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May 03 2012

14:55

The newsonomics of Pricing 101

When the price of your digital product is zero, that’s about how much you learn about customer pricing. Now, both the pricing and the learning is on the upswing.

The pay-for-digital content revolution is now fully upon us. Five years ago, only the music business had seen much rationalization, with Apple’s iTunes having bulled ahead with its new 99-cent order. Now, movies, TV shows, newspapers, and magazines are all embracing paid digital models, charging for single copies, pay-per-views, and subscriptions. From Hulu Plus to Netflix to Next Issue Media to Ongo to Press+ to The New York Times to Google Play to Amazon to Apple to Microsoft (buying into Nook this week), the move to paid media content is profound. The imperative to charge is clear, especially as legacy news and magazines see their share of the rapidly growing digital advertising pie (with that industry growing another 20 percent this year) actually decline.

Yes, it’s in part a 99-cent new world order as I wrote about last week (“The newsonomics of 99-cent media”), but there are wider lessons — some curiously counterintuitive — to be learned in the publishing world. Let’s call it the newsonomics of Pricing 101. The lessons here, gleaned from many conversations, are not definitive ones. In fact, they’re just pointers — with rich “how to” lessons found deeper in each.

Let’s not make any mistake this week, as the Audit Bureau of Circulation’s new numbers rolled out and confounded most everyone. Those ABC numbers wowed some with their high percentage growth rates. Let’s keep in mind that those growth numbers come on the heels of some of the worst newspaper quarterly reports issued in awhile. Not only is print advertising in a deepening tailspin, but digital advertising growth is stalled. Take all the ABC numbers you want and tell the world “We have astounding reach” — but if the audience can’t be monetized both with advertising and significant new circulation revenues, the numbers will be meaningless.

When it comes to dollars and sense, pricing matters a lot.

Let’s start with this basic principle: People won’t pay you for content if you don’t ask them to. That’s an inside-the-industry joke, but one with too much reality to sustain much laughter. It took the industry a long time to start testing offers and price points, as The Wall Street Journal and Walter Hussman’s Arkansas Democrat-Gazette provided lone wolf examples.

The corollary to that principle? If you don’t start to charge consumers — Warren Buffett on newspaper pricing: “You shouldn’t be giving away a product that you’re trying to sell.” — then you can’t learn how consumers respond to pricing. Once you start pricing, you can start learning, and adjust.

We can pick out at least nine emerging data points:

  • 33-45 percent of consumers who pay for digital subscriptions click to buy before they ever run into a paywall. That’s right — a third to a half of buyers just need to be told they will have to pay for continuing access, and they’re sold. As economists note that price is a signal of value, consumers understand the linkage. Assign what seems to be a fair price, and some readers pay up, especially if they are exposed to a “warning” screen, letting them know they’ve used up of critical number of “free” views. Maybe they want to avoid the bumping inconvenience — or maybe they just acknowledge the jig’s up.
  • If print readers are charged something extra for digital access, then non-print subscribers are more likely to buy a digital-only sub. Why pay for digital access is the other guys (the print subscribers) are getting it thrown in for “free”? Typically, Press+ sees a 20-percent-plus increase in signups on sites that charge print subscribers something extra. That extra may be just a third or so of the price digital-only subscribers pay (say, $2.95 instead of $6.95), but it makes a difference. Consequently, Press+ says 80-90 percent of its sites charge print subscribers for digital access. The company now powers 323 sites and thus has more access to collective data than any other news-selling source.
  • You can reverse the river, or at least channel it. The New York Times took a year, but figured it out righter than anyone expected. It bundled its Sunday print paper (still an ad behemoth) with digital, making that package $60 or so a year cheaper than digital alone. The result, of course, is that Sunday Times home delivery is up for first time since 2006. It’s not just NYT or the L.A. Times which have embraced Sunday/digital combos. In Minneapolis, the Star Tribune began a similar push in November. Now, of its 18,000 digital-only subscribers, 28 percent have agreed to an add on the Sunday paper, for just 30 cents a week, says CEO Mike Klingensmith (“A Twin Cities turnaround?”). So we see that consumers may well be more agnostic about platform than we thought. Given them an easy one-click way of buying even musty old print, and they will. Irony: If you hadn’t charged them for digital access, you probably wouldn’t have sold them on print.
  • New products create new markets. 70 percent of The Economist‘s digital subscribers are not former print subscribers, says Paul Rossi, managing director and executive vice president for the Americas. That’s surprising in one sense, but not in another. Newspaper company digital VPs will tell you that they’re surprised to see how little overlap there is between their print audience customer bases and their digital ones. The downside here: Many print customers seem not to value digital access that much. The Star Tribune is finding a low take rate of 3 percent of its Sunday-only print subscribers willing to take its digital-access upsell. One lesson: The building of a new digital-mainly audience won’t be easy and will require new product thinking; it’s not that easy just to port over established customers.
  • The all-access bundle must contain multiple consumer hooks. Sure, readers like to get mobile access as well as desktop and print, and maybe some video. Yet some may especially prize the special events or membership perks they are offered, as the L.A. Times is banking on (and start-ups Texas Tribune, MinnPost, and Global Post have applied outside the paywall model). Some will like the extras, like The Boston Globe telling its new 18,000 digital subscribers, as well as its print ones, that they now get “free” Sunday Supper ebooks (“The newsonomics of 100 products a year”). Sports fanatics or business data lovers will find other niches to value — and ones that make the whole bundle worthwhile. Archives — and the research riches they offer — will prove irresistible to some. In 2012, a bundle may offer a half dozen reasons to buy, casting a wide net, with the hope that at least one shiny lure will reel in the customers. By 2013, expect “dynamic, customized offers,” targeting would-be buyers by their specific interests to be more widely in use.
  • While pageviews may drop 10-15 percent with a paywall, unique visitors remain fairly constant. We see the phenomenon of those who do hit a paywall one month coming back in subsequent months, rather than fleeing forever. “It may be the second, third, or fourth month before someone says, ‘I guess I am a frequent visitor here, and I’ll play,’” says Press+’s Gordon Crovitz.
  • Archives find new life. Archives have lived in a corner of news and magazine websites for a long time. They’ve been used, but not highly used or highly monetized. Now, courtesy of the tablet, and a new way to charge, The Economist is finding that 20 percent of its single copy sales are of past issues. Readers will pay for the old in new wrappers, whether back e-issues, or niched ebooks. The all-access offer can be much wider than cross-platform, or multi-device. It can extend across time, from a century of yesterdays to alerts for tomorrow.
  • News media is probably underpriced. Take the high-end Economist. CEO Andrew Rashbass — speaking to MediaGuardian’s Changing Media Summit 2012, in a recommended video — said that a survey of its subscribers showed that a majority didn’t know how much they were paying for the Economist. When pressed to guess, most over-estimated the price. At the Columbia (Missouri) Daily Tribune, an early paywall leader in the middle of America, a recent price increase to $8.99 from $7.99 has so far resulted in no material loss of subscribers. At Europe’s Piano Media, early experience in Slovakia and Slovenia is that price isn’t a big factor, says Piano’s David Brauchli. “Payment for news on the web is really more a philosophical mindset rather than economic. People who are opposed to paying will always opposed to paying and those who see the value of paying don’t mind paying no matter what the price is.” That suggests pricing power. It makes sense that publishers, new to the pricing trade, have approached it gingerly. Yet the circulation revenue upside may well be substantial.
  • Bundle or unbundle — what’s the right way? Mainly, we don’t know yet, and the answer may be different for differing audience segments. The Economist started with print being a higher price than a separate digital sub. Then it raised the digital price to match that of print — to assert digital value. It now offers all-access: one price gets you both. Next up: You can buy either print or digital for the same price, but if you want both, you’ll pay more. It’s an evolution of testing, and so far, it’s been an upward one.

Overall, this is a revolution in more than pricing. It’s a revolution in thinking and, really, publisher identity.

