-to-high strategy in process.
• It’s a way to motivate your staff: “You really turn your staff into a real digital organization.”
• Content: Levasseur says it’s mainly the form factor of the tablet — which enables that storytelling — that brings in that younger audience, rather than a significant change in the content itself.

So where might this lead? Move over Advance Publications, whose own day-cutting could seem like mild historical prologue. As Levasseur describes it, it’s clear the company is planning its exit from print. The only question is when.

Some La Presse execs will tell you that the days of daily print newspapering may be measured in months, not years in Quebec. Certainly, the strong Saturday paper will remain as a reading and shopping mainstay for a longer time. Daily print, though, is another story. The company has reviewed lots of metrics, and thinks it will soon arrive at a point of important crossover (“The newsonomics of crossover”).

Consider: 60 percent of LaPresse ad revenue now derives from the tablet, a product that’s only been in the market for two years. Since web does still contribute some digital ad revenue, print now throws off only 30 percent of overall ad revenue. Yet the production people come in to work every day, and the presses and trucks still roll, all at great cost.

So the crossover calculus: Trade all those print and production costs — which now make up 65 percent of La Presse’s overall costs — for drops in both daily print advertising and daily print circulation, while maintaining Saturday for both revenue streams.

How many of La Presse’s daily 100,000-plus print readers will convert to the tablet edition when print starts to go away? One number that complicates such a transition: Today, there’s only 6 percent weekly overlap among those who read print and the tablet. Still, if print is removed from the market, some La Presse execs believe that as many as 30 percent of print readers will make the journey fairly immediately, even though there’s so little overlap now. How about the other 70 percent? It sounds like hubris at first hearing, but the company is willing to let them go to make the digital transition. At that point, it would become a digital news company that also publishes one strong weekly print product.

Yes, it’s the nightmare of the 70-year-old you know who pleads: “They won’t take the newspaper away from me before I die, will they?”

(Let’s note that The Star’s plan, in that respect, differs markedly; it plans to keep its print paper strong for now, believing it can profitably serve both audiences and markets.)

You’d think the great slowdown in tablet sales would give La Presse pause. After great year-on-year sales growth, tablet sales hit a wall in 2014, growing just 4.4 percent. That’s four percent, after 2013 growth of 55 percent and 2012 growth of 78 percent. One huge seller, Best Buy saw a 30 percent decline in tablet sales in the fourth quarter. And iPad sales have declined year-over-year for 8 consecutive quarters. Why? Those larger-than-phone phablets with 5.5-inch-plus screens eat into tablet sales. The big wild card: Tablets, expensive and unsubsidized, aren’t replaced near as often as smartphones. So they stay in use for a longer time.

We might think of the market as fairly saturated, but another way of looking at is to count the installed base that saturation has built: 147.1 million people in the U.S. will use a tablet of any kind at least monthly this year, says eMarketer.

In Canada, more than 50 percent of households own tablets — and those will tend to be the news-reading households.

As it proceeds into Year 3 of its grand experiment, La Presse is looking for ways to defray that large investment in tech development and staffing. That’s why it’s become a vendor, an often difficult path for a publisher. The Star serves as its first customer, but it plans to add more, though not immediately. Getting The Star off to a great start is essential to its vendor strategy.

There’s still skepticism, says Levasseur: “I think many of the publishers are just wrapping their brains around the short-term problems they have right now. Others are just printers, and they want to ensure the survival or print as long as they can. It isn’t a question of how many we can put the pipes. It is how many publishers are willing to adopt.”

One further advantage of the Star relationship: the two companies will jointly sell tablet advertising, covering the two largest ad markets in the nation, Toronto and Montreal.

Already, its digital transition has been remarkable. In 2013, the company’s digital ad revenue totaled 10 to 12 percent. In 2014, the first full year of La Presse+ operation, it came in at 70 percent, says Levasseur, the overwhelming share of that from La Presse+.

Has La Presse crossed over into the proud new age? No, not yet, and not surprisingly, given that La Presse+ is still a toddler. Gesca is a private company, releasing selective numbers, as private companies do. We don’t know what its P&L statement looks like, further complicating its message to the wider newspaper world.

Levasseur makes the longer-term crossover point. “The faster we move people and revenue over to the new platform, the more we are going to be profitable.” In the short term, the company has stopped marketing its print subscriptions, even encouraging cancelling subscribers to transition to the free tablet product. That means it’s taking a short-term hit on circulation revenue, while still bearing the costs of print production. That’s why the logic of day-cutting looks so attractive.

The company can hit that crossover button whenever it wants. It would just like to have as big a tablet business as possible in place first.

For those who don’t know it, Meeker — formerly of Morgan Stanley, at VC firm Kleiner Perkins since late 2010 — each year produces a curated set of data reflecting what she sees as the major trends in Internet usage and growth. It may be the only slide deck that qualifies as an event unto itself.

And a chunk from the 2014 version:

What’s useful about Meeker’s deck is that its core data serves as a punctuation mark on some big, ongoing trends. The kind of trends we all know are happening, but whose annual rate of progress can be hard to judge. Like, say, the continued demise of print.

The Meeker slide that always interests me most is the one where she shows how American attention is divided among various forms of media — and how that division lines up with where advertising dollars go. How much of our attention goes to television, say, versus how much of our advertising go there?

It’s not absolute dogma that the two — audience attention and advertising dollars — always be equal. But it makes sense that they would tend toward parity. More people listening to the radio should lead to more companies advertising on the radio, or vice versa.

So let’s travel back in time. Here’s Meeker’s chart for 2011:

The two things that jump out at me: Print gets a lot more advertising than it gets attention. And mobile is the opposite. You’d think that would equalize with time.

Here’s 2012:

Equalization! Or at least the path to equalization, proportionately. Print loses attention, but loses ad dollars a bit more quickly; mobile gains attention, but gains ad dollars a bit more quickly. (Sizable margin of error here, it’s worth saying.)

Here’s 2013:

The print story remains the same: down in attention and in ad dollars. But note there is still a wide gap between the two — print still gets far more ad dollars than its hold on the American attention would seem to “deserve.”

Finally, here’s the new 2014 chart (it’s slide 16):

The mobile growth everyone anticipated is happening — moving from 4% to 8% in 12 months’ time. And print continues to lose both time spent and revenue.

Let me wrap up by copying what I wrote last year:

Print advertising is not coming back. It will fall further. Substantially further. All newspaper planning for the coming few years needs to reckon with that basic fact.

Mobile continues its rocket rise, and there’s still lots of room for ad revenue growth. And now it’s even eating away at the Great American Time Suck, television. Mobile is eating the world, and most news organizations make only a pittance off it.

Lots more interesting stuff in Meeker’s complete deck.

The new Tribune Publishing is made up of eight — and maybe soon to be nine — metro papers spun out of what is now the broadcast-centric Tribune Media last August. It is indeed playing a rough game, and doing so from behind. If you had to pick one segment of the daily newspaper business to bet on, you probably wouldn’t pick metros, which have underperformed even smaller community dailies by about 10 percentage points over the past half-decade. And if you were handed two handfuls of metros, you probably wouldn’t want to operate them within a public company, with shareholders looking for increasing profits, quarter after quarter and year after year. That, though, is precisely, the hand TPUB’s been handed. How Griffin and his team are playing that hand was better revealed today, though still only sketchily. That’s not surprising: In five months as a spun-off company, Griffin has greatly reshuffled his top team, with new publishers in three of the eight markets and several other high-level appointments. At this point — as would be expected — much is still prologue, and we shouldn’t expect this set of numbers to show much progress, which they don’t. It will take another good six to 12 months to judge TPUB’s real progress.

Also as would be expected, though, early reaction of the public markets was a thumbs down. TPUB was off as much as 6 percent earlier today because of, due to a quick (and likely fairly uninformed) reading of the headline numbers, which weren’t surprising. (It did recover a bit toward day’s end, finishing down 2.8 percent; TPUB is down nearly 30 percent from its opening price last August.) Despite the whirlwind of activity that Griffin could point to on the call and in other company interviews, the markets expect financial miracles, a near impossibility in this publishing climate. Jack Griffin is trying to thread a needle, a quite thin one, in the latest attempt to transform the Tribune newspapers, turning tough metro properties into market leaders. It also has to find a way to keep pruning expenses, given revenue shortfalls.

The real issue with TPUB’s transformation, a word Griffin returns to often, is how much it’s a game of catch-up. Many of TPUB’s peer companies have already been executing on similar theories, with overall tepid results. The initiatives all make sense — but even executed at a high level, they produce no better than close-to-flat results, if that. That’s why the industry keeps falling deeper into a money hole (“How deep is the newspaper industry’s money hole?”), losing a couple of points of revenue a year. TPUB’s 2014 overall results are similar.

That catch-up metaphor cuts across all the business initiatives:

• Digital subscriptions: Griffin’s team inherited a mixed bag of digital/all-access subscription efforts. Last year, when I tried to compare what the Orlando Sentinel offered as compared to the L.A. Times, for instance, I found myself confused. Apparently, I wasn’t alone. Griffin says new systems coming into place now reduce a seven- or eight-step (!) signup process to two or three; he is aiming for one or two. “There wasn’t even a subscribe button” on some sites, he says. He says the company is now doing A/B testing as well. All good things — but that’s catch-up.
• Selling multiplatform audience: TPUB, under new chief revenue officer Michael Rooney (formerly of The Wall Street Journal), is making a push to sell audience across print and digital platforms. Again, a smart strategy, but one that others have a head start in implementing. TPUB’s 42 million uniques, across its properties, is impressive — and it’s trying to represent more non-Tribune titles in its ad selling as well — but it’s not a huge number in comparison to so many other available ad networks out there.
• Digital revenue: 11 percent of all TPUB’s revenue is now digital. That’s largely ad-driven, and it’s a number that needs lots of work. For instance, The New York Times now counts 31 percent of all ad revenue as digital, and other daily chains count higher numbers as well. Also of note: Digital revenue overall is essentially flat. That’s a problem, given that digital advertising is growing 13 percent-plus in the U.S.; it’s the major issue confronting Rooney in his fledgling sales reorg.
• Digital services and content marketing: Tribune can point to a current doubling of content marketing clients, and its Jewel-Osco video model is a smart one, bolstered by its investment in Contend. With 22 “custom clients” signed up into 2015 — more than half of what the company served in all of last year — there’s a lot of upside. Again, though, doubling a tiny business, at this point, still adds relatively small dollars. Likewise, in digital marketing services, Tribune showed a whopping 54 percent increase — but, given, its small size, that amounts to only $8 million.

Griffin noted in his 2015 outlook the possibility of more “bolt-on” acquisitions. TPUB’s purchase of Maryland and suburban Chicago properties have already netted $5 million in increased earnings; expect $10-12 million in added earnings this year, due to those buys. TPUB’s got a bit of cash for more acquisitions, and as I reported Monday (“Tribune in final bidding for U-T San Diego”), it’s hot on the trail of a ninth metro property, U-T San Diego, at a likely purchase price of $85 to 90 million. TPUB’s metro bet isn’t for the fainthearted.

Take a look at TPUB’s overall 2014 performance, and you see a lot of red ink:

• Earnings down by $20 million on an adjusted basis, to $160 million. Without the adjustments, TPUB shed $55 million in earnings, but the company’s split and less good deals the company now has to manage in digital recruitment (CareerBuilder) and digital car classified (Cars.com) take a real — if predictable — toll here.
• Total revenues down 4.9 percent.
• Total ad revenues down 8.7 percent.
• Preprint ad revenues down 8.9 percent.
• Circulation revenue managed to find a bit of black at 1.4 percent up.
• Expenses are flat, reflecting both zero-based budgeting and small, targeted investments in the strategy.

Those numbers speak broadly to the overall down market — but also of metro papers’ particularly poor performance. Griffin offered his outlook for full year 2015, forecasting largely flat earnings, with revenues a bit up — and costs down another $65 to 70 million. The revenue forecast is what stands out — it will be quite tough to pull off.

Where might that cost-cutting come from? Chief financial officer Sandy Martin cites “centralized procurement” as the No. 1 suspect; as Tribune, like so many of its peers still, finds “waste”, operating individual properties too individually. Editorial headcount isn’t on the hit list, though given market pressures, reduction in overall FTEs through technology and centralization, should be expected. Griffin gave a shout-out to good journalistic work in both Chicago and L.A., and reiterated: “The lifeblood is content.”

