The newsroom at The Daily Telegraph. | Credit: victoriapeckham/Flickr

The person who spoke this line was Matt Berger, the director of digital media at Marketplace. What he meant was there is no business model that will support an organization with 100 reporters writing 100 stories (or, as we used to refer to the newsroom, 100 monkeys at 100 typewriters).

When you are going up against a World Wide Web that has so much real-time content, it’s almost impossible to gain enough traction to adequately monetize the work of a single soul banging away at a single keyboard. This old model was only possible when information was scarce. And information was scarce because it was delivered on newsprint. (And yes, there are still a few places that can achieve the necessary scale in the digital realm, and we all know who they are.)

Of course, there is nothing earth-shattering about this concept. It’s blatantly obvious. And yet, when you stop to consider it, you wonder how anyone who cares about the future of the industry could be thinking about anything else. Or why so many news sites are still swimming upstream by trying to sell ads against work churned out by individual journalists.

The implications of this challenge are unsettling. The single “article” — journalism’s basic unit of commerce — will only rarely generate enough value to cover its cost of production. (Gulp.) But as I began to consider what scalable journalism meant, I also realized how many conversations I had had recently that were really about addressing this very problem.

I recently sat down with Steve Rosenbaum, author of “Curation Nation” and founder of Magnify.net. His startup seeks to address this issue by helping news sites appropriately harness content that’s out there already, rather than attempt to produce it themselves. Plenty of people might want to visit the homepage of Field & Stream to watch a video about boat trailers or fishing lures. But it’s not realistic to think that magazine’s staffers can churn out enough quality video to satisfy the demand of either the audience or advertisers. Again, it’s a question of scale.

Yet the Internet is brimming with videos about these topics already. So Magnify reels in an array of relevant videos that editors can choose from. Field & Stream provides the context (you’re watching this in the confines of their site’s video page) and the curation (they choose the content that they feel is most valuable). The best part: The magazine can sell pre-roll ads or ads on the site even though the content (the actual video) was created elsewhere. Depending on the arrangement, the magazine either pockets the revenue or shares it with whoever made the video. This last point marks an evolution of the concept of curation. Not long ago, showing someone else’s video on your site was considered “theft” by some. Now, many just call it “distribution.”

The issue of scale is also lurking in the background throughout the recent report from Columbia’s Tow Center for Digital Journalism on Post-Industrial Journalism (though it weighs in at an industrial-length 122 pages). Much of the report discusses the need for a new workflow that is more open and responds to the ways in which information is currently assembled and consumed. (For a smarter, Cliff Notes version of this concept, read the post from my friend and former editor Reg Chua.)

Obviously, the layers of editors that were once charged with policing copy have no place in the modern, distributed newsroom. But editing — the process of vetting, sharpening and enriching content — still holds tremendous value. I spoke recently with Roman Heindorff, one of the founders of Camayak.com, a browser-based product that helps organize a newsroom’s workflow. The founders were trying to address an increasingly common problem: how to bring sense to the news organization of the future, which will be made up principally of part-time contributors working on myriad projects, sometimes across vast geographies. Camayak has begun to gain traction with campus papers, which often have hundreds of occasional contributors who need a seamless way to collaborate with each other. The overall goal is to make the most efficient use of available human resources to produce greater amounts of