The Boston Globe’s Jeff Moriarty sums it up well, as his company aims (as has the Financial Times before it: “The newsonomics of the FT as an internet retailer”) to emulate a little digital-first company called Amazon:

I think overall publishers have to start thinking more like e-commerce companies. More like Amazon. You can’t just throw up a wall or an app and expect it to just sell itself. We’re still building that muscle here at the Globe, and some of our colleagues in the industry are even farther along. We have extensive real-time and daily analytics and are employing multivariate testing to try offers and designs to refine the experience that works best for each type of user.

Photo by Jessica Wilson used under a Creative Commons license.

January 20 2011

21:00

The shakeup at MediaNews: Why it could be the leadup to a massive newspaper consolidation

[Our regular contributor Martin Langeveld spent 13 years as a publisher in MediaNews Group. That gives him an inside perspective on the company's bankruptcy filing, which he shares with us here. —Ed.]

Back in the early 1990s, Dean Singleton predicted that ultimately there would be just three newspaper companies left standing, and he intended his MediaNews Group to be one of them.

It was an audacious prediction, because at the time, after a decade of wheeling, dealing and sometimes ruthless management, MediaNews Group still consisted of just a dozen newspapers, and the company’s board meetings, as he was fond of saying, “could be held in the front seat of a pickup truck.” But Singleton often repeated his prediction of industry consolidation, and it was the driver behind MediaNews’s growth into the sixth largest newspaper company (in terms of circulation) over the past 15 years. Today MediaNews has 54 daily newspapers with a total of 2.4 million weekday circulation. (On its own site, MediaNews claims to be the “second largest media company,” but that’s a double stretch: Its properties are nearly all newspaper entities, and, by my count, Gannett, Tribune, News Corp., McClatchy and Advance have more daily paid print circulation — and are certainly all bigger media companies than MediaNews.)

MediaNews’s growth was accomplished not only through acquisitions but through innovative regional partnerships such as the California Newspaper Partnership, and was paid for through a complex and ever-changing leverage structure put together by the financial wizardry of Singleton’s associate Joseph “Jody” Lodovic IV.

But over the past few years, opportunities for Singleton to pursue his vision came to a halt. MediaNews could not outrun the ticking clock of debt accumulation; revenues plummeted; newspaper values tumbled; and lenders threatened foreclosure. Lodovic engineered a strategic and very quick bankruptcy that wiped out $765 million in debt by placing nearly all of the company’s stock in the hands of the former bondholders. Remarkably, the bankruptcy reorganization left him and Singleton in charge and with a small equity stake, plus the opportunity to earn back an equity position up to 20 percent. They also had theoretical control in the form of the power to appoint a majority of the board.

The shakeup

It was an unusual outcome — in other major newspaper bankruptcies, the lenders have imposed new management. For example, there have already been several changes at the top in Tribune’s ongoing bankruptcy process; at Freedom Communications, longtime chief Burl Osborne was replaced by Mitchell Stern, whose background includes CEO stints at Fox Television Stations, Inc. and Direct TV; at the Phildelphia Media Network, the publisher of the Inquirer and Daily News, Greg Osberg, a veteran of Newsweek and U.S. News & World Report, was handed the reigns; and at the Minneapolis Star-Tribune, Michael Klingensmith, a longtime Time Inc. executive, became CEO following the paper’s emergence from bankruptcy.

And then there is Journal Register Company, which emerged from bankruptcy in August 2009 and was once known as one of the most rapacious of publishing firms. “Tell me a Jelenic story,” Singleton would ask new refugees from Journal Register hired by one of his papers, referring to the sometimes ludicrous anecdotes of skinflint budget management attributed to Journal Register CEO Robert Jelenic and his lieutenant, CFO Jean Clifton. But under its post-bankruptcy CEO, John Paton, Journal Register Company has become a forward-thinking, innovative organization with a digital-enterprise management style, and has even instituted a profit-sharing plan which was on track, as of October, to make a substantial year-end payout.

So given that the normal pattern is for the post-bankruptcy owners to dump the old leadership team, it should not be surprising that the MediaNews creditors-turned-owners considered Singleton and Lodovic to be on probation. And it turns out that their trial period is over. On Tuesday, MediaNews announced a shakeup in which Lodovic (who has no street-level newspaper or digital operating experience, and whose financial skills were no longer relevant in the post-bankruptcy structure) was ousted and Singleton was reassigned to “executive chairman of the board” — ostensibly with strategic and deal-making responsibilities described specifically as “opportunities to optimize the company’s portfolio of properties and consolidation opportunities in the newspaper industry.”

