And, in so complaining, he put his finger on a major problem with journalism as it’s practiced. Amid all the tit-for-tat accusations, running around trying to dig up, follow the latest, get the scoops, journalists too often forget to explain to those who desperately want it what the story at its deepest levels is really about -- which also would serve to tell the reading/listening/viewing public why they should care. That kind of depth, of course, doesn’t get the quick pageviews, nor is it the kind of investigative journalism that tends to win Pulitzers and other prizes. In a business sense, it’s not the kind of journalism that will pay for the resources it takes create it. But it is a big public service that can accrue pageviews (on pages carrying ads) over time. And there are ways to “monetize” it beyond the pageview-ad formulation. (partnerships, re-branding, syndication, books, new sections ... that would be another blog post.)

Not that it’s easy to explain something like this crisis. A lot of people tasked with explaining what’s going on probably themselves don’t understand, and good journalists are trained not to let their grasp exceed their reach. Heck, some of the smartest professors I had in business school seem at a loss to completely explain what’s happening in the economy right now. (One wrote an email about the opposing views of who’s to blame, without answering a question I asked about whether models he taught us projecting increased value as debt is taken on were still valid, or formulations for calculating risk should be changed). And, the ones who can explain it all to us -- smart MBAs who do financial modeling -- are, after all, ones who helped get us into this, with the very financial models they created or followed. They’re likely to earn a lot more than the ink- and pixel-stained wretches working in newsrooms. Then, again, there’s a few of those folk who have a bit of free time at the moment. Maybe they could write a little something for the papers, even help come up with some graphics and videos to explain it all.

Even without the business justifications, though, the explanation would be worthwhile and a public service.

The “Heard on the Street” column of The Wall Street Journal last Friday noted that “Of the U.S. media companies whose debt is rated by Standard & Poor's ... 86% are speculative-grade, a higher percentage than any other industry.” Those companies planning to pay down debt through asset sales, such as The Tribune Co., may find that potential acquirers will have less access to financing. With $12 billion in debt, it was expected to pay some of that down through the sale of the Chicago Cubs. But that is not a done deal.

McClatchy Balance Statement

For example, McClatchy, the third largest newspaper publisher, is laden with debt from its 2006 acquisition of Knight Ridder. Its long term debt is still 10 times higher than pre-Knight Ridder even after using proceeds from sales of some newspapers to pay down debt. At the end of June, McClatchy had $1 billion in revolving and term bank notes loans as well as $50 million in public debt that will come due in 2009.

Its Long Term Debt to Equity is 5.8, up from 0.1 in 2005. And its stockholders equity is down 72% from its 2005 level. All this gives the owner of the Miami Herald and Raleigh News & Observer little wiggle room for raising additional capital. This crunch is reflected in its recent dividend announcement, cutting in half its dividend to conserve cash. That step is in addition to a 10% reduction in its workforce.

Holding higher relative amounts of debt is called “leverage” in the financial world. Used judiciously, leverage can help an enterprise grow without diluting the holdings of the owners. But when access to debt is too cheap and easy, it can also lead to making poor strategic decisions. And once laden with debt, it restricts further flexibility when, as now, credit comes with more strings and tighter knots.

With the decline in advertising and circulation, restrictive and more expensive credit may only accelerate the slide for some media companies.

Nevertheless, it has for decades been a "given" that a U.S. newspaper would take the AP as a core component or important supplement of its news coverage. The MinnPost writer, David Brauer, talks of the damage to the area's news gathering if the AP loses the Star Tribune's participation (and fees). But he also notes that papers could use that money to pay for more of their own reporting:

If AP gets less cash and copy from the Strib and cuts its local presence, Minnesota’s news ecosystem could take a big hit. The wire service’s copy fleshes out local papers big and small; a diminished AP weakens a key line of defense for cash-strapped newsrooms.

Then again, non-metro editors around the nation were among the first to give AP notice; most said they’d rather save the coin for their own staffers (even as their publishers were thinking cash flow)

A Newsweek editor once quipped in an editorial meeting that "if we have two examples, it's a trend, three, a cover story." Well, now we have at least a half-dozen.