A few more takeaways from Tribune’s numbers:

• Digital-only subscribers stand at 61,000 — across all eight papers. That’s a small number, given the readerships and markets of L.A., Chicago, Baltimore, and more. Yet it’s up 24 percent year-over-year, 11 percent quarter-over-quarter. Again, that’s indicative of good recent execution — after years of stagnation. But there are a couple of standalone metros that themselves approach that 61,000 number.
• Moving from anonymous to known: The number of registered digital readers is up (24 percent) to 3.2 million, and activation — getting print subscribers to “activate” and then actually use digital products — is up as well. Those are good markers, fundamentals of what a successful digital business needs to invest in.
• TPUB’s in-sourced printing and production business is slowing down. In part, that’s because of lost business from the termination of its deal with the Orange County Register in L.A. But in general, the general decline of print is now sapping what has been a go-go revenue and profit source for bigger papers from coast to coast. TPUB’s commercial print and delivery business moved down 9.4 percent year-over-year, symbolic of a wider trend of print’s overall disappearing act pulling down all print-related revenues, not just print advertising (“Jim Moroney’s digital-reaching Dallas Morning News”).

We know the toll in newsroom jobs — about 20,000 lost in a little under a decade — and the fact that the industry as a whole took in about $26 billion less in 2014 than it did a decade earlier. We’re used to, and fairly inured to, those numbers.

So let’s ask a new question: How close is the industry as a whole to reversing its long slump? That’s an answer we can quantify.

First, we’d ask what would a new normal would look like. Let’s say the newspaper-based industry could simply maintain itself at rate of inflation in the overall economy. The Fed’s target inflation rate is 2 percent, with all kinds of deflationary fears bringing that number into question. For 2014, it clocked in at just 0.8 percent, the lowest since 2009’s Great Recession, following 1.6 percent in each of 2013 and 2012. That’s not as big a goal as growing as fast as the overall economy, of course, which has been running at 4.5 percent growth or more over the last two quarters — but it would be a big start. If the industry could match its previous year’s revenue — plus a little inflation, at least — it might be able to stop cutting.

Let’s assume a 1 percent inflation rate for 2015 and use, then, a 1 percent revenue growth as our target for a new newspaper-industry normal. Hit that number broadly across the industry, and we’d hear at least a small rallying cry that the bleeding is over. How close — or far — is the industry from raising that voice?

We won’t have full-year 2014 figures from the Newspaper Association of America (NAA) for a few months, so let’s use previous years for our math.

In 2013, total revenue in the U.S. industry totaled $37.5 billion, according to NAA. That number was down an even one billion dollars, or 2.5 percent, from the year before. The difference between its actual performance and what it would have needed to get to the new normal: $1.4 billion. With a revenue of $38.9 billion, the industry would have grown one percent and stayed even with inflation.

The industry missed a new normal by about 4 percent.

It may seem like a small number, but it’s been a mountainous goal. The industry hasn’t overall seen revenue growth at all (much less with inflation taken into account) since 2007. The continued declines in print advertising — down in the high single digits, percentage-wise, year after year — have been too big for other revenue sources to make up the difference.

So what do publishers need to do achieve to effect a turnaround — to reach a talkable milestone of stability?

Of course, it’s more than an academic question. With the Digital First Media sale moving forward, we revisited the questions of who would want to buy a newspaper company in 2015. As private equity investors eye the whole of Digital First Media (“Digital First Media’s upcoming sale is producing some surprises”), that question is very much on their minds. Key to valuation is the projection of future cash flow; without a business that at least keeps up with inflation (if not the overall growth of the economy), that’s tough. Certainly, would-be buyers appear poised to find new “efficiencies” in an acquisition — some real, some imagined, some smart, and some that portend new damage to the products they offer up for sale to readers and advertisers.

Their math can’t be just about expense-cutting; somewhere, sometime — even in the span of four to seven years in which private equity may stay in the game — new revenue must be found.

Dallas Morning News publisher Jim Moroney makes that point often and succinctly: “How do you deal with all of that? To create a sustainable business model, you have to have growth.” In other words, simply managing decline of the print business won’t get your there. Without new revenue, the sad shrinkage of America’s local news pipeline will continue.

So: How might “up” be found? Where could that plus revenue come from? We’ve heard a lot about paywalls, marketing services, and new programmatic ad approaches in last couple of years. How likely are they to turn the negative into a positive?

Think of industry’s potential revenue growth buckets as three-fold: reader revenue, digital advertising, and what we’ll call the Third Stream.

What’s in this bucket? It’s things like commercial printing, distribution of other products (e.g., other newspapers), event marketing, e-commerce and marketing services. In fact, though NAA doesn’t report marketing services revenue by itself, it does say it grew 43 percent year over year. That’s off a very small base, but it’s significant. Marketing services is where most of the big players are putting their biggest chips, from New Media’s Propel to Gannett’s G/O Digital to McClatchy’s impressLocal (“The newsonomics of selling Main Street”).

The numbers: 2013: 5.0 percent growth, or $150 million. 2012: 8.0 percent growth or $248 million.

Bottom line: If Third Stream revenue were to be the sole boost towards the plus-1-percent goal, it would take $1.4 billion in new revenue for full-year 2014 — or more than 9× times the growth in Third Stream revenue in 2013.

Prospects: Though marketing services shows boatloads of promise, its execution is tough — a block-by-block exercise of inventing a whole business with many small customers each paying in the multiple hundreds of dollars a month.

Takeaway: Growth in marketing services should be real, and ramping up, but it’s unlikely to throw off the big dollars needed for the up turnaround. The other new revenue sources are good, but won’t grow a lot.

Our conclusion: The industry, as a whole, is far away from getting to any new stability. Growth that matches inflation would be very difficult; growth that matches the growth of the overall economy even tougher. In fact, even in the areas the industry has looked to for recent growth, the trend lines are the opposite of what we’d hope.

Significantly, though, there are a few companies that are close to that 1 percent growth level. One is The New York Times, which is running up 0.9 percent through three quarters and finished 2013 up 0.5 percent. Of course, the Times, now a global news business, shares even less with its 1,400-plus local and regional peers than it used to.

For most newspapers — using more or less the same business models as their peers — there are no growth drivers on the immediate horizon to make up those precious three or four percentage points of turnaround. Assuming continuing retrenchment in print advertising — and that’s what those in the industry expect — it’s a fact that the business still needs new ways of driving new revenues.

DFM, and its most powerful owner, Alden Global Capital, would love to sell off the whole company in one sale. No muss, no fuss, less time and fewer costs. That is unlikely. Start with DFM’s motley collection of titles, diverse in both geography and circulation size, from big metros to small community papers. Add to that the current uncertain state of the newspapering business, and it’s tough to come up with a logical bidder for the company’s 76 daily papers and 160 weeklies across 18 states. (“The newsonomics of auctioning off Digital First’s newspapers (and California schemin’)”). How much would DFM like to get for a company it likes to say reaches 67 million readers monthly across 18 states, from New England to California? Figure $500 million. That’s based on a likely EBITDA (earnings before interest, taxes, depreciation, and appreciation) of about $125 million, for a company earning a 10 percent-plus margin. A half billion dollars represents a 4× multiple of those earnings.

The Last Man Standing Metro Theory of Newspapering: I’ve pointed to this justification in Scripps CEO Rich Boehne’s buildout of WCPO TV in Cincinnati, where this TV newsroom may well now outnumber the daily, turbulent Cincinnati Enquirer in size. New Tribune Publishing CEO Jack Griffin serves as this theory’s high priest. In short order, Griffin closed deals to buy up print properties around Tribune’s Baltimore Sun and then its Chicago Tribune. Tribune bought out the Sun-Times’ six daily and 32 weekly suburban newspapers last week, paying a grand total of $23.5 million for them. (That’s a total that wouldn’t even buy you six houses in Silicon Valley’s high-flying Atherton, where the median home sale price is up to $4.6 million. That’s both an interesting comparison and one more symbol of the divergent fortunes of print and digital in 2014.)

The big idea: Print advertising may be in permanent decline, but there’s still lots of it. If you can buy print properties cheaply enough, and then exact the tech/sales/content synergies possible, the value of a metro-area print-based enterprise will increase. It’s Dean Singleton’s once precedent-setting clustering theories for this age, and it’s as yet unproven. Griffin, like GateHouse in smaller communities, plans to add on a digital services business to these metro properties; one top priority is expanding Tribune’s 435 Digital. So put Tribune in the hunt for some DFM properties. Likeliest: The LANG properties in greater L.A., allowing the L.A. Times to execute the Baltimore/Chicago strategy there. Most prized is the Long Beach Press-Telegram, serving a population of 600,000 right next to L.A. Orange County Register owner Aaron Kushner had prized that market as well before his fall; now his archrival Times is likeliest to dominate it.

Digital First Media CEO John Paton is an old hand at opening envelopes. He loves the dating and mating game of publishing. Assuming no whole company bids surface, then expect the partial selling of the named clusters. Since however, some of these clusters aren’t really logical clusters (like the Pioneer Press/East group), we can figure the poking and pursuing will take lots of twists and turns. By mid year 2015, new owners will be forced to bring new logic back to the romances of late 2014, setting their theories against real-time performance.

Take the month of October — the biggest ad revenue month of the year for the Times.

Digital advertising will be up about 15 percent this month, says Times Co. chief financial officer Jim Follo, but print advertising will be down about 10 percent, with total ad revenue down 5 percent. The delta is widening, though these are not placid waters. Choppy or “volatile,” as CEO Mark Thompson said, repeating that word many times to describe the ups and downs of print ad revenue. “Inexplicable” is another word Thompson used, trying to explain the vagaries of managing a declining, if still valuable, print ad business.

That perplexedness didn’t do a lot to assuage Times Co. shareholders, who have driven the stock down more than 6 percent in mid-day trading. Maybe it was the volatility, or maybe it was the word “loss” that appeared in the Times’ own story on itself, front and center in Google search: “New York Times Co. Reports a Quarterly Loss.” The Wall Street Journal’s headline offers more nuance: “New York Times Loss Narrows.”

That operating loss of $9 million, though, is no surprise. It cost the company $21 million in severance to reduce its headcount, that much-reported, in-progress buyout of about 100 newsroom staffers (“The newsonomics of new cutbacks at The New York Times”). Overall, the Times reported adjusted operating profit at $40 million, down $5 million a year ago.

Much more important to understand than these bottom line numbers are the ones that illustrate the quickening acceleration to digital.

Look only at the income results of the quarter — an overall 0.8 percent increase in revenues — and you’d miss the drama of that volatility. What seems like a smooth drive is actually quite a bumpy journey. Advertising is moving profoundly (but haphazardly) from print to digital, as are readers. While the Times could count 44,000 new digital subscribers in the quarter, a 20 percent year-over-year increase, it lost 5.2 percent of its daily print readers — and, more worryingly, 3.5 percent of its Sunday print subscribers. The Times already counts more digital subs than print ones, and the divide is widening.

The ad volatility shows how much even big publishers like the Times can be affected by the arrival (or absence) of a few big campaigns, year over year. This is what print ad revenue looked year-over-year in the third quarter:

• down 1 percent in July
• down 7 percent in August
• up 5 percent in September

With all that change, what tumbles out is an on-the-line performance: Overall revenues up a little less than a percent. Circulation revenues up just over a percent. Ad revenues down less than a percent.

The good news: The Times’ overall performance is better than the average newspaper company, which is still overall down in mid-single digits. The bad news: With all the Times has done, it still hasn’t managed to grow revenues faster than the economy. Performance of plus or minus one percent in growth quarter by quarter, year by year, leads to the kind of significant budget cuts we’ve seen this fall.

Below those tepid results is that swirling digital acceleration:

• The Times will hit another milestone — 900,000 — in paid digital subscribers in the upcoming Q4, up from the 875,000 at which it finished the third quarter. That will represent almost 3 percent of the Times domestic unique visitors of 31 million.

  That’s a big number. It’s a percentage I’ve pointed to for several years as a major success point for paywalls. Mark Thompson emphasized this number: More new net additions in 2014 than in 2013. International subs feed that growth, with local currency transactions now enabled in several countries. Given that the Times finds as many monthly visitors — though with way less usage — outside the U.S. as within, that’s a big field to mine in 2015 forward.

  Revenue, though, from these international subs and some of the other newer digital offerings, reduces ARPU or average revenue per digital subscriber. That’s down, unsurprisingly, about 5 percent. Bottom line: The Times’ core all-access market, which is still growing bit by bit, is the key going forward. The other stuff will help, but kick in smaller pots of money.

• $43 million is the digital sub revenue taken in by the Times in the quarter, up 13 percent year-over-year. So annually, the Times is approaching the $175 million level in digital reader revenue — a big chunk of what the whole American newspaper trade has managed to take in.
• More than 50 percent of digital traffic is now mobile, up from a third or so, a year ago, says advertising head Meredith Levien.
• Paid Posts, the Times’ native ad foray, now counts 30 advertisers, some of whom are cycling into their second campaigns, Levien says. Some represents switches from other advertising forms, but some is new business or represents increased business from ongoing customers. Luxury, importantly, is now part of that mix. The Times’ luxe market — well described by Capital’s Joe Pompeo here — primed that September print pump as well.
• Two million visitors have found the Times’ elegant-looking Cooking app since its recent launch. Thompson says the company is learning to give the products breathing space. In other words: Follow the startup mantra of build audience first, in every way you can — and then monetize. “Consumer monetization” of it is down the road, he says.