On the surface, this looks like a way for Singleton to pursue his vision of consolidation, something he alluded to at the time MediaNews emerged from bankruptcy. But in reality, the shakeup robs him of nearly all his clout. The Singleton-Lodovic appointees to the MediaNews board are gone, replaced by new directors representing the stockholders group led by Alden Global Capital, a hedge fund firm which has acquired a large, though not controlling, stake. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC. While Singleton may have ideas for strategic consolidations, without Lodovic he lacks the necessary financial engineering savvy, and without control of the board, he can’t make anything happen. The new title for Singleton looks and feels like a face-saving ambassadorial position.

Consolidation?

So the question becomes, what will happen next? For clues, it is worth digging into Alden Global Capital and a web of investment cross-connections that tie it and several other hedge funds and investment banks to most of the major newspaper firms that have experienced bankruptcies in the last few years.

Consider the following list of investment banks, hedge funds and investment managers that have been reported to be involved in various bankrupt or post-bankrupt publishing companies (note, though, that because most of these are private investments by relatively secretive players, it’s not possible to know whether all of them are still involved as listed, or what their ownership percentages are):

MediaNews Group: A large stake is held by Alden Global Capital; the reorganization was led by BankAmerica and involved 116 lender-creditors.

Philadelphia Media Network (publisher of the Inquirer and Daily News): Alden Global Capital, Angelo, Gordon & Co, Credit Suisse, Citizens Bank, CIT Group.

Journal Register Company: Alden Global Capital, JPMorgan Chase.

Freedom Communications: Alden Global Capital.

Tribune Company: Alden Global Capital, Angelo, Gordon & Company, Greywolf Capital, Oak Tree Capital Management, JPMorgan Chase. (Note, in this case, the players are not on the same page yet, with Alden and others filing suit against JPMorgan and others.)

Minneapolis Star-Tribune: Angelo, Gordon & Company, Credit Suisse, Wayzata Investment Partners.

Postmedia Network Inc.: The Canadian group acquired the newspaper holdings of bankrupt Canwest Global Communications Corporation with backing from Golden Tree Asset Management as well as Alden Global Media and a number of smaller investment funds. John Paton, CEO of the above-listed Journal Register Company, serves as an advisor and recruited its CEO, Paul Godfrey, a media executive who also did a stint as CEO of the Toronto Blue Jays.

Morris Communications: The lone publisher with no apparent overlapping investors shared with the others; its principal creditor in bankruptcy was Wilmington Trust FSB. But Wilmington is a bank, and in most of these cases the banks have been flipping their holdings to the hedge funds.

Clearly, Alden is the outfit with the most skin in the game, having investments in MediaNews, Freedom, Philadelphia Media, Journal Register, Freedom, Tribune and Postmedia. (Incidentally, as a further extension of this network, JP Morgan Chase, which has been involved in the Tribune, Freedom and Journal Register reorganizations, is the largest stockholder at Gannett, with a 10.2 percent “passive” investment.)

With all these interrelationships among investors and “distressed” newspaper firms, it’s not hard to see why Dean Singleton might say that achieving some kind of “consolidation” will be a full-time job. Still, it seems unlikely that Singleton will get to pull the strings, when the money behind the interlocking investment structures is controlled by billionaire Randall Smith, Alden’s founder, who built his fortune through investments in junk bonds and distressed properties. Alden acquired most of its newspaper stakes through its Alden Global Distressed Opportunities Fund, which it launched in 2008 and which is now worth nearly $3 billion. Alden has offices in New York, Dallas, Dubai and Mumbai, along with a tax-haven presence on the Channel Island Jersey.