If the major reason for the American daily newspaper industry's demise were its stories contained too many dangling participles, then the industry could more easily comprehend its situation than instead hearing that the reason was it had violated the Principle of Supply & Demand.

The understanding of economics, particularly media economics, has never been its strong suit, except if the topic is how many tons of newsprint to buy, how many points a major stock market dropped, or how cut expenses to match revenues. Most newspaper publishers, editors, or journalists tends to equate economics as solely the science of government financial policy, household spending, Wall Street speculation, and petroleum pricing. They don't understand or have forgotten that a major branch of it is the behavioral science of Microeconomics - the study of how individuals make decisions to allocate their time and activities.

The main paradigm of microeconomics is known as rational choice theory or rational action theory, which states that individuals choose the best action according to their preferences and what constraints of supply, demand, time, and access face them. In it now lays the demise of American daily newspapers as we know them.

How did the American daily newspaper industry violate the Principle of Supply & Demand by failing to adapt the industry's core product to a radical change in consumers' supply of news and information during the past 35 years? To understand how, both start and end at the roots of the newspaper industry.

Start in the European city of Strasbourg during 1605 when the world's first newspaper began publication. It used a technology developed there 164 years earlier by the metalworker Johannes Gutenberg, who had invented a device for producing innumerable copies of the same text. (Please keep that concept in mind, because it's now moldering the newspaper industry). The Supply & Demand equation for accessing daily changing information was then quite the opposite it is today: Consumers had little or no supply of daily news until the daily newspaper. So to produce newspapers, this adaption of Gutenberg's book printing technology spread quickly worldwide.

Some modern critics of newspapers say the industry is leaden and 'doesn't think outside the box.' They probably don't realize the historical irony that underlay their criticisms. The core of Gutenberg's technology was a box containing lead type whose impressions could print innumerable copies of the same thing. In that core is the inherent limitation that it produces the same edition for everyone. Although in the 19th Century steam and later electrical power speeded Gutenberg's technology and the introduction of offset lithography during the middle of the 20th Century eliminated its use of lead, the analog technology used to produce today's daily newspapers is still Gutenberg's. Indeed, today's analog printing technology still has the same limitation that it had in Gutenberg's days - it produces the same edition for everyone.

That technological limitation delineated the newspaper industry's editorial and advertising practices during the past four centuries. Because each edition had a finite number of pages and was printed by analog technology had to produce the same for everyone at once, newspaper editors had to select stories according to two criteria:

Some attribute their grave condition to advertisers suddenly switching huge portions of spending from print to online - an excuse that ignores more than 30 years of declines in those newspapers' printed editions' circulations and readerships. Some others attribute their deterioration to not having transplanted their content into online quickly enough -an excuse that ignores not only the dozen years they've spent transplanting it but how their online editions are now read even less frequently and less thoroughly than their printed editions.

Most of the print newspaper experts who diagnose these companies' condition still prescribe stale nostrums such as more consumer focus groups, subscription price incentives, more stylish typography, or shorter stories. Meanwhile, most of the experts who diagnose these companies' Web sites prescribe balms and accessories such as giving blogs to reporters, adding video, or having the readers themselves report the stories. American daily newspaper companies have long been too financially impatient to submit themselves to anything but ostensibly quick cures and they've even longer been too conceptually myopic to perceive the real reasons for their declines.

I'll declare the real reasons. There are but two and neither has anything to do with multimedia, 'convergence', blogs, 'Web 2.0', 'citizen journalism,' or any ancillary topics you may have heard presented at New Media conferences this millennium.

Nor is either of the real reasons advertisers' abandonment of printed newspapers. Their abandonment is a symptom, not the reason for the decline. Contrary to myopia of many newspaper executives, advertisers aren't newspapers' primary customers. Although advertising revenues may be sunshine for newspaper executives, the roots of their business are readers. A newspaper with readers will attract advertisers but a newspaper without readers will not. Readers ultimately support and sustain the newspaper business.