Mark Thompson continues to gather his own team. His appointment of Meredith Levien shook up the Times’ ad sales significantly. Now he’s filling two new positions, which will both report directly to him and ultimately prove out his tenure, one way or the other. The Times now hires a chief marketing officer and chief digital officer. Marketing has been blamed internally for the slower-than-hoped uptake in the Times’ paid niche products. The digital change is a big one, as 26-year Times veteran Denise Warren leaves the company. As first head of advertising, then digital (and, for a while, both), she’s been a pivotal figure in the Times’ unprecedented transformation. Now, it’s onto to Thompson 2.0, as he puts his own top execs into place.

Those execs will find a 2015 a little different than the Times’ 2014. The Times spent a lot of money to get its new Paywalls 2.0 products into the marketplace, with less-than-stellar results. That spending is now cycling through, so the Times’ expenses are moderating. 2015 looks like the year of execution on all of what’s been launched — from the niche paid products to Paid Posts and the Content Studio — as the company tries to get content marketing overall Times-right.

The New York Times, as the industry’s gold standard in news, prides itself on getting things right. In the newsroom, that’s the very foundation of the trade and the bond between journalists and readers. In business, it’s not so simple. You have try, and fail occasionally, to find light in the digital din. So even though the capital allowing for margin of error is small, Thompson exhorts his troops to play. His two-word description, a wishful one to be sure, of what he wants to the Times to be this morning: “unashamedly experimental.” That’s more aspiration than reality, but a telling pointer of this acceleration in time.

The Times had built major internal confidence, riding a wave of paywall-induced exhilaration, and eagerly moved on to what it had believed would be icing on the reader-revenue cake. I called it Paywalls 2.0 (“The newsonomics of The New York Times’ Paywalls 2.0”). The Times has tried to combine four magical words, squishing them together in ways no one had yet: Digital. Niche. Mobile. Paid. It’s the paid, of course, that’s the toughest part.

In that alchemy, the Times relied on deep research whose forecasts have proven close to the mark, as the Times has climbed to about 870,000 paying digital-only readers and reaped pricing rewards by combining print-plus-digital all-access subs. But the number of those who loved the Times enough to pay hundreds of dollars a year for it showed inevitable signs of peaking. The Times “little data” research projected a smaller but significant market of those would pay — if at lower dollar amounts — for different entry points into Times content.

Those forecasts haven’t come true, and in their wake, we see the substantial cut of 100 newsroom positions announced today, and a change in its niche apps strategy.

The core content and paywall strategy of the Times worked — that’s Paywalls 1.0 — but building on it has been tougher than planned. Today’s move is significant, but it’s one that should be understood carefully.

How much had the Times invested in the new strategy? While it’s impossible to parse the differing kinds of resources the newsroom added over the last three years or so, the amount of them is a number to behold. In 2011, the Times counted 1,189 newsroom employees. At the end of 2013, the number was 1,251, up 5.2 percent. Currently, it counts 1,330, up 11.5 percent from 2011. With 100 to be taken out, the 1,230 number would still be 3.4 percent higher than three years ago. It’s worth highlighting: While the overall number of newspaper editorial staffers has declined across America (down 20,000 jobs, about 30 percent of the total, in seven years), the Times has been bolstering its staff.

Those who volunteer for a buyout will receive a relatively generous three weeks of severance for each year worked. Of course, the Times will be semi-selective: “We reserve the right to say no to people who request a buyout but whose jobs and talents are critical to our mission,” notes executive editor Dean Baquet. One major question here is what the newsroom will look like when the dust settles.

Figure it this way: The Times’ newsroom needs to do two fundamental things well. First, it needs to maintain its gold-standard journalism capacity. That’s the very core of its business.

Second, it must transform its storytelling, becoming more intuitively digital, every day. Much of the newsroom increase was driven by the second priority. And, of course, the difficulty of changing newsroom culture, capability, and collaboration drove the well publicized Times innovation report leaked in the spring. Let’s recall that Arthur Gregg Sulzberger (good Capital profile), the publisher’s son, was a leader on that report and then assumed the title of senior editor for strategy in July to tackle the deep issues it presented. Now, amid the cutbacks, how will the work of culture change move forward, and how will relevant resources be affected?

Look at the Times’ newsroom numbers, even after these cuts, and it still stands apart. The content question for its immediate future: How much new content — and product — creation can be justified by business reality? That’s where Thompson’s new Times got a little ahead of itself.

Let’s look at four of the key questions to pop out of today’s move:

Is this a major business reversal?

No, the Times’ revenue is on a familiar path. If you look at the financials of the first six months of the year, reader revenue is still growing a bit and advertising is basically flat overall. The big bright spot is obscured by that big layoff number: a 16 percent increase in Q3 digital revenue, compared to 3.4 percent up in Q2 and 2.2 percent up in Q1. That’s a big number, and a hopeful one for the future as new executive vice president for ads Meredith Kopit Levien works through her massive overhaul of the Times ad operation.

Is the poor business performance of the new niche products a surprise?

Not really. When I wrote about the launch of NYT Now in April (“The newsonomics of NYT Now”), I suggested that a good baseball hitting average was the goal: “My bet is that the Times will be fortunate if one of the three new products generates substantial profits. Two would be a big win, and three would tell us that the Times has arrived at a new level of data-mastering strategery.”

So we’re clearly well short of masterful strategy, but it’s early in the Paywalls 2.0 game. Here’s what we know about the first set of these Paywalls 2.0 entries:

• The NYT Opinion app is being terminated by month’s end, after being launched all the way back in…June. At $1.50 a week, it didn’t find a separate, significant audience.
• The $2-a-week NYT Now app is staying in place — smartphone-only, as it has been — for now, though it is underperforming.
• The NYT Cooking app is staying free — it was launched in beta with the intention of charging for it — and the Times, citing audience growth, is apparently seeing it mainly as a digital ad vehicle. In fact, the digital ad growth potential — that 16 percent number — must be balanced carefully against restricted-to-pay products going forward.
• Then, there’s Times Premier, the VIP sub, which the Times is retooling. The Premier offer has seemed like a mishmash of stuff, and apparently that’s been greeted with lukewarm customer reception as well.

In the spring, I noted that there were clear stumbling blocks to success. There were navigation issues and questions about the daily adoption of a product that was kinda like (but not the same as) the full Times mobile product.

Comparative pricing is one issue, as I noted then: “The pricing of the ‘essential’ product, NYT Now, may be tricky. It’s only $2 a week, which gets you through-the-day reports plus a curated sense of what’s big news from elsewhere and the briefings. However, for $3.75 a week, you can get access to four or five times more New York Times content through its smartphone app — and full access to the NYTimes.com on the web. So a side-by-side comparison may give buyers second thoughts…The biggest, of course, is how many current non-subscribers will see enough value to pay…How large might the NYT Now segment be? There is undoubtedly a vast potential audience that could appreciate a Times fast-read view of the world, but it’s a group that may be tough to get to pay. Two bucks a week isn’t much. But at that price, NYT Now isn’t competing against other $2 products. It’s competing against the enormous freely available web.”

What do we learn about investing in news product?

The stock market — no surprise — loved today’s announcement. It was an announcement of business discipline. Call it a pivot, as CEOs like Thompson are wont to, or a sharp unexpected turn when the boulders in the road look larger than Google Maps told you.

We can figure that the 141 increase in staff in the newsroom over last 30 months cost about $12.5 million a year. Take out 100 of those and the Times saves about $9 million a year. That’s a positive financial move. Look at the wider expense context. Newspaper companies have been cutting expenses annually in the low- to mid-single digits for almost a decade now; that’s the only way they can stay profitable since they largely haven’t grown revenue year-over-year since 2005. Last year, the Times was down 2.1 percent in overall expenses, pruning in lots of places while investing in the newsroom and new products. Through the first six months of 2014, though, it’s been up 4.5 percent. Given the flattish revenue performance (more on which below), that number couldn’t hold. The Times’ operating profit for 2013 was $156.1 million, and Thompson’s already said it will be less than that in 2014.

To be clear, today’s cut is newsroom-centered. Says the Times: “A smaller number on the business side [will be cut] through a combination of buyouts and layoffs.”

The Times operates on relatively slim margins and without deep pockets, even though they’re a bit deeper than they were five years ago. Up I-95 in Boston, John Henry is investing millions in the new Globe. South of it, in D.C., Jeff Bezos is doing the same at the Post. Both see these as long-term investments, without a lot of prospect of short-term payoff. The Times simply can’t afford to do that.

So this “pivot” comes quickly — only a few months after the new niche products were introduced in the spring. Financial pressure is real, and so is a management culture that is seemingly tortured by transitions. (Witness the messes around the firings of former publisher Janet Robinson and former editor Jill Abramson.) It’s not a confidence-builder, internally or externally, to hire up quickly and then buyout/layoff quickly; after all, that’s the industry’s big complaint with Aaron Kushner’s Orange County Register roller coaster.

The Times’ lurch is a cautionary note for anyone experiencing premature exuberance about the digital future of the news business. All kinds of good things are emerging: new revenue from smarter digital ad strategies (native, content marketing, digital services, event sponsorships) and some readers will pay for digital access. But these are still uncertain flashes of light on the horizon. They’re real — but how big are they, and how sustainable?

What’s the size of the Times’ paying audience?

[Note: This section has been revised for greater clarity.]

Consider this. At the end of the last century (1999, to be precise), the Times print paying circulation stood at 1,097,200 daily and 1,682,200 on Sunday. Today, we see 1,217,201 paying Sunday print readers, 680,905 paying daily (Monday-Friday) print readers, and those 870,000 digital-only subscribers.

Let’s compare some numbers, then. Adding today’s Sunday print to digital-only, we now get 2.08 million paying readers — or a little more than 300,000 more than the 1999 high-water mark, which was that Sunday print number. Adding today’s daily print to digital only, we get 1.55 million paying readers, or close to the top print circulation (Sunday’s) of 1999.

We can take a couple of points from these comparisons. The Times has more paying readers today than in 1999. That’s a signal accomplishment. And the number of people who will pay for the Times is relatively stable, across 15 years and a whirlwind of world, generational, and news-reading change. Even though the Times can count more than 30 million U.S. monthly unique visitors and 40 million worldwide, its number of paying readers hasn’t changed a great deal. The plus side of that: There’s apparently a sizable group of people who value news content enough to pay for it, in digital or print form. The minus: That group is relatively small, and apparently not too changeable over a more than a decade. Each publisher must decide how best to find, satisfy and price that audience.

The Times — through its core digital-only/all-access offerings — has succeeded in transitioning over many people into the paid digital world, and that’s a milestone; no one would have believed four years ago that it would have more digital-only Times subscribers than print by 2014. While the Times has so far stumbled out of the Paywalls 2.0 gate, its almost four years of success at working that transition is still a newsworthy one, and a model to further parse.

But we’re just beginning to see the impact of that orphanage, as the quarter-by-quarter results of the standalone newspaper-only companies roll out (“10 takeaways from Gannett’s blockbuster announcements”). New rounds of troublesome numbers could precipitate still more sales and combinations of properties. Southern California — ground zero for daily newspaper bankruptcy and turmoil — remains Exhibit A.

This week’s Tribune Publishing results are instructive. Tribune’s eight papers, led by the Los Angeles Times and Chicago Tribune, were down 3.8 percent in revenue. The usual culprit: print advertising. Overall advertising is down 7.1 percent, with detail on print vs. digital performance unavailable until next week. Circulation revenues helped offset that drop; they were up 2.3 percent, due to higher subscription pricing. The thinness of margin is all-too-apparent:  The company made just $15.2 million in net income, down from $21.9 million a year ago. (The first six months’ net income comes in about $27 million, down from $43 million a year ago.) The Q2 profit is small in dollars, and represents a razor-thin 6 percent margin.

Though the stated results are somewhat clouded by the second quarter being the newspapers’ final reporting as part of the combined Tribune Company, it’s the expense side that will probably see more split-related change than the revenue side going forward.

The Tribune’s revenue performance mirrors that of two other newly split companies. Time Inc’s first standalone report, too, showed it staring into a small but nasty revenue hole. Time Inc. was down 2 percent year over year, attributable to 5 percent decline in circulation revenue; optimistically, its 12 percent digital ad increase helped swing advertising to a 3 percent positive. News Corp, which split last summer, has been similarly challenged. It reported a (currency-adjusted) 5 percent decline in news publishing revenues, largely due to ad dropoffs.