The tip of the iceberg of consolidation shows in rumors of a possible merger between Freedom and MediaNews. This would be of strategic value particularly in California, where MediaNews already controls about 26 percent of the newspaper market by circulation through its California Newspaper Partnership created by Singleton and Lodovic. MediaNews, Gannett and Stephens Media Group all contributed newspapers to the partnership, in which each firm holds a proportionate equity stake and profit share, but which is controlled and managed by MediaNews. Combining MediaNews and Freedom would add another 7 percent, bringing the total to 33 percent. Antitrust is unlikely to be a big hurdle, since the MediaNews and Freedom holdings compete only at territorial margins and the continuing decline in newspaper revenue and circulation is a sufficient argument for the need to consolidate.

Alden could be seeing the California opportunity not only as a chance to find additional cost savings through production efficiency, but more importantly as a way to gain revenue through market share, both in print and online. Conceivably, because of Alden’s role in Tribune, the Los Angeles Times could end up as part of the partnership as well, boosting the consortium to about half the state’s paid circulation.

This California consolidation opportunity could be used as a model for similar possibilities elsewhere. For example, in New England, a combination of MediaNews, Journal Register and Tribune would have properties in Connecticut, Rhode Island and Massachusetts — totaling about 25 percent of circulation in those states, on a par with the current California partnership. On a countrywide basis, the companies in which Alden appears to have a stake and some degree of influence, as detailed above, have about 15 percent of all circulation and if fully merged, would be about 10 percent bigger than the current champion, Gannett. Gannett currently holds only about 13 percent of total circulation, and when compared with most other media such as television, cable, radio and magazines, the patchworked map of newspaper ownership and its lack of concentration of ownership both now seem outdated and inefficient. Singleton’s early vision of three principal players owning most of the newspaper landscape is increasingly likely.

But it must be done right. Strategic geographic consolidations, if operationally led (one hopes) by someone of Paton’s caliber, could be a potent force for the rejuvenation of the industry, including a renewed focus on what, after all, is the principal product and potential strength of all three companies: local journalism, along with Paton’s strong emphasis on digital-first, print-last thinking.

MediaNews’s own statement on the reorganization seems to echo this: “These measures will strengthen the company’s performance in its core markets, and continue the transformation of the business from a print-oriented newspaper company to a locally focused provider of news and information across multiple platforms.”

It’s really the last hope for the newspaper business, but a pessimistic view is possible, of course. Randall Smith, Alden’s CEO, is a shrewder and more sophisticated financial engineer than Lodovic was as Singleton’s second-in-command, and Alden’s ultimate interest is in earning a strong return on its investments, not in the future of journalism, so its strategy is at heart a financial one. And, yes, consolidation will come at the cost of jobs.

But Smith also knows that the only way to win his big bet on the future of newspapers is to turn them into nimble, modern digital news enterprises, and even Singleton (who rarely touches a computer) seems to agree.

Let’s hope they both listen to Paton, who said in a December speech:

Stop listening to newspaper people. We have had nearly 15 years to figure out the Web and as an industry we newspaper people are no good at it. No good at it at all. Want to get good at it? Then stop listening to the newspaper people and start listening to the rest of the world. And, I would point out, as we have done at JRC – put the digital people in charge – of everything.

Disclosure: I worked for MediaNews Group for 13 years as a publisher in its newspapers in Pittsfield and North Adams, Mass. and Brattleboro, Vt. In a previous post, I asked whether Singleton could steer MediaNews to a digital future.

July 15 2010

15:00

The Newsonomics of the dead cat bounce

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

The season’s upon us, as newspaper and media companies announce their second-quarter earnings. At least some of the companies will announce: fewer than used to a couple of years ago, as Tribune has gone private (and banko), metros like Philly and Minneapolis have moved to private hands, MediaNews releases less information than it used to, and Dow Jones’ results are less decipherable, aggregated within News Corp. news division results.

Still, Gannett — the largest U.S. newspaper company — leads off Friday. The New York Times Co. follows on July 22. McClatchy comes in on July 29. We’ll also hear from A.H. Belo, Scripps, Lee, and Media General, dates TBA.

Let’s get ahead of it a bit and see what we can look for in the announcements and what that will mean for the news industry. Let’s look at a newsonomics primer of this struggling industry as the rest of the economy haphazardly improves around it.