To understand the real reasons why the American daily newspaper industry is dying, first understand why more and more Americans are no longer reading daily papers and how their abandonment of newspapers has been wrought by changes in their own media economics. Also comprehend why the epicenter of the newspaper industry's problems in post-Industrial countries is America and exactly how grave the situation is there.

Still, there is some news on the subject. I have written several times now about how the Journal has been devoting its front page to hot-off-the-press headlines that are essentially the same as what every other daily publishes: “Obama wins primary,” “Cyclone levels Sri Lanka.” This is a form of run-of-the-mill reporting to which the Journal brings little value added and, with earlier deadlines than most local dailies, perhaps less value.

But now comes some hard data—that’s what I like more than impressions—that does indeed confirm a substantial shift in the Journal’s editorial coverage since the change in ownership. The Project for Excellence in Journalism undertook a content analysis of the front page stories in the Journal for the four months before the December 12, 2007 date that News Corp. acquired control of Dow Jones, the parent of the WSJ and the three months following. Its finding was unambiguous:

In the first three months of Murdoch’s stewardship, the Journal’s front page has clearly shifted focus, de-emphasizing business coverage that was the franchise, while placing much more emphasis on domestic politics and devoting more attention to international issues.

The before and after change is most dramatic in several areas, as seen in PEJ’s chart I’ve cribbed here. Political news is up four fold, reflecting the intense coverage of the primaries that in the past election cycles would have received less space (if only because until recently the Journal rarely devoted more than a single front page column to any story). The full report at the Project’s Web site also compares the “new” Journal’s editorial mix with that of The New York Times, which Murdoch is keen compete with. There are still substantial differences, with the Journal devoting more of its front page to foreign topics, business and economics, less to politics.

Jack Shafer, writing at Slate’s Press Box last month, made note of the PEJ data, but chose to focus on his more generalized impression that the Journal may indeed be better under Murdoch because “it was swinging hard again in its traditional wheelhouse to produce great enterprise journalism.” He proceeds in identifying some examples, all, indeed quality reporting in which the Journal has long excelled.

This may be wishful thinking on Jack's part. I hope not. He has certainly identified some fine-- and traditional -- Journal pieces. But I'm speculating that perhaps they stand out because, as Jack notes, the primary season is over, and there had been no devastating earthquakes or cyclones for a few weeks, and the presidential campaign was in pre-convention simmer. Indeed, in the midst of these fine articles was the front page on June 4, as Obama wrapped up the Democrat's nomination. It struck me immediately as I picked up the Journal and The Boston Globe from the driveway that the Journal article was readily interchangeable with the Globe (and other dailies) articles. In my analysis, every day the Journal wastes newsprint with such headlines, photos and copy is a day lost to do the type of journalism Jack is rightly trumpeting.

I’ve mentioned before that I have great respect for Murdoch as a savvy businessman and as a risk taker who has made real contributions to the competitive landscape of the media.. My current critique is that the hot news approach is not a strategic direction that plays on the Journal’s long time strengths. To the contrary, it takes the paper on a path that daily newspapers should be trying to leave behind.

Ok. ‘Nuff said. I’ll leave this behind. If only Lou would move on from his obsession.

A few weeks back the editor of the Cleveland Plain Dealer on "On the Media" talked about how newspapers in Ohio were reaping great benefits trading material, and linking and cross linking. More importantly, she said she was no longer reliant on The Associated Press for her stories from the region but instead was getting the original versions direct from the other sources around the state rather than paying “a big chunk” of her budget, about $1 million for rewritten AP stories. Picking up directly, on the Web, and putting other papers’ stories directly in the newspaper was also better quality, she said, and readers were noticing:

“I mean, we've always had access to news from all over the state. It was just, you know, it went through the AP mill. I frankly think we're getting better, more distinctively written stories because they're not going through the AP mill.”

I’m not saying this will happen immediately. AP, whose core business is the not-for-profit cooperative dues of member newspapers, has offered to cut its rates starting next year. Newspapers, despite ad and circulation declines for decades, have been notoriously slow moving, and many will be reluctant to pick up content from papers they might think of as competitors; the AP has given them the cover they sought to do so less blatantly. But the economic pressures are only increasing as revenues and readership decline more precipitously, and any success in Ohio could be the thin edge of a wedge. “We've set up this little cooperative,” said the Plain Dealer editor, Susan Goldberg. “I don't know how it'll work in the future, but right now it's working really well.”