(Meanwhile, even those more highly valued broadcast-centric companies emerging from the split are showing they’re not necessarily high fliers — they’re just in much better relative shape than distressed newspapers. For instance, Tribune’s broadcasting operations showed a small $3.8 million decline in advertising, although that was more than made up by increased retransmission revenues. Gannett’s recent broadcast ad results showed similar weakness. Both companies’ acquisitions provide them good banner headline increases in revenue, but the underlying digital disruption of their core advertising businesses will become more noteworthy over time.)

The splits offer the choice of your favorite pop tune — “Breaking Up is Hard to Do,” or “One (Is the Loneliest Number),” perhaps. With an inflation rate of 2 percent, and revenues dipping 2-5 percent, news publishers will need a big shovel to dig out. They’re at least a handful of digits away from just staying even, despite all the many publisher efforts at diversification or developing alternative revenue streams.

At the L.A. Times, a surprising new publisher joined this struggling crowd. Tribune Publishing CEO Jack Griffin’s first big appointment is a little bolt out of the blue: Austin Beutner. Beutner is hardly a household name, but he’s a player in L.A. A venture capitalist turned one-dollar-a-year salaried L.A. Deputy Mayor for “jobs,” the appointment of the 54-year-old Beutner signals an effort to shake things up — and maybe set things up for the future.

First, he’s not a newspaper guy by trade, a member of the brotherhood of usual publisher suspects. Second, he’s a Los Angeleno (since 2000), glad to call himself a civic booster. Ever since 2000, when the Tribune Company bought Times Mirror and the Times, the civil war between Chicago and L.A. has simmered and occasionally boiled. Times leadership has bristled at corporate and Chicago authority, all of that exacerbated by the nonsense of the Sam Zell ownership years and the ceaseless wielding of the budget-cutting knife. Now Beutner, a guy who doesn’t need a job, is poised to try to break barriers of past rivalries and past strategic thinking.

He, along with his new boss, Jack Griffin, will need help. Griffin lays out the right playbook. It includes modest increases in reader revenue (with a smarter, company-wide digital/all-access system finally rolling out within six months among all eight newspapers, which have haphazardly applied the wider lessons of paywalls) and marketing services (growing, but still small in revenue). But the issue for Beutner and Griffin, and for leaders of all the newly standalone companies remains time. Without those new revenues, only more cost-cutting — further weakening products — can maintain even those meager profits.

The naming of Beutner fuels a familiar parlor game: guessing who may be Tribune Publishing’s next owner.

Oaktree Capital Management, Angelo, Gordon & Co., and JPMorgan Chase currently own 40 percent of the company and control it. We’ve chronicled the will they/won’t they sales odyssey of the past year or two (“The newsonomics of the Kochs: The impact on the L.A. news landscape”).

Austin Beutner occupied a role in those dramas, expressing interest in buying the Times (or possibly all of Tribune) when it looked like the company would be sold, before it decided to first split its newspapers from TV assets last year. He’s a smart guy, and now he’s in the driver’s seat at the Times. That’s a perfect starting point for what could be a “management buyout” of the Times — and maybe more properties — as Tribune Publishing’s tax spinoff clock winds down over the next couple of years.

By then — or sooner — we may see rollups, or maybe rolldowns, in the 20 million-person population area ranging from Simi Valley to the Mexico border.

Look to Orange County, to start. The news keeps coming out of Aaron Kushner’s always shape-shifting family of Registers.

It now looks like owner/publisher Kushner is getting closer to closing on the sale of the Register’s headquarters building, at a sales price of about $27 million, as reported by the Orange County Business Journal. (The Register would then likely lease back space in the building. That would mean that none of the major dailies in southern California any longer owned its own building — another a sign of Splitsville: Real estate is being divorced from newspapers just as surely as broadcast is.)

Further, Kushner’s Freedom Communications finally settled one of three claims/suits against it. On July 31, the L.A. Superior Court approved a $4 million arbitration award to former Freedom execs Mitch Stern and Mark McEachen. That case, over contracted severance payments, gives the execs a lien on real estate parcels that Freedom owns — and which are also for sale.

In this case and in another, Aaron Kushner has countered claims in part by blaming the “misrepresentations” of others. In an April 23 judgment, Judge Luis Lavin failed to find those claims credible. The misrepresentation defense could take on its own irony, as Kushner’s own representations to those with whom he had financial dealings have come under fire.

In that April 23 decision, the judge also considered the necessity of providing Stern and McEachen an attachment: “Petitioners’ contend that Freedom will likely not be able to satisfy its severance payment obligations due to its perilous and continually worsening financing condition. The Court agrees.”

What is that financial condition? Freedom is a privately held company, so we can only judge from fragments. In June, its seemingly rushed buyouts of about 70 employees and furloughs (forcing two-week unpaid leaves that all employees had to take within the following six weeks) screamed panic to many. While word of slow-paying key Register vendors is rampant, Kushner, characteristically, described the payment practices to me Tuesday as business as usual: “We’re running our game.” Further, he notes the company’s “clean balance sheet.”

Freedom does have an obligation to the lenders who replaced previous financing, in December of last year. Silver Point Finance is owed $24,688,391.53, accordingly to July 31 Superior Court documents. It presumably has first call on real estate sales proceeds, given the language in the court ruling.

Related to the Silver Point financing, the July 31 court ruling also indicates “The Freedom Parties acknowledge, for the benefit of the Agents and the Lenders, that (i) there exists one or more “Events of Default” under the Senior Lender Agreement, and that the Agent and the Lenders are entitled to exercise all rights and remedies in respect of such Events of Default……and (ii) the application of the sales proceeds of property constituting Claimants’ Collateral as set forth with the exercise of such rights and remedies….”

Then there’s the heavy burden of pension obligations, which Freedom took on as it bought the Register and other properties out of bankruptcy proceedings two years. Freedom maintains certain early obligations to the federal Pension Benefits Guaranty Corporation and retains responsibility for funding the plan going forward. I asked Kushner if the company had missed a summer payment obligation, and he only offered, “I’m not going to get into it. I’m not commenting on our pension fund.”

I also asked him to verify whether the pension fund, which he controls, had purchased shares of Freedom Communication stock last year, to help fund his fall acquisition of the Riverside Press-Enterprise. He acknowledged that the pension fund had indeed bought Freedom shares, but says that purchase was “unrelated” to the Riverside purchase.

Finally, there are two other lawsuits. Each, notably, includes litigants now involved with Tribune and its Los Angeles Times — the Times being both a head-to-head competitor (especially since Freedom launched the Los Angeles Register in April) and a key vendor, delivering Register subscriptions in its home Orange County. One lawsuit involves Angelo Gordon, which is suing Aaron Kushner for $17.45 million related to money he held back when he purchased Freedom in 2012; Angelo Gordon is one of those three major owners of Tribune Publishing.

Finally, there is curious suit of Jack Griffin. Griffin, who formally became Tribune Publishing CEO last week, served as an advisor to Kushner when he tried to buy The Boston Globe and, he says, when Kushner’s 2100 Trust bought Freedom two years. He is seeking up to $13 million, for related fees he says are owed.

Griffin’s suit now takes on a new color. After all, Griffin and Kushner are now the CEOs of the two largest newspaper companies operating in southern California. While a financial falling out may have torn them asunder, their current posts bring them back together, geographically at least. To be clear, Griffin’s suit is a private matter, unrelated to his new tenure at Tribune. But the bad blood between the two brings a new edge to head-to-head newspaper competition in greater L.A.

Which brings us back to the question of where all of this may lead.

The new Tribune Publishing has already made the point that it’s got an eye out to buy more print properties in its core eight markets. It says its recent acquisition of Annapolis-area papers (close to its Baltimore Sun) will increase earnings later this year. So it makes sense to see Tribune as a potential buyer for adjacent Southern California news properties.

The opportunities are certainly within reach. Let’s also remember that most of the daily press can be bought in this greater region. There’s not only Freedom Communications, with its ever-changing strategies and questionable finances. In San Diego, owner Doug Manchester hasn’t hung a “For Sale” sign on the Union-Tribune he bought three years ago, but he’ll take calls. Digital First Media’s Los Angeles News Group is all but for sale, as DFM’s owners prepare their own auctions more widely.

Tuesday, in fact, a rumor made the rounds in the Orange County Register newsroom: Freedom and the Los Angeles News Group could merge. I asked Aaron Kushner about it. He laughed and said, “We don’t comment on rumors…It’s a fluid market.” In that flux, I asked, “Are you a buyer or a seller?”

“We have a proven track record of being acquisitive,” he said.

On one hand, given tight money all around, deals seem tough to pull off. On the other hand, they seem inevitable.

If somehow the new Tribune — constrained somewhat, by debt, lack of cash, and tight cash flow — could finance a deal, its path to doing so seems to be clearing by the month.

Who better to put together that deal than its new publisher, Austin Beutner? A founding principal in the Evercore investment banking advisory firm, he knows M&A inside out. He also knows the financial straits of the newspaper industry, and believes that intelligent, well-funded consolidation could be a route forward to successful, high-quality daily journalism.

It all seems like a lot to consider for a one-week-old Tribune Publishing company and a neophyte publisher newly named. But then again, change in America’s newspaper industry seems to picking up rapidly this year.

Jake Batsell has a post up on his blog examining how a few nonprofits — Voice of San Diego, The Texas Tribune, Southern California Public Radio — are seeing an opportunity in sponsored content. (We’ve written before about the Trib’s approach.) At VOSD:

So last month, San Diego’s pioneering online news startup quietly debuted a native advertising program aimed at fellow nonprofits. The program, called Partner Voices, publishes article-length “partner promos” that are either paid for by the nonprofits themselves, or on their behalf by a corporate sponsor.

The promos, which carry a monthly fee of $1,500, are clearly labeled as sponsored content. Voice of San Diego’s editorial staff has no role in producing them.

“This was our way to approach native advertising in a fresh, new way that we felt was more in line with our mission,” [Mary Walter-Brown, Voice of San Diego’s vice president of advancement and engagement] said.

Walter-Brown said the sponsorship option gives Voice of San Diego a new way to cultivate revenue from corporate clients who want to publicize their support for civic initiatives. For example, she said, San Diego Gas & Electric is sponsoring 12 Partner Voices promos over the course of a year.

“It allows us to go to an organization or a company that might not have been a traditional advertiser before, but present them with a new opportunity to just build their brand and build their community goodwill,” she said.

Contrary to most popular accounts, the growth of the Internet has not obviously caused a large decline in newspaper readership. Readership has fallen steadily since the Internet was introduced in the mid-1990s, but it had been falling at almost the same rate since 1980, and the small acceleration of this trend accounts for a drop in readership of only about 10 percent. This is consistent with more systematic evidence in Gentzkow (2007) and Liebowitz and Zentner (2012), suggesting that online-offline substitution is relatively limited, as well as survey evidence showing that the Internet currently accounts for less than 10 percent of total time spent consuming news (Edmonds 2013).

In addition, he says print news lost more revenue when it lost its classifieds to sites like Craigslist than it ever did to online news.

For data, Gentzkow relied on comScore for online news traffic and the Video Consumer Mapping Study for print. Obviously, it’s much harder to measure minutes spent reading print than spent reading online, however, Gentzkow writes in an email:

…they actually had observers follow participants around and record what they do minute by minute. They find that the average person who reads a newspaper on a given day reads for 41 minutes.

Now these aren’t exactly comparable — one person could make multiple visits to a website on a given day, and subscribers probably read more than the average reader. But I think it’s clear as a ballpark estimate that the print number is an order of magnitude bigger than the online number.

Based on these numbers, Gentzkow calculates that, although more money is spent on print advertising, when you look at spending per hour of attention, the rates for online are much higher.

Gentzkow offers a a few rationales for why online advertising might be valued more highly in the market.

Each newspaper has physical space for exactly one advertisement. All readers of the newspaper must see the same ad. The marginal cost of printing ads is zero. Each website also has physical space for exactly one advertisement, but these ads are targeted, so the website can show different ads to different consumers. Consumer types are observable to websites.

In other words, whatever online news lacks in eyeballs, it makes up for in delivering the intended viewer.

Nielsen collaborated with YuMe, a “multi-screen video advertising platform” based in California, on a Reach Calculator, which if nothing else is a fun excuse to LARP the life of an ad executive. First, you pick the size of your budget, which cannot be lower than $250,000. (Sorry Mom, sorry Pop.) Then, you decide how much of your budget you want to shift to digital — a figure that, somewhat ironically, cannot exceed 30 percent. Then you choose your target demographic — male, female, or both, and an age range. From there, you get to determine how you want to distribute your digital budget across mobile, computer (i.e. desktop), tablet and CTV (connected or smart TV).