I could call this post “The Newsonomics of newspaper quarterly earnings reports,” but much better is the story of the moment: How much will newspaper companies tout — and how will the reduced-but-remaining corps of those who cover the industry report — how positive their dead cat bounce is. “Dead cat bounce” is a phrase you hear — confidentially — from some newspaper executives. It’s an old Wall Street term, observing that even long-declining stocks will bounce a bit sometimes.

Let’s recall that last year’s ad revenue results had all the spring of a dead cat — down some $10 billion and 27 percent. So take a dead cat and pump a little life in it, with things less worse than they were in the disastrous 2009 and you get a bit of a bounce — but not one to crow about. Unless, that is, you don’t have much else to crow about, and that’s that’s the predicament, circa mid-2010, of most newspaper companies. They don’t have a big, positive story to talk about.

So, consider this a parsing guide to what we’ll hear in the next month:

  • How much was the second quarter down from 2Q 2009? First-quarter numbers were down largely in single digits, and that seemed a relief after comparable double-digit declines. We heard such CEO parsing as “improvement in comparables” and hopefully spun statements such as “Domestic classified advertising was just seven percent lower than March a year ago.” The problem: The rest of the economy, and even the TV and online ad economies, are all showing real growth — and taking market share from newspapers. Newspapers’ continuing inability to find real arithmetic growth doubles down on the theory that these revenue changes are more structural than cyclical — and that the Great Recession may have accelerated newspapers’ downward fortunes. Are there any positive growth numbers to report? Which categories may be turning positive — maybe national or retail display ads — as the sagging economy continues to plague the traditional classified strengths of auto, recruitment, and real estate?
  • How much will the prepared remarks focus on cost or debt reduction and how much on revenue growth? Play Earnings Bingo and count the comments involving “debt reduction” or “cost restructuring” as compared to “growth.”
  • How much of revenue is now coming from digital, and what’s the digital growth rate? Most newspaper companies increased their percentage of overall revenue attributed to digital to the 12-15 percent range in 2009 — but that was largely because print revenues dropped so precipitously. The news industry is becoming more digitally oriented, but still has a long way to go. Still, it’s a useful percentage to know; few companies report it routinely, but often mention it in Q&A. Most importantly, is the digital business growing, and at what rate, after being just north or south of flat in Q1? Such growth is key to these companies’ future.
  • How much of that digital revenue is coming from digital-only sales? McClatchy CEO Gary Pruitt was the first to make a point of digital-only sales, as it approached half of total digital revenue. Pruitt’s right; it’s an important barometer of where the business is going, not where it’s been. Since the mid-’90s, the industry has been overly reliant on “bundled” ad packages of print/online. Now as the digital marketing revolution matures, a number of companies — often spurred by the Yahoo Newspaper Consortium — are really pushing online-only packages.
  • How much revenue is coming from emerging marketing services business initiatives? Tribune and Gannett are among the leaders at selling website building, search engine optimization services, and more to small and medium-sized businesses. Will we hear about this big new push — and how many dollars it is starting to drive?
  • Is there any circulation revenue growth? Circulation numbers have continued to plummet, while newspaper companies have priced up substantially. The overall notion: Get long-standing, habituated print subscribers to pay more of the freight. For The New York Times, the strategy has worked and circulation revenue has continued to grow (up 11 percent in Q1). For other companies, Gannett (circ revenue down 5 percent) and Lee (down 4 percent), the math isn’t working as well. Pricing up and losing both revenue and circulation numbers that are the lifeblood of selling advertising is not the outcome desired. So watch circulation revenue numbers in the reports. If they’re still negative, that’d be an indication that newspapers’ circulation pricing power is waning.
  • Do we hear any strategies discussed for the second half of 2010 or into 2011? Any iPad/tablet plans or development? The discussions surrounding the earnings calls can focus just on numbers, sometimes arcanely so, or get into actual strategies that may lead from the tepid now to a better tomorrow. How much strategy do these companies have and/or are willing to share with investors?

Image by Eric Skiff used under a Creative Commons license.