Add to that AP’s deal to have its direct results placed higher in Google than member papers, further pissing them off, and newspapers will look harder at the Ohio example. We're talking months or perhaps years, certainly not decades. The example could spread nationally or internationally.

CEO Tom Curley has been leading the AP into a future in which an increasing share of its revenues comes from sources other than member dues, such as direct photo revenues, Web content services and broadcast fees. But the transformation may not be fast enough. AP doesn't have the luxury of Bloomberg or Thomson Reuters in which news gathering can be supported by financial terminals that really bring in the bucks.

AP should own the Web. It has its roots in the trading and sharing of information. It gets a significant chunk of revenue from providing the backbone through which others pass content. It coded and tagged and parsed content with everything from category codes to prioritization markings, and ways to match text and photos decades before those practices became fashionable for everyone. But culture and old habits are very hard to change, and I fear for the company's viability hope it can work out a more creative win-win solution for all.

He also doesn't literally mean, I would guess, that all ink on paper production will cease in toto, full stop. Horse and buggy still exists, as do books made by hand, despite the invention of the press and moveable type. But his point in a larger strategic sense is, I think, well-founded. That the lion's share of media -- media that matters in a larger, societal and business sense -- will be delivered over an IP network, at least in the industrialized world. Who can refute that, honestly? Newsprint and fuel costs rise, we're choking on garbage and need to recycle, our forests are becoming denuded. Meanwhile, the technology of the next next next generation Kindle and Sony reader and iPhone and e-paper and tablet computer will all be better better better, and eventually get good enough that people will be comfortable opening their flexible, reaable (and listenable and watchable and networked) thin, bendable screen (or goggles or mini-projector or who-all knows what?) as they do a newspaper or book today.

People love books and magazines and newspapers not because they're ink on paper, but because they're right now the best technology around: quick, easy, never need rebooting, easy to fold, put in a bag, read in nearly all conditions, don't need power, etc, etc. If the IP device technology approaches those attributes, it will be immaterial on what surface people read, and the cost- and other pressures I mention above will move folks to digital (or IP, if you prefer).

Sure, some glossy magazines will still give a "luxury" experience that won't be well-approximated by the screens. And some may get news on paper -- those at the bottom rung who can't afford digital or at the very top who CAN afford good paper -- but the mass will probably be digital. So, yes you'd win the bet if you said there will be print around in 10 years. But if it's 14 or more, you might lose if you say it will have primacy above digital.

It will take the a few circulation reporting periods (March 31 and September 30) to get a feel for whether the Journal's new "look like a conventional daily" strategy is a positive or negative.

There is, in short, much uncertainty surrounding where the business models for media are and should be headed.

One area that legacy media can control and should know something about is content. Newspapers, broadcasters, publishers of all stripes, have absolute control over their content. Newspaper publishers constantly need to ask themselves “What do consumers want when they subscribe or take $.50 (or $1.00) out of their purses/pockets to buy the publication. Broadcasters certainly ask, ‘Why should viewers tune us in?”

But I’m constantly amazed at their lack of insight and therefore the choices they make. And here I’m referring in particular to the broadly defined “news” segment of the media. Research shows that there has been a range of motivations that are involved in getting individuals to buy a newspaper or tune in a news program—or click to a Web site bookmark. One of the top motivating factors is the interest in learning what we do not know. What happened in the world while I slept? Who won the game last night? What is the weather forecast for tomorrow? What did my stocks close at? What does some “expert” think about a new movie or show? Surprise me!

What we don’t need the news media for is to be told what we already know. The Internet has, of course, made it possible for more people to know more of the answers to the above types of questions before they are available in print or even on a regularly scheduled broadcast. Still, there are many things we know even without the Internet. For example, most of use know if it is hot outside. Or wet or windy or cold. We look out the window or open the door. Anyone who drives a car knows the price of gasoline. Anyone who flies knows the airports are crowded and lines at Thanksgiving are long.