The data for the calculator comes from a YuMe household survey as well as the use of “connected devices.” From a YuMe press release:

Client reactions to the calculator, which was recently presented at YuMe’s global research roadshow as part of a larger Nielsen-powered research study, ranged from ‘very useful’ to ‘I can’t wait to begin using this’. The study that spurred the calculator was comprised of two different studies — an online media survey and an in-person media lab. The results include findings for advertisers around US connected device ownership and how to more accurately plan reaching their target audience across digital video screens.

Using the calculator can be frustrating as you try to nudge your market reach upward, toggling back and forth between tablets and mobile, trying to figure out who — if anyone — is watching smart TVs. Mobile seems like a strong bet across demographics. For example, if I spend along a relatively even distribution (10 percent mobile, 10 percent computer, 5 percent tablet and 5 percent CTV), I can reach 24.7 percent of 25- to 54-year-olds. If I spend my entire digital budget on mobile — a full thirty percent of my total $8,000,000 budget — I can reach 29.9 percent of that group. Meanwhile, the best way to increase my reach among 35 to 54 year olds is to spend it all on tablets — with max digital spending, I nudged just over 30 percent reach only by eliminating all non-tablet spending.

The point of the calculator is to show (rather than tell) media companies that investing in digital platforms will increase their audience. If I spend my whole digital budget on mobile for 18- to 34-year-olds, I reach 78.9 percent of them, compared to 55.6 percent if I just spent my money on regular TV. But the biggest takeaway for me is that it’s not easy to manage a budget. Do I do whatever it takes to reach the most people? Should I pay attention to what percentage of my audience I’m reaching in relation to what percentage of my budget I’m spending? And how many impressions am I getting? It takes a lot of fiddling, and I’m still not sure who’s watching smart TVs. (They seem to be most popular with people over 55.)

Now, a quarter century after those early driving days, the Orange County Register owner and publisher is displaying his latest errant skills behind the wheel. On Tuesday, the Register — not long ago a poster child for confident community news investment and a revival of targeted print — slashed and burned some more, raising new questions about its very viability in the year ahead.

The immediate news confirms that many of the warning signs of the last six months were very real:

• A mandatory, company-wide, two-week furlough that employees must take before the end of July.
• Buyout packages offered to as many as 100 newsroom employees. The package is less generous than the one offered in January, which saw a headcount cut of 30. It includes one week of pay for each year worked at the Register, to a maximum of 20, but no company-paid COBRA health care extension this time around. Journalists must make a decision on the offer by Monday evening, a few hours after a Kushner-led “Town Hall” meeting earlier in the afternoon. If the company doesn’t hit its targets, expect layoffs, with lower severance packages to be the standard.
• Immediate layoffs in sales, in the name of “restructuring to ensure sustainable, cost-effective growth.”
• The Long Beach Register, the paper’s first big expansion, is being scaled way back. The L.B. Register moves from a six-day edition to largely being absorbed within the newly launched L.A. Register (“Six things to consider about the new L.A. Register”). On Sundays, a Long Beach-only section will wrap around the L.A. Register and be delivered, for free, to a select 61,000 Long Beach households, in addition to the relatively few subscribers the Register has picked up there.

As a package, the announcement — delivered by email, without a newsroom meeting — shocked the company. It’s a big red flag, screaming we’re running out of money really soon, following numerous months of yellow flags.

Even as Aaron Kushner surprised everyone with an announced plan to publish an L.A. Register in December, those yellow flags had already started to pop up.

Two months earlier, it announced the purchase of the neighboring Riverside Press-Enterprise for $27 million from A.H. Belo. Before the deal finalized around Thanksgiving, Kushner suffered public embarrassment as the high-wire act required to locate the cash and close the deal became clear. Then, in January, weeks after the L.A. Register announcement, the Register took 32 jobs out of the newsroom and saw its four top newsroom leaders, including longtime editor Ken Brusic, quit, in something between protest and pure emotional resignation. Who would staff the Los Angeles Register — serving a three-times-larger population in neighboring L.A. County — if jobs were being cut in Orange County? Forty or so staffers soon were prepped to be sent over the county line; no new journalism jobs were to be added.

About the same time, its much ballyhooed five-day-a-week print community sections — colorful and well designed, the centerpiece of its community reporting investment — went back to weekly.

Throughout it all, we knew that Freedom Communications, the parent company that Kushner and his business partner Eric Spitz had bought out of bankruptcy two years ago, was a pencil-thin financial operation. Even as it’s tried to innovate, expand, and impress among the multiple challenges of modern-day, digital-disrupted journalism, it’s had little cushion. It had only $6 million on hand in November. Payrolls reportedly weren’t easy to make, though the publicity machine rolled on. In May, it once again made payroll, but you can assume not by much. Now the paper’s vendors are seeing slower payments. Then, Tuesday, this seemingly panicked lurch back to massive — and immediate — cost-cutting.

The yellow flags have turned red. What happened?

First, we can look at the strategy — and some observers question how much there has been one all along — and see a series of lurches.

Take the Long Beach Register as just one example. Last July 15, Kushner announced that he was moving into Long Beach, a large and always-somewhat-separate community of 465,000 just over the Orange County border in L.A. County. He’d be doing so with a staff of 20 journalists — doing it right, investing in journalism, smartly leveraging the Register’s presentation workflows, editing hubs, and sales staff — and proclaiming to Long Beachites that the new five-day-a-week would become their trusted new community paper. The paper launched on Aug. 19. On Nov. 24, its new Sunday edition hit the streets.

Six months later, the experiment is dramatically reduced, the promise quickly changed.

It seemed like the Register’s strategy in Long Beach matched that of its original Orange County investment. Kushner’s early hiring spree expanded a recession/bankruptcy-damaged newsroom of 188 to as many as 400. Today, it stands at 345. His promise to readers, advertisers, and the communities the Register serves: “We care deeply about Orange County’s communities, and the best way to help them grow and connect the people of each city to one another is to cover them with greater depth and frequency.”

The strategy: Rebuild the product. Boost subscription pricing. Reap the ad benefits.

Then the Riverside buy offered a different strategy: regional consolidation. Not a bad idea on paper, but fundamentally different than the OC/Long Beach plan.

Then, the L.A. Register plan — by removing O.C. resources and adding no new ones — flew in the face of the original strategy (“The newsonomics of the Orange County Register’s new, newer, newest plan”).

All of these moves, amid financial tightness, occurred in rapid succession. Amazingly, Kushner’s and Spitz’ revolution has spun itself into a hole in less than two years — they took possession of the paper on July 26, 2012.

A few months ago, I asked Aaron Kushner how long would it take to really replace the incumbent Long Beach Press-Telegram as the go-to news source of Long Beach? Kushner told me it was a 10-year play, acknowledging that no matter how good a product you put into the marketplace, it takes time to change reading habits.

Six months later, the strategy is changed again.

Second, the Kushner contrarian business strategy hasn’t worked. The over-investment in print, as print continues to slowly die off, and the under-investment in digital, has only exacerbated the effect of ownership’s poor driving habits.

The enthusiasm of Kushner and Spitz is hard to dislike. In a short period, they’ve brought numerous good marketing ideas forward (“The newsonomics of Aaron Kushner’s virtuous circles”). But those have been swamped by the many issues of money and management. That newsroom, built up to a level of 375, may be down to 245 soon. That’s still more than 50 greater than when Kushner and Spitz took it over, but several dozen of those 245 are interns and trainees, young journalists with more enthusiasm than experience covering their communities. Certainly, a case can be made for the massive change in the staffing, but the problem that now dogs the O.C. duo is credibility. How can they convince readers, advertisers, staffers, and their communities that they are really invested for the long haul?

Overall, it’s been a down year for those looking for out-of-the-box models to local newspapering.

First, AOL’s Tim Armstrong finally succumbed to investor pressures and jettisoned Patch late last summer. Though the new privately held Patch still employs 65 journalists, and had The New York Times buy its turnaround story, its model-making days seem long ago. Digital First Media’s digital-first revolution has been suspended, as its owners prepare for sale. Advance’s day-cutting fervor is producing new problems along with its new solutions. Now, the Freedom revolution seems more like a school play than a way forward for the industry. Big broad ideas, though sexy, may matter less in rebuilding the news business than brick-by-brick, block-by-block work.

Finally, the wider area — the Register’s playbox of southern California — emerges as ground zero in whatever comes next for metro newspapering. Tribune is about to spin off Tribune Publishing and its L.A. Times; its eventual fate and ownership is unknown. The Los Angeles News Group, soon to be up for sale by Digital First Media, faces its own uncertainties. And now, we have to wonder what the next turn of the Register will be.

Will it be further cut back, or be able to cajole new investment, or be sold, or embark on court-supervised restructuring? All are possible. One thing’s likely: We probably won’t have to wait too long for next act.

For those who don’t know it, Meeker — formerly of Morgan Stanley, at VC firm Kleiner Perkins since late 2010 — each year produces a curated set of data reflecting what she sees as the major trends in Internet usage and growth. It may be the only slide deck that qualifies as an event unto itself.

What’s useful about Meeker’s deck is that its core data serves as a punctuation mark on some big, ongoing trends. The kind of trends we all know are happening, but whose annual rate of progress can be hard to judge. Like, say, the continued demise of print.

The Meeker slide that always interests me most is the one where she shows how American attention is divided among various forms of media —and how that division lines up with where advertising dollars go. How much of our attention goes to television, say, versus how much of our advertising go there?

It’s not absolute dogma that the two — audience attention and advertising dollars — always be equal. But it makes sense that they would tend toward parity. More people listening to the radio should lead to more companies advertising on the radio, or vice versa.

Anyway, here’s the chart for 2011:

The two things that jump out at me: Print gets a lot more advertising than it gets attention. And mobile is the opposite. You’d think that would equalize with time.

And here’s 2012:

Equalization! Or at least the path to equalization, proportionately. Print loses attention, but loses ad dollars a bit more quickly; mobile gains attention, but gains ad dollars a bit more quickly. (Sizable margin of error here, it’s worth saying.)

And here’s 2013:

The print story remains the same: down in attention and in ad dollars. But note there is still a wide gap between the two — print still gets far more ad dollars than its hold on the American attention would seem to “deserve.” Print advertising is not coming back. It will fall further. Substantially further. All newspaper planning for the coming few years needs to reckon with that basic fact.

Mobile continues its rocket rise, and there’s still lots of room for ad revenue growth. And now it’s even eating away at the Great American Time Suck, television. Mobile is eating the world, and most news organizations make only a pittance off it.

Here’s the optimist’s spin for print: Not all forms of media are equally useful for advertising. Mobile, thus far, has been notoriously difficult to monetize through advertising; app purchases and in-app payments are the dominant ways for companies to make money on phones. Display advertising doesn’t work as well on such small screens, and search ad revenue is reduced.

If that’s true, maybe print is just mobile’s opposite: uniquely aligned with an advertising model, with big lush expanses of newsprint aching for a cell phone provider’s printed embrace.

Maybe so! I buy that, a little. But Meeker’s slide deck is that useful, punctuating reminder of the deeper trend lines of the publishing business. And for newspapers, they’re not good, and they’ve still got a ways to go down.

Go check out the full presentation — lots more interesting stuff in there.

Two reports tumbled into the public sphere within a week of each other recently, and together, they help us answer both questions.

The numbers here show that the newspaper industry overall — a relative minority of leading-edge players aside — is trending the wrong way. Both digital ad revenue and reader revenue continue to grow, but both are less positive than they were a year ago.

Let’s start with the overall digital ad market.

The Interactive Advertising Bureau’s 2013 full year report is its usual rosy self. Ten years ago, IAB had to explain what it was. Now, it tracks the country’s No. 1 ad type — digital. Digital ads passed broadcast TV for the first time, and by a healthy margin, $2.7 billion. Passing TV is another milestone, coming just a year after digital surpassed print (newspaper + magazine) spending. Now, its lead over newspapers, as seen in the IAB chart below, is more than two to one, $42.8 billion to what IAB counts as newspapers’ $18 billion.

Curiously, that last number — part of a study PwC (PricewaterhouseCoopers) did for IAB — counts $5.8 billion less in overall newspaper advertising than does the Newspaper Association of America (NAA), which released the other big summary 2013 report.

That’s a big difference — 25 percent. How come? (“It was sourced within PwC data,” offers PwC’s Steven Silber in explanation.)

Metrics are a big issue in the web world, but this ad delta — print and digital combined — is an outsized one. Whichever number you want to use — $23.8 billion or $18 billion — is highly meaningful. But your choice won’t change our tale much. The gulf between digital and newspaper advertising is now enormous, and still growing: Digital advertising grew 17 percent year over year.