May 07 2010

15:00

This Week in Review: Newsweek on the block, Twitter as a journalistic system, and more paywall rumblings

[Every Friday, Mark Coddington sums up the week’s top stories about the future of news and the debates that grew up around them. —Josh]

Has Newsweek’s time come?: This week was a relatively quiet one until Wednesday, when The Washington Post Co. announced that it’s trying to sell Newsweek, which it’s owned since 1961. A possible sale doesn’t always signal the demise of a news organization, but in this case, as the folks at The Wall Street Journal’s All Things Digital noted, this move was the equivalent of “hastily scrawling out a ‘Going Out of Business — Name Your Price’ sign and plastering it on the front window.” The New York Times has the details, including a j-prof’s pronouncement that “the era of mass is over, in some respect.”

PaidContent’s Staci Kramer talked to Washington Post Co. chairman Don Graham, who boiled Newsweek’s profitability problems to one telling statistic: Newsweek’s staff split its time about evenly between print and digital last year, but print brought in $160 million in revenue, while the digital side drew $8 million. Newsweek’s digital operation was good, Graham said — just not good enough to stand out from the hundreds of other news sites out there. Still, he was confident the Post would find a buyer (though he hasn’t talked with anyone seriously), and that Newsweek and newsweeklies in general would live on.

Newsweek editor Jon Meacham talked to the New York Observer, saying he’s going to see if he can save the magazine, possibly by rounding up bidders to buy it. Meacham’s conversation with Jon Stewart the day the news broke was laced with both optimism and gallows humor, and New York magazine examined Meacham’s decision to try to make Newsweek the American equivalent of The Economist.

In a well-written piece, The New York Times’ David Carr summed up two bits of conventional wisdom about Newsweek’s downfall: The economics of weekly publishing simply aren’t feasible anymore, and the Washington Post Co.’s Slate, with its snarky, knowing tone, has taken Newsweek’s place. MarketWatch’s Jon Friedman suggested that the Post combine the two. Slate’s Jack Shafer said it wasn’t the Internet that killed Newsweek, but instead an ongoing game of musical chairs that someone had to lose. (Slate and Time, for example, seem to be doing just fine, thanks.) Meanwhile, Derek Powazek, who’s edited several web magazines, gave his recipe for newsweekly success in the digital age.

The next question, of course, is who will buy Newsweek. News business analyst Ken Doctor examined two possibilities: TV-based news orgs like ABC, CBS, and NBC looking for a print distribution point, and “firebrand owners” like media moguls Mort Zuckerman or Marty Peretz. Either way, Doctor said, Newsweek will probably be all but extinct before long. Poynter’s Rick Edmonds, Media Alley, and Mediaite all throw out some combination of Zuckerman, Meacham, Bloomberg, and Rupert Murdoch. as possibilities.

Committing journalism with Twitter: Many of Twitter’s users have understood and used it as a medium for breaking, spreading and consuming news for quite a while now, but some research presented within the past week adds some backbone to that idea. Four Korean researchers collected all of Twitter’s data over a month’s time last year and released their research on it — the first quantitative study of the entire Twitterverse.

What they found, according to PC World, was that both the structure of Twitter (with its asymmetrical following system, creating a world with some incredibly influential users and many other more peripheral ones) and its messages (85 percent are about news) give it more of a resemblance to a news medium than to its fellow social networks online. Our Jason Fry also gave his take, noting the potential value of reciprocity even in an environment that doesn’t require it.

MIT’s Technology Review zeroed in on two particularly interesting findings illustrating the breadth of this new news system: First, two-thirds of Twitter users aren’t followed by anyone that they follow, meaning they use it for information consumption rather than social connections. Second, despite the wide disparity between the Twitter “stars” and typical users, anyone’s tweet still has the possibility of reaching a wide audience, thanks to the usefulness of the retweet function. “Individual users have the power to dictate which information is important and should spread by the form of retweet,” the researchers wrote. “In a way we are witnessing the emergence of collective intelligence.”

Also this week, Canadian j-prof Alfred Hermida put forward his argument in an academic paper for Twitter as an “ambient form of journalism” — a medium in which the former news audience creates, disseminates and discusses news, performing acts of journalism that were once performed only by professionals. In a more technical paper, Alex Burns delved into the definition of “ambient journalism,” especially as it relates to Twitter. Here at the Lab, Megan Garber also looked at the way news organizations in several countries are using Twitter and other social media for news.