So where am I going with this rant? I’m astounded—and hopefully some of you are as well—at how the editors of news media shoot themselves in the foot everyday with the non-compelling nature of their many of their content decisions. For example, most days I turn on “American Morning” on CNN, even before the computer is fired up. And what do I hear, at length, each day lately? A business reporter, Ali Velchi, telling us the price of gasoline. “Pain at the pump” is the not so original refrain. And the usual “B” roll of someone filling up, with the obligatory quote from the woman in the street who is driving less and someone who will give up their “gas guzzler.” And the anchors commiserating over the latest record. And a reiteration of where Lundburg or AAA thinks the price is going in the “peak driving season.” Compelling stuff, no? Maybe the “Today Show” isn’t so lame.

Not long ago I was asked by a small chain of newspapers to spend a few days with their editors in a session to help them understand and strategize for the challenges facing them. They sent me a large stack of their newspapers so I could get a flavor for them. In the sample were issues from several of the papers with a variation of the headline “It’s Hot Out There.” Immediately I created in my head what this would say. By the third paragraph it would quote some gardener about the heat and how he is coping with it. And sure enough, in the first article I read I was both pleased and disappointed with the copy. There, in the third graph, was a quote from Pedro something, with the Generic Landscape Co. “Yeah, it’s hot. So we start really early and quit by two o’clock,” he explained. I mentally patted myself on the back. But there was more disappointment that the article was so very predictable.

However, the larger point is that, with both CNN and these newspapers (and many others that could be included) that these prominent “stories” were not about news. They were what anyone knew.

In this space I have recently been critical of The Wall Street Journal for a new editorial approach that has often reduced prominence of analysis and surprise in favor of featuring in many cases material that most readers would already know: A who-what-where-when accounting of an earthquake. A routine summary of the previous night’s primary results (and, with its early deadline, less timely that what was in the local newspaper). It is telling readers what many, if not most, could be expected to learn from other media they are likely to have seen.

The legacy “news” media cannot materially change the trend toward whatever is coming via technology. But they can slow their demise by concentrating on the content of their products. And they can enhance the position of their digital products as well by providing audiences with the serendipity factor and with a value added quality that is needed to have users buying, tuning or clicking to their products. That has been the not-so-secret sauce behind the strength of The New York Times, USA Today, Fox News and, until recently, The Wall Street Journal. Give people what they don’t know, not the current weather or yesterday’s price of a gallon of petrol.

Here’s another way to look at more by subtraction. David Pogue, a New York Times tech columnist who I find entertaining and quite informative, had a column last month about why a product can be a success even with acknowledged flaws. Referring to Apple’s Mac Air he wrote:

…When your laptop has the thickness and feel of a legal pad and starts up with the speed of a PalmPilot, it ceases to be a traditional laptop. It becomes something you whip open and shut for quick lookups, something you check while you're standing in line or at the airline counter, something you can use in places where hauling open a regular laptop (and waiting for it) would just be too much hassle.

It's the same lesson I learned when I reviewed the Flip "camcorder" a couple weeks ago: if you change the shape and concept of something enough, it ceases to be that thing. It becomes a new thing, or a descendant of that earlier thing. But it's no longer the original thing, and you can't judge it on the same yardstick.

Lesson learned: Form—the products attributes—can create the function. Thus an entrepreneur can break out of a well-defined category (camcorder, laptop, cell phone) by changing some key characteristics—weight, time to boot up, capabilities—even a dramatic new price point.

Does this insight provide any guidance for the media industry? Should the local newspaper continue trying to be a general interest publication even when online? Is it already something else, in which case it needs to be evaluated by a different metric (i.e., time spent, return visits) than what has been used in the past (i.e., hits or clicks or gross eyeballs or total page views)? Or, perhaps, should legacy media be creating new “things” based on the old? What is the media equivalent of the Mac Air or Flip camcorder: a product that is recognizable but, by changing—often removing—product attributes is used by consumers (and advertisers in this case) in new ways?