The graphical time series reinforces the numbers and puts squiggly lines to the lost decade for newspaper companies:

There’s a lot more in the report than the top-line numbers, and we’ll get to some of that below. First, though, let’s compare the IAB report with that NAA report that came out at the end of last week. Let’s start with the NAA’s digital ad number. It came in at $3.42 billion, an increase of only 1.5 percent year over year, shown below in the context of other 2013 revenue categories. (Note: The direct marketing and niche publication data is all print; any digital niche revenue would be in “digital ads.”)

So, as digital advertising overall grew by $6.2 billion in a year, newspapers’ digital ad take increased by only $50 million — less than one percent of that six-billion-dollar growth.

That’s a fairly incredible number. But it’s not a surprising one.

Each newspaper company reports (and internally allocates) its digital ad revenues by its own standards, so it’s tough to get apples-to-apples comparisons about how well these publicly reported numbers differ company by company. (Not to mention the many newspapers going private and only selectively releasing any data at all.) Is McClatchy’s digital-only revenues report significantly different than Gannett’s, or A.H. Belo’s?

What we can see in this NAA assemblage of numbers is that digital advertising growth has become an increasing challenge for all newspaper companies. NAA’s compilation is a fairly comprehensive extrapolation, based on 24 newspaper media enterprises, including all the public companies and some private ones. Its aim: to “cover all regions of the country and all circulation size groups.”

It shows this troubling trend in digital ad revenue growth over the past few years:

• 2010: 10.9 percent
• 2011: 6.6 percent
• 2012: 3.7 percent
• 2013: 1.5 percent

That takes us back to the recession-wracked year of 2009, when overall advertising dropped 19 percent — and that’s what took the breath out of the industry. Digital advertising, unsurprisingly, declined 11.8 percent that year. Before that, it all felt like upside: Digital ads grew at annual rates between 18 percent and 31 percent between 2004 and 2007.

This is where we need a New Yorker cartoon: Silver-haired mid-aughts newspaper CEO standing in front of chart, presiding at an impressively long, carved from a single exotic tree and flown in from wherever, whatever-the-expense, table. Pointing to a drawn five-year spreadsheet, he’s saying, “Yes, the down arrow of print advertising is regrettable, but manageable. Look at the up arrow of digital ad growth! As you can see, we’ll hit a crossover point of digital ad growth surpassing print ad decline, and all will be well.”

It didn’t work out that way. Few of those CEOs are left. The digital ad arrow rocketed higher and at a sharper angle than nearly anyone would have believed 10 years ago. But newspapers didn’t benefit from the boom. And the newspaper print ad arrow plummeted, a fall that now looks stuck at about an annual 8 percent rate.

What was once the great growth hope is now a popped balloon. The digital ad war looks almost over. Newspapers haven’t lost, exactly — $3.4 billion is still a lot of money — but they have been reduced to supporting player status.

Digital advertising

Put a few numbers together and we can see that newspapers take only about 8 percent of all digital ad spending, a share that’s clearly in decline. In the old pre-Internet world, newspapers took about 20 percent of overall ad spending. Those two numbers are another shorthand to understand the destruction of the industry’s core business, as advertising once supplied 80 percent of the industry’s revenues and nearly all its profits.

Take in these numbers from the IAB report:

• Ten companies control 71 percent of all U.S. digital advertising. The next tier, those companies ranked 11th to 25th, account for another 10 percent — leaving 19 percent of the largest ad category in the country for everyone else. IAB doesn’t list the top 10, but we know no publishers have been among the top eight, led by the likes of Google, Facebook, Yahoo, and Microsoft, over the last several years. The dominance of that top 10 has moved between 69 percent and 74 percent for about a decade.
• The highest growth digital ad areas are the ones in which newspapers are the weakest. Mobile grew 110 percent year over year, to $7.1 billion. Digital video grew 19 percent, to $2.8 billion. Performance-based ads now make up 66 percent of ad spend. Search, while maturing, still commands 43 percent of all digital advertising.
• Digital classifieds revenues, a traditional newspaper strength, were up but 2 percent, to $664 million.

It’s important to say: A relative few leading-edge newspaper company players are growing digital ads in high-single and even low-double percentages. Those are the companies I usually dwell on in my work, in this column and at Newsonomics.com, the best practice examples that may push faster innovation for others. Those companies are using a new portfolio of good techniques, deploying advanced ad technology and optimization, selling local digital marketing services, and retooling their sale forces to widen and deepen relationships with advertisers. One brighter spot the NAA numbers can point to: Digital agency and marketing services grew 43 percent, albeit off a still-small base (“The newsonomics of selling Main Street”).

This week, though, it’s essential to face the average reality for the industry. That 1.5 percent digital ad growth rate says volumes. Most companies simply aren’t executing at a transformative level, and their continued cutting of staff and product reinforces that often dismal reality.

A few have prioritized print over digital — the Orange County Register’s Eric Spitz is the most vocal in that camp. Most, though, are trying to focus on digital — they’re just not succeeding.

The IAB data tells us something else about the 2015-18 digital ad ecosystem: Publishers may succeed best by aligning themselves with one or several of the top 10 players. Those players’ ad tech so far surpasses most publishers’ that partnerships — and using others’ tech and reach — become essential. Take the Local Media Consortium, which grew out of major newspaper publishers’ relationship with Yahoo ad tech. It now uses Google’s DoubleClick Ad Exchange, as do many other individual chains and papers. Google is a foundation for their digital businesses.

Then there’s Facebook, now building itself into an ad network, which will no doubt be used by newspaper companies. (Many of them already resell Facebook advertising.) Riding along — finding the most profitable place nesting within the biggest ad players — is much of the future of local newspaper companies’ digital ad future.

Digital and all-access circulation

Finally, let’s get back to that other growth area for newspaper companies, what I have identified as the revolution of reader revenue.

NAA reported an increase of 3.7 percent in circulation revenue. That surprised me. I’d expected it would come in around 4-5 percent. Why? By the end of 2013, more than four in 10 U.S. dailies had restricted digital access in some form, including almost all the chains other than Advance. Some charge extra for digital access; many include it as part of single-priced print-plus-digital sub. The singular compelling idea: Get more reader revenue to help offset the awful decline of print ad money.

While 3.7 percent is good, up from the flat circulation revenue we saw in 2008-10, it’s a point less than the 4.5 percent circulation revenue growth in 2012.

There are lots of moving pieces with reader revenue, but looking at individual company numbers, it looks like reader revenue growth may already be slowing — and that would be bad news for publishers still searching for a way to first get to zero revenue growth — and then, hopefully, positive revenue growth.

Let’s also remember that The New York Times’ reader revenue number is included in that 2013 over 2012 NAA industry increase of $430 million. The Times increased its overall circulation revenue by $51 million in 2013 — so that’s 11 percent of NAA’s increase right there in one paper.

(For context, The New York Times’ circulation revenue equals about 7.5 percent of all U.S. circulation revenue. For clarity, the Times’ 2013 net increase in reader revenue was $51 million, despite its reporting of what is now a $160 million run-rate in digital-only subs. The $100-million-plus difference? The Times, like all dailies, continues to lose print subscribers, and their money. Just this morning, in its 1Q earnings call, the company noted that print circulation dropped 6 percent in daily copies, 2.5 percent on Sunday. So figure this: For every two dollars lost in print reader revenue, it is gaining three in digital. That’s a tough tradeoff, but one that seems to be working. In fact, with print advertising just reported to be 4 percent up for the first quarter, the Times is doing decently in print overall.)

Why might reader revenue increases be slowing, a topic that needs to be deeply explored? Consider these possibilities:

• Mediocre execution: Press+, the largest supplier of digital sub services, has made a major point of how much reader revenue varies among its affiliates, as much as 10×, all based on the fundamentals of pricing and marketing.
• Too much cutting: The amount of news content, too, is a driver of digital subscription success, Press+ has noted. Clearly, some would-be customers are balking at paying increased prices (when digital access is added to print) for what they perceive to be (and which often is) less news.
• Volume loss is holding down the ability to price: That, of course, is the dynamic balance. How many paid copies are you willing to give up to improve your per-subscriber revenue? Charge too much, and the math doesn’t work. Newspaper pricing, after an initial blush of paywall-inspired increase in 2011-13, may be hitting a wall.
• First-year price increases — when papers started restricting digital access — may be tough to match in the second and third years.

It’s too early to know what’s yet true, among that mix-and-match set of possible scenarios. Something, though, seems afoot.

One could say the numbers are sobering. But this is an industry that was shocked into sobriety years ago. Overall, NAA put the best face it could on its numbers, noting industry revenue was only down 2.6 percent. That’s still down, though, and those digital ad and reader revenue growth rates are going in the wrong direction. It’s a performance that may raise new questions for the spate of new owners, and the would-be buyers of properties on the market or soon to come to market. As the industry sells off Cars.com, newspaper sellers may find its hard to put a fresh gloss on a used paper.

That’s the best spin. For the pessimist living in your cold, black heart:

— Print advertising revenue continues its massive slide, down another 8.6 percent in 2013 — another $1.6 billion gone missing. An annual decline in the high single digits has become the norm; you don’t hear people talking about getting back to par, as you did three or four years ago. NAA’s release notes that print advertising now “makes up less than half of total revenue,” which is true. But that’s not because of the strength of everything else; it’s because print advertising is in a state of collapse that isn’t going to stop anytime soon.

— Digital advertising — once touted as the savior of the business — was up a measly 1.5 percent. To put that in context, through Q3 2013, Nielsen estimated the online display ad market was up 32 percent. The broader online advertising world keeps growing; newspapers’ share of it keeps shrinking. (And much of that digital advertising number for newspaper still includes a lot of print advertising with a digital throw-in. Only 24 percent of what NAA counts as digital advertising is digital-only advertising.)

— Those two numbers combined mean that, in 2014, American newspapers still get 83 percent of their advertising revenue from print.

I feel confident in saying that newspaper print advertising will decline again in 2014, most likely in the high single digits again. Digital advertising will continue to muddle along with a slight increase. The key question for 2014 is whether circulation revenue gains can continue. It’s the only thing providing meaningful resistance to that ad decline.

Industry-wide, there’s probably some growth left, if only from more papers adding paywalls. Most American dailies still don’t have them (roughly 900 out of 1,400), despite the boom of the past two or three years. Many of those are small or weak enough that a paywall might be a hard sell, but there are still some candidates out there, and one could expect a boost in circ revenues just from them.

But for individual newspapers with existing paywalls, it’s a very real question. Are the John Patons right that digital subscription revenue is a one-time gain, destined to plateau or even fall off? If that’s true — and I think for many newspapers it is — you could easily see a bigger overall revenue decline in 2014 than in 2013.

(Just to get my predictions for these numbers next year on the record: print advertising down 9 percent; digital advertising up 1 percent; circulation revenue up 2 percent; new/other revenue up 6 percent; overall revenue down 3.5 percent.)

If the Register were a football team, Coach Kushner’s strategy would clearly be to flood the zone. That’s what all the moves — from Orange County to Long Beach to Riverside and now L.A. — tell us.

Let’s consider six things about the new Los Angeles Register.

1. It’s far more fun being the insurgent than the incumbent.

It’s a pirate move, and it’s pure Kushner, going big and bold and loud back into the marketplace. Newspapers have sometimes seemed almost agoraphobic in the wake of digital disruption. The Register wants to put itself in the center of a marketplace.

2. If you’re the pirate, paint your own picture of the competition.

Kushner has gotten his reasons to take on the Los Angeles Times down to two sentences: “We are very much pro-business, right of center. The L.A. Times sits on the other side.” He is painting the Times as a lumbering lefty paper, more interested in the world outside L.A. — “The L.A. Times is a wonderful national newspaper” — than in being a local news medium. Of course, the Times has been a great newspaper in part by knowing that its longtime readers care about the wider world. And, like all ambitious metros, it’s turned itself in pretzels trying to figure how to do that and still be local too. If you’re the insurgent, though, you don’t care about the nuance — you just paint the portrait. Kushner’s adoption of the libertarian mantle is a curious one. The Hoiles family, long-time owners and builders of the O.C. Register, were among the leading libertarian voices of their times. Kushner, though, didn’t make much of a point of his politics in the early O.C. Register expansion. In L.A., it seems, it makes a good talking point.

3. How local is local?

Los Angeles County includes 88 city jurisdictions. It is a famously balkanized place; grow up west or east, and you might never set foot in the opposite end of the sprawling city in an entire lifetime. In that regard, it’s even less a singular place than Orange County, itself diverse. There, the new Kushner-Spitz Register came out brawling, promising local above all else. Handsome, new colorful sections rolled off the presses, and a near-doubling of newsroom staff filled their pages — fulfilling that promise to a great extent.