The paid-content beat goes on: A few quiet indicators this week of the move toward news paywalls: Rupert Murdoch said News Corp. will be announcing their paywall plans in a few weeks. Those plans apparently include anchoring a consortium of paid-content systems across various media companies, using technology that powers the Wall Street Journal’s paywall, the Los Angeles Times reported. Meanwhile, the number of publications that Journalism Online’s execs say they’re working with on paywall plans has increased to 1,400, including the sizable MediaNews chain of newspapers.

The Minneapolis Star-Tribune’s new publisher/CEO, Mike Klingensmith, talked to MinnPost about his plans for a new metered-model system (like what The New York Times announced in January), and from the sound of it, he’s looking at charging primarily for local news — the paper already charges for some of its Minnesota Vikings coverage — and wants to allow traffic from links to come in fairly uninhibited. A decision on the specific plans sound like they’re at least a year off, though.

Advertising Age’s Nat Ives also took a look at paywalls for smaller newspapers (here’s the link, but Ives’ article is also under a paywall). Ken Doctor says that for smaller papers, a paywall may be a good short-term wait-and-see strategy, but papers still have to be proactive about ensuring long-term growth.

The pros and cons of Facebook’s spread: There wasn’t a lot of news involving Facebook this week, but the grumblings about its privacy issues rolled on. The New York Times used Facebook’s latest (relatively minor, it seems) privacy glitch to give another overview about those concerns, and TechNewsWorld pegged their overview to a Consumer Reports survey about Facebook information sharing that was released this week.

Social media guru Robert Scoble wrote a depressing piece about why Facebook’s disregard for privacy can’t be regulated, concluding that Facebook founder Mark Zuckerberg “just played chicken with our privacy and it sure looks like he won.” New media expert Jeff Jarvis suggested that Facebook turn their bad privacy PR into a service for users (with some help from their ubiquity), offering them a simpler way to see what’s being written about them across the web and manage their online reputation.

The New York Times’ digital chief Martin Nisenholtz was pretty impressed by Facebook’s spread across the web, giving a sharp analysis of the importance of engagement and identity to publishers online. Those are things that Facebook has mastered, he said, but news organizations haven’t, and that’s a shame when the Times’ most valuable asset is “our audience as knowledgeable participants in the life our web site.”

Reading roundup: This week, I’ve got two news items and a few other good ideas to chew on.

— EBay founder Pierre Omidyar launched his new local news site, Honolulu Civil Beat, this week. It’s being run by John Temple, who was at the helm of the Rocky Mountain News when it shut down. The biggest distinctive of this project: It’s almost entirely behind a paywall. PaidContent and NPR both have the details.

— The Audit Bureau of Circulations reported the most recent set of newspaper numbers a couple of weeks ago, and here at the Lab, newspaper vet Martin Langeveld punched a few holes in the Newspaper Association of America’s declaration that the results are the sign of a turnaround. And after the announcement of the first quarter’s newspaper profit numbers, the Lab’s Ken Doctor explained why newspapers aren’t going to be investment those profits in much-needed innovation.

— Publish2’s Greg Linch put together a great case for incorporating more of a computational mindset into journalism, identifying several common elements between journalism and programming and urging the two groups to work more closely together. English professor Kim Pearson followed that post up with some proposals for ways to integrate computational thinking into curriculums.

— We’ve been hearing a lot about online comments over the past few weeks, and Poynter’s Mallary Jean Tenore took a close look at the ways several news organizations are working to improve them.

— I’ll close with two simple but thoughtful pieces on online media, one from the production standpoint, and the other looking at consumption. First social media entrepreneur and blogger Ben Elowitz gave a fine summary of the way the definition of quality has changed in online media versus traditional publishing, and Slate’s William Saletan had some helpful tips to make your media consumption broader, deeper and altogether smarter. It’s hard work, but it’s necessary, Saletan said: “In the electronic echo chamber, it’s easier than ever to shut out what you don’t want to hear. Nobody will make you open the door and venture out. You’ll have to do that yourself.”

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