Experiments with short form videos—first popularized from the bottom up thanks to the YouTube platform—have now become mainstream with the traditional video programmers. Viacom purchased short film pioneer Atom Films in 2006. But most attention continues to be on finding outlets for conventional programming, such as NBC Universal/News Corp.’s Hulu.

If I had the answer I’d offer it (though probably not here—a guy’s got to feed his family, or in my case, start paying college tuition). But I think it is an area ripe for brainstorming and another round of informed trial and error.

Ready. Fire. Aim.

Meanwhile, another participant, Amy Gahran, has asked why newspaper execs are limiting their vision to commoditized pageviews on websites. Shouldn’t they be thinking more about how to add ad revenues to feeds, mobile distribution, RSS, widgets and the like?

And I’ll add a third thought: Newspapers aren’t really a single general-interest publication, but rather -- in a digital age -- an amalgam of targeted niches. Sure, in print, it’s one branded publication that you hold in your hands and flip through as you’re interested. But on the Web, it’s a local sports “vertical,” a local business “vertical” and so on. While the general interest local news areas of the site will probably remain commoditized, the more targeted areas with a high interest and usership should be sold separately and at a higher CPM. If the frequency is as low as Vin says, that can be made a strength, by asking advertisers to understand they’re buying engaged targeted readership, not frequency or reach.

Similarly, AP announced its test of a mobile initiative to give more content and ad outlets for digital distribution. . That should make some folks in that discussion happy.

But a lot of what he said at the CSB speech -- a thoughtful analysis of today’s media landscape -- wasn’t in the column and bears repeating. One crucial point he made was that B2B information applications now often lag behind consumer ones. Consumer-focused products tend to have better interfaces and applications than the high-priced business and financial services ones. He calls this a “real challenge for the B2B industry, which has so far been less affected by the digital age than B2C.”

“Much of the innovation is based on the broad consumer market,” B2C rather than the B2B market, he says. This is a see change. It’s been a given that people pay handsomely for business-oriented information, and get real value from it. But Crovitz notes that financial professionals with high-priced terminals at their desks today will often turned to Yahoo Finance. This movement has big implications for B2B information providers.

Other points he makes:

* Subscription plus ad revenue “works very well” as a revenue model. (In other words, the WSJ is smart to have subscriptions and ads; new owners News Corp., of course, considered doing away with them.
* Software and information are more powerful together than separate. “Information and software are more closely linked and mutually dependent than ever before. Changes in each affect the other. “The great changes in computing power” have shifted the information industry, changes in information have affected software..
* Neither content nor distribution is king: the consumer is.

Rather than muck up a successful franchise that has outperformed the dismal newspaper industry metrics in advertising and circulation in recent years, my take at the time was why would he do more than invigorate management?

Well, I was wrong. Although there is no noticeable new slant ideologically, there has been a very visible change in editorial priorities. My own opinion is that they are taking the Journal 180 degree from where it should be.

For me (yes, I know, a sample of one), the attraction of the Journal was the unique front page: Distinctive both in physical layout and in content. It was clearly not my hometown Boston Globe—or your hometown whatever. I need not elaborate for anyone who has been a Journal reader.

While the Journal had moved away from the old six column layout, with most articles running one column down the front page, to a more conventional design with multi-column heads and less copy on page 1, the gist of the content was the same.

Now, many days I pick up the Globe and the Journal outside my door and I need to stare for a second to figure out which is which. Do I really need the Wednesday Journal to tell me about the vote tally from Tuesday’s primaries (and with an earlier deadline, less complete than the Globe). For that matter, what proportion of Journal readers even need the morning paper to inform them of the outcome? They got it from TV last night, from TV this morning, or online anytime.

There was certainly room for improvement in the management of Dow Jones that News Corp. could provide. Fresh thinking can be introduced. As one who has been following the ups and, more lately, downs of the newspaper industry professionally for 35 years, the fresh air being blown across the newsroom of the Journal seems to be a cold wind rather than a crisp breeze.

Prove me wrong Rupert. It’s your money and legacy. But if I’m right, can I get the old Journal back?