Then, as the Register assessed its finances and its expansionist desires, those new sections were significantly scaled back (and some staff laid off). In L.A., the new Register, with an unstated press run, will be a single edition. So, yes, it’s local — as local as one edition can be for the entire county. Then there will be monthly community sections. How local will L.A. Register readers find the new paper? Today’s first Local section is an uncertain metro assemblage, fronted by Kareem Abdul Jabbar’s picks of his favorite movies about L.A. and an interview with restauranteur Wolfgang Puck.

4. It’s a consolidation play.

DFM’s Thunderdome may be closing its doors, but the trend toward centralizing content production and editing is a fundamental feature of the L.A. Register launch. Its sports section can share the Dodgers, Angels, Clippers, Kings, and college coverage across the board, maximizing the investment in beat reporters and columnists. Ditto for features, business, and nation/world. Then the central creation hub — working itself to the bone, I hear — puts all the pieces together. Residents of Santa Ana may get different local sports than Santa Monica, but on the whole, there’s great cost savings in producing multiple print editions. Tribune and Gannett, among others, are doing the same thing, but at newspapers in different cities; the Register is doing it across the L.A. area. In addition, the L.A. Register reporting staff isn’t new; they’re O.C. staffers now working out of mobile offices in L.A. So, overall, the high-profile invasion is smartly built on a lower-cost strategy.

5. It’s more a print play than a digital one.

Register president Eric Spitz is quite outspoken about what he considers the industry’s abdication from newsprint. He’s also deeply skeptical that newspaper companies can grab much of the now-$40-billion-plus U.S. digital ad business — given the economies of scale that Google, Facebook, and others have amassed. So that means the L.A. Register play is mainly print, scrapping for a still-substantial — if still declining annually, somewhere in the high single digits — share of print ad spend in the nation’s second-largest market. (Today’s e-edition is chockful of ads, many O.C.-based and at low rates, we’d presume.) LosAngelesRegister.com will be a hard-paywalled site, like its OCRegister.com parent, though it should be noted that the O.C. site is significantly more porous than it used to be. Kushner denies a change in paywall strategy, but it seems like a more metered approach is being tried. L.A. Register debut pricing is the same kind of one-price-for-print-and-digital deal as in Orange County, starting in L.A. at $20 every four weeks. Don’t expect much in the way of digital subscriptions.

6. It’s as much about staking out turf as selling newspapers.

I don’t expect the L.A. Register to sell more than low five digits of new papers for a while. Kushner talks about a 10-year plan — but seriously, how many humans are going to be buying daily print newspapers in 2024? This move is calculated to produce a lot of buzz and some incremental sales.

In the last generation’s newspaper wars (Newsday’s move into New York, the Twin Cities, Dallas vs. Fort Worth), insurgent papers moving into the other guy’s turf were priced at 25 cents or so. The L.A. Register is six times that price, but at that level, the Register makes some money on every copy sold — and it can then extend its ad rate base for its windows/shutters/carpets medium-sized retailers. More importantly, in the still volatile L.A. newspaper landscape, the L.A. move aims to position Freedom Communications one of the last two last print survivors in the Southland.

How big a market are we talking about? Fifteen million people live in the L.A., Orange, and Riverside counties; Freedom bought the Riverside Press-Enterprise just last fall. Yes, print advertising is in decline — but if you can be one of the last two big print publishers in that big a market, there’s a lot of business. Finally, who knows what comes next in the L.A. Times saga? The spinoff (“The newsonomics of the print orphanage, Tribune’s and Time Inc.’s”) of the Times will come soon, and its future ownership and direction remain unclear. Aaron Kushner, ever aggressive, says he still wants to buy the Times, if not all of Tribune. Many will scoff: “Where is he going to get the money?” Yet, deploying the L.A. Register, modest as its sales may be, may convince financiers that a combined Times/Register could be a horse worth backing.

News observers have parsed and poked at every recent big buy over the last year. Is this the turnaround? Why are these billionaires buying? What do they see? What’s the reason?

Life — even business — is sometimes a little more nuanced. We race to make money, even when we seemingly have enough. We acknowledge our roles within our wider communities. 50/50 is a perfect way to capture the spirit of some of the new personalities and money entering news company ownership. Almost all of them have a sense that they are buying near a financial bottom. And of course, there’s the ego-stroking that still comes with putting your name atop a masthead. Then there’s the mix of civic and sometimes political motivations we see ushered in by these new owners. It’s never quite a perfect 50/50 split, of course, and it varies with each of the new owners.

50/50, though, is an eloquently simple way to describe this new era of Bezoses, Buffetts, Henrys, and Taylors. Warren Buffett has been the most obscure in his motivations, but that’s explained by his use of publicly traded Berkshire Hathaway as a buying vehicle. John Henry laid out civic motivations in a way we haven’t heard from incumbent publishers in a long time, in his fall piece “Why I Bought the Globe.”

Now that new class of owners has unexpected company: Alice Rogoff.

Rogoff (illuminating in-house bio here) shot to national prominence Tuesday. Her purchase of McClatchy’s Anchorage Daily News for $34 million, and its planned merger with her six-year-old digital startup the Alaska Dispatch, re-electrified the local news debate. Another billionaire buying; another chain selling. Is it a trend? Are we seeing the deconsolidation of the U.S. press?

Our new Alaska tale can be read as a David taming a Goliath. The digital-only Alaska Dispatch, with a scrappy staff of less than 20 journalists, takes over the print incumbent, with the Daily News’ publisher and editor retiring with the sale. (While the Dispatch is small, it’s not a perfect David: Rogoff is a former chief financial officer of U.S. News and World Report, and her husband David Rubenstein has an estimated net worth of $3.1 billion.)

Rogoff, 62, shares that sense of place, of legacy, and of impact with Glen Taylor. Last week, the group that bought the Star Tribune out of bankruptcy in 2009, announced it was agreeing in principle to sell to Taylor, best known for owning the Minnesota Timberwolves. Seventy-five percent of the ownership has been split among GE Capital and the local Wayzata Investment Partners, and they’ve been rewarded for their above-average stewardship of the Star Tribune (“The newsonomics of Pulitzers, paywalls and investing in the newsroom”). I estimate the sale price at about $100 million, built both on healthy profits of $20 million-plus and an ahead-of-the-curve community-reaching, ad-servicing, reader-paying strategy. We knew the current owners were involved for the short term; the news here is that ownership will stay local, have deeper pockets, and keep management in place.

Glen Taylor is a 72-year-old Minnesota-bred billionaire who earned his way to his mini-Buffett empire of 50 or so companies through Taylor Corp., along with ownership in 30 other companies. He also has served as a moderate Republican state legislator from 1981 to 1990. He grew up reading newspapers and understands the value of a strong news organization in the life of a city (or two) and a state.

“I’m interested in this one because it’s a Minnesota paper,” Taylor told the Star Tribune. “For the long run, if we can continue to have a news media that’s consistent, fair, broad-based…I think it’s in the interest of our state. I would be proud to be part of that.”

Taylor and his fellow new newspaper publishers share at least three qualities. The first is what gains the headlines: They’re billionaires. They have enough money to buy a property worth a tenth or so what it would have gone for 15 years ago. Second, they have civic impulses, understanding that the world is about more than making money. Third, they are optimists, now apparently on the loose.

Washington Post executive editor Marty Baron outlined his nine excellent reasons (“Optimism is the Only Option”) to be optimistic about the news business, a seeming act of bravery in a trade that has long embraced cynicism is a professional religion. I’ve pointed to this emerging “outrageous optimism” as key driver of news business rebirth, and this week Capital New York’s Joe Pompeo pointed to it in the air in the NYT Now launch. Watch out: It could be contagious.

Let’s be clear about this particular rush of money. What’s most interesting about this spate of buys is that they are local.

National news media is in a new go-go mode, with diverse investment capital announced in the last year alone. Read Marc Andreesen’s well-noted manifesto and you can see the financial justification for everyone from Vox Media to ESPN and NBC Universal pouring millions in national/global news sites.

Then there’s Pierre Omidyar’s First Look Media, still in embryonic stages. Its founder and funder is a 50/50 figure: clear about his pro-democracy reasons for building First Look, but also envisioning it at better than break-even — though that may take more than five years. For all of the moneyed individuals now investing in news, it’s a melding of market discipline and civic value.

The one thing Andreesen left out, as he prophesied hockey-stick-like growth for new media — “The big opportunity for the news industry in the next five to 10 years is to increase its market size 100×” — is local. In fact, almost all the movement of high-profile free agent journalists — the Ezra Kleins, Nate Silvers, Matt Yglesiases, and Kara Swishers — has been within the national news sphere. That 5,000-person increase in journalist hiring, noted in Pew’s recent report? The great majority are national, especially in the wake of Patch’s demise.

The local digital opportunity is real, but it’s a tough, years-long slog. It can never offer the sheer multiplying scale of a global audience or that hockey-stick dream return. It demands patience. It requires at least a 50/50 approach to business and life. That’s why these billionaire bets are timely: They bring money and time to the business of reviving a local American press.

Will this go off the tracks in certain cities? Many will say we already have our proof in millionaire Papa Doug Manchester’s tenure owning U-T San Diego (née the Union-Tribune) in San Diego. But then again, we’ve always had a wide spread of viewpoint and journalistic quality among the daily newsrooms spread across America.

All else equal, though, local ownership is a good thing. That may be especially so in this age. Look at the broad history of chains sweeping up most of American’s dailies in the ’60s, ’70s and ’80s, and you can see all kinds of patterns. Great local papers were homogenized; wretched local papers were made much better, with some even made great. It depended on which chain owner you got in your city. Today, the financial pressure on the chains makes their own reinvestment in the print/digital future hard to pull off. So, local buyers, with deeper pockets and good intentions, can be a very good thing for the local news business and its readers.

The slow unchaining of U.S. daily journalism

We’re not seeing the end of newspaper chain journalism. But we clearly see a weakening of the links, especially in metro markets. (Consider this historical footnote: The Anchorage Daily News was McClatchy’s first outside-of-California paper acquisition, the beginning of its chain growth.) Make no mistake: The rationale for chain ownership — those sometimes-real, sometimes-elusive synergies of multiple properties across broad geographies — still has some purpose. The new, post-bankruptcy GateHouse/New Media Investment Group, funded by Fortress Investment Group, is currently the most aggressive in rollup. (Here’s a good explainer by the Boston Business Journal’s Jon Chesto.) Even as some of the old chains sell, new chains are replacing them.

Still, overall, we’re seeing some significant unchaining of newspapers. Alice Rogoff’s purchase in Anchorage is only the latest example. In the past year, we’ve seen the New York Times Co. complete the process of de-chaining itself, selling The Boston Globe to John Henry. A. H. Belo sold off its Riverside Press-Enterprise to Aaron Kushner’s Freedom Communications (now more a multi-title local news company than a chain, as it launches the L.A. Register next week) and has placed its Providence Journal on the market. When the ProJo is sold, A. H. Belo will be back to being a Dallas-area company. Could McClatchy ultimately peel back to its own California roots, with its three Bees and two other properties? The company will take $24 million in post-tax gains from the Alaska sale, as it tries to thread its needle, balancing debt reduction and digital investment. It may seem far fetched to think of a smaller McClatchy today, but consider the massive change among McClatchy’s newspaper brethren.

Knight Ridder, not long ago the No. 2 largest newspaper company in the company, sold itself to McClatchy eight years ago. Tribune, the No. 3, is about to spinoff (“The newsonomics of orphanage”) its all its newspapers, with follow-on sales of individual papers the greatest likelihood. MediaNews is no longer with us, merged along with the Journal Register chain into Digital First Media, which itself (“The newsonomics of Digital First Media’s Thunderdome implosion — and coming sale”) looks to be splitting apart. Media General is no longer a newspaper company, selling its largest paper, in Tampa, to single owners for a bargain price and the rest to the newest contrarian chain in the business, Warren Buffett’s Berkshire Hathaway Media.

The Washington Post has moved from a larger diversified company into the singularity of the Post itself. In the Twin Cities, the Cowles-owned paper Star Tribune went chain in 1996 when McClatchy bought it, and now has meandered its way back to individual ownership as Glen Taylor comes forward to buy the paper.

Wow. It’s dizzying change for what used to be a staid industry. Though it’s not clearly moving in a straight line, the unwinding of the chains is real. The post WWII logic of buying and building holds far less logic financially.

Beyond billionaire bingo

Billionaires can be good for the newspaper business. That’s the good news. The bad news: There aren’t that many to go around. We have a paltry 492 in the U.S., and they’re unevenly distributed geographically. (A few of China’s 152 have shown interest in U.S. media. And then there are the 111 in Russia, who may find America a more compelling investment environment in these post-Crimean invasion times.)

Still, the 0.000001% are having an impact. It may soon have more.

In L.A., Eli Broad is once again expressing interest in buying the L.A. Times — and returning it to local control. In San Diego, control — which has been local except for a brief Platinum Equity interim — looks like it is up for grabs again. Given the opportunity to rebut the notion of U-T San Diego is for sale, CEO John Lynch refused to do so.

Of course, for readers in southern California and around the country, it depends on which billionaires or multi-millionaires (yes, you qualify too) you get. You want the ones, whether Republican or Democrat, who believe in a fair, straight-ahead news report.

Consider last year’s allergic reaction to the Koch Brothers’ attempt to buy the Tribune newspapers. Through public protest and private pressure, the Tribune properties never made it to the offer sheet stage — but they’ll come back on the market some time after the spinoff. Given the Kochs’ great understanding of political influence, why wouldn’t they buy newspapers as another lever of political persuasion? As news of the DFM shakeup reverberated around the country last week, smart observers noted that one of the purplest of purple states — Colorado — could see one billionaire newspaper owner, Philip Anschutz, consolidate the state’s press. With its “stridently conservative” stance, those nine electoral votes in 2016 may swing in the balance. While the Roberts Supreme Court has widened the opening for wealthy campaign donations, owning a press still offers an old-fashioned means of influence.

To be sure, relying on billionaires to save the local day would be silly. We’ve seen all kinds of efforts — from tenacious, high-achieving, nonprofit startups to would-be for-profit digital chains, as well as financial strategizing around “low-profit” local news corps. All have their place in the renaissance. This year, though, it is the boys (and girls) with the big bucks who are making headlines.

Happy answering. Unless, of course, you want to pose your own question: Isn’t it time Corporate stops asking such awkward questions in the first place?

In Pew Research Center’s latest State of the News Media report, just out, you get a glimpse of how the worlds of journalism and technology are continuing to merge and the impact that convergence has on the business and editorial prospects of media companies.

A majority of Americans now say they get news through a digital platform: 82 percent reported using a desktop or laptop, while 54 percent got news through mobile devices, according to Pew. Half of social media users share or repost news stories, while 46 percent discuss news on those sites. Audiences are also spending more time watching their screens: 63 percent of U.S. adults now watch online video, and of that, 36 percent watch news video.

At the same time, the companies that are helping to redefine digital news are expanding aggressively: Pew estimates that digital news operations, from the small hyperlocal shops up to the likes of ProPublica, The Huffington Post, and Vice have produced almost 5,000 full-time editorial jobs. Not enough to make up for a decade of losses in newspapers, but significant.

Traffic-wise, those companies are also challenging legacy media operations for audience. In April, May, and June of 2013, The Huffington Post averaged 45 million unique monthly visitors, which put it behind only Yahoo News as the top news site. BuzzFeed averaged 17 million monthly unique visitors, almost on par with The Washington Post’s 19 million monthly unique visitors.

“This year, what we saw was individuals tied to technology with a deep understanding of technology and digital content begin to tackle news reporting in a way we haven’t seen before,” said Amy Mitchell, director of journalism research for Pew.

But the State of the News Media report also offers a dose of cold water to the digital media excitement: That new cash flowing in — whether through VCs, philanthropy, or personal investment — represents only 1 percent of the overall funding for journalism. Pew estimates that for-profit digital native news outlets pull in between $500–$700 million in advertising annually, which is just around 1 percent of all news-related advertising across sectors.

While the consumption of news on new platforms is rising, it still occupies a small space in the overall news industry, said Mitchell. “It’s all here, and real,” Mitchell said of the digital newcomers, “but also step back and look at the whole picture of news that consumers are receiving, and where does this fit in that? And it’s a small piece, at this point.”

On the business side, Pew found that audience-derived revenue — through paywalls, cable subscriber fees, and other sources — was growing both as a dollar figure and as a share of overall revenues. But it’s uncertain whether that increase is driven by a more paying readers or if news companies are just squeezing more money out of existing customers.

Mitchell said there’s still plenty of uncertainty in the business models for news. Nonprofit news outlets need to find sources outside of foundation funding; most news companies are still heavily dependent on advertising; and digital news sites are still developing new sources of revenue. “There is that big question mark next to the dollar sign that lets people think about what the future of sustainability is,” Mitchell said.

Circulation revenue at daily newspapers was up 5 percent for the year, driven largely by new paywall plans. But newsstand sales of magazines fell by 2 percent. While cable news audiences declined, local TV news saw modest increases in viewership, and evening network newscasts were up.

That’s all just the tip of the iceberg: As always, this is a huge report, with a wealth of information for media nerds. Pour a nice cup of tea, find a comfy chair, and set aside some time for reading. Here, in no particular order, are some of the more interesting takeouts from this year’s State of The Media report:

How news makes money in 2013

Pew estimates the U.S. news industry generates around $63–65 billion a year. But advertising remains the backbone of the business, making up two-thirds of revenue for news organizations. The area seeing the most growth is audience revenue, which includes subscriptions (digital or print), premium services (like Politico Pro), TV bills (cable and satellite), and the types of voluntary contributions that go to nonprofit news.

Daily newspaper subscriptions make up almost 70 percent of audience revenue, totaling $10.4 billion in 2013. But Pew’s research suggests that media companies aren’t pulling in new paying customers, but rather extracting more money from a shrinking pool. Giving to public radio stations was down by 3 percent in 2012, but the $400 million raised was still the second-highest dollar amount in 16 years. Similarly, Pew points out that newspaper and magazine circulation numbers are flat overall as subscription revenues are up.

According to data from eMarketer, digital advertising on the desktop web generates more than 3× the money of mobile. In 2013, desktop advertising brought in $33 billion, up a smidge from the previous year. Mobile jumped to $9.6 billion in 2013 from $4.4 million the previous year.

The report also included a good comparison graphic of revenues from digital-only outlets:

Digital newsrooms are expanding rapidly, but sustainable business models remain elusive

To get a better look at the emerging digital-only news environment, Pew surveyed 468 digital-only outlets, with 30 qualifying as “major” news organizations under Pew’s definitions. Combined, all these shops represent almost 5,000 full-time editorial jobs (though that figure also includes all of Vice’s 1,100 headcount, editorial or not). The 30 bigs, which include places like HuffPo, Gawker, BuzzFeed, Mashable, Business Insider, and ProPublica, accounted for about 3,000 of the new jobs created by digital-first news organizations. Of the other sites, 241 have three or fewer full-time staffers.

Pew found that many of the new newsrooms focused their reporting on topic areas left vacant by downsized print newsrooms. The digital outlets fell into three areas: local or hyperlocal news (think The New Haven Independent or West Seattle Blog), investigative reporting on the local, state or international level (ProPublica or the New England Center for Investigative Reporting), and international news. The focus on international news has expanded in recent years, with some, like GlobalPost, focusing solely on foreign reporting, but others like Vice, BuzzFeed, and Quartz expanding into overseas operations.

Who’s coming onboard? The hiring mix includes both legacy journalists and newcomers. At the investigative outlets, the balance is on people from traditional backgrounds. Kevin Davis of the Investigative News Network told Pew that 80 percent of 600 staffers at the 92 newsrooms in the INN come from legacy backgrounds. Business Insider CEO Henry Blodget estimates 10 to 15 precent of his staff came from legacy media companies. Josh Marshall of Talking Points Memo told Pew half his editorial staff have legacy backgrounds, but that he also tends to hire younger people. BuzzFeed editor-in-chief Ben Smith told Pew 20 to 30 percent of his editorial staff are on their first job.

Jobs report: For the time being, hiring seems to be disproportionately happening in the digital newsrooms. Using data from the American Society of Newspaper Editors’ annual newsroom census, the total number of full-time newsroom jobs in 2012 was 38,000. Between 2003 and 2012, 16,200 newsroom jobs were lost, according to ASNE. Similarly, Ad Age’s Data Bank reports that the number of magazine jobs has decreased by 26 percent in the past decade. (Pew also points out that job losses at Patch make the numbers for digital-only hiring less than rosy.)

Online video continues to grow

One indication of how people watch online video: 88 percent of smartphone owners watch online video, and 53 percent watch news video. By comparison, only 35 percent of those who don’t have smartphones watch online video. Younger viewers are also more likely to watch online video. Nine in ten 18- to 19-year-olds watch online videos, and 48 percent reported watching news videos. That matches the viewership of the 30 to 49 demographic, and is much greater than the other age groups.

User-submitted video has become a part of most news operations, particularly for events like natural disasters, emergencies, and protests. But the number of people participating in creating those videos is relatively small: 36 percent of U.S. adults have reportedly shot video on their cellphone as of July 2013. Only 14 percent of social media users have posted photos of a news event to a social network and 12 percent have posted video. As for the audience submitting videos, photos, or writing to their favorite news outlet: Pew says 11 percent of “online news consumers” have provided a news outlet with content. That amounts to 7 percent of U.S. adults posting news video.

While digital video advertising is a small part of the overall digital ad pie — and even smaller still in the overall advertising picture — it’s growing. According to stats from eMarketer, video ads are growing 43.5 percent year over year. In 2013, digital video advertising revenue was estimated at $4.15 billion, up from $2.89 billion in 2012. However, according to the data, video advertising is only 10 percent of all digital ad revenue and 2 percent of all ad revenue.

Complicating things further is the fact that the online video advertising marketplace has quickly become crowded. Google, by way of YouTube, is the top online video property and the top destination for ads in the space, according to Pew. eMarketer projects that YouTube will pull in $850 million in video advertising in 2013, which would be about 20 percent of the overall video ad market. Fighting for the rest of that money are news organizations big and small, as well as places like Facebook. The slice of pie gets smaller when you factor in that news outlets share their revenue with ad networks.

On the local level: An audit of 32 local TV stations finds almost all (all but four) have video displayed on their homepages. The amounts vary among sites, and just half of the stations offer live-streaming video of their on-air programming. Interestingly, 24 of the stations have mobile apps that allow users to watch video. However, the type of video varied: More apps allowed users to watch clips, while fewer offered the option to watch live broadcasts. Pew found that many of the news sites host the videos on the sites themselves, rather than using YouTube or another service.

A big year for the business of local TV

In the local TV business, 2013 was dominated by business moves. In 2013, 290 stations were sold, up from only 95 the year before. The total value on those transactions in 2013 was $8.8 billion, according to data from BIA/Kelsey.

That’s changed the TV map around the country in a number of ways. According to Pew, a increasing number of stations in the same market are working through joint service agreements, meaning the stations are separately owned but operated together. Those agreements now exist in 94 markets, up from 55 in 2011, reaching almost half of the 210 local TV markets in the U.S.

The consolidation in local TV has also meant a shift in how news is produced by local stations. One in four stations do not produce the programs they air, according to data provided to Pew by the Radio Television Digital News Association. At the same time, content sharing is on the rise: More than three-quarters of local stations share stories with newspapers, radio stations, or other outlets in their community.

One interesting market: New Orleans. There, The Times-Picayune partners with WVUE, the Fox affiliate, where the station provides weather and video to the paper, and the paper’s reporters collaborate with TV reporters on projects and appear on air. Meanwhile, The New Orleans (née Baton Rouge) Advocate, which has risen as a competitor to The Times-Picayune, has a similar agreement with TV station WWL, recently sold by Belo to Gannett.

The hours of TV news being produced are still relatively high. The average hours of weekday news programming dropped by six minutes in 2012, but weekend newscasts increased by 11 percent on Saturday and 5 percent on Sunday in 2012. The biggest area of increase has been pre-dawn news, as the number of stations producing newscasts at 4:30 a.m. jumped to 634 in 2012, up from 245, according to Nielsen.

Getting a mix of news on social media

The distribution of news across social networks remains a mixed picture. As Pew reported last year, Facebook users are more likely to bump into news than seek it out. Facebook reaches far more adults in the U.S. than any other platform at 64 percent of the population. Still, only 30 percent of adults get news on Facebook. The numbers fall sharply from there. While 51 percent of adults use YouTube, only 10 percent get news there. As for Twitter, 16 percent of adults in the U.S. are sending and/or reading tweets, but only 8 percent are getting news there.

Facebook and search have become important to publishers as new pathways to stories. But Pew found that people who arrive on news stories through Facebook and search spend less time engaging with a site once they land there.

This may be a surprise to media watchers who clock endless hours on Twitter, but Pew found that sentiment on issues in the news on Twitter differs from those in the broader public. After the school shooting in Newtown, Conn., in 2012, Twitter conversation overwhelmingly supported stricter gun control, 64 percent to 21 percent. But a Pew Research Center survey during the same period found a close split in opinion, with 49 percent favoring more gun control and 42 percent saying they support protecting the rights of gun owners.

Full disclosure: Nieman Lab director Joshua Benton was a prerelease reviewer of parts of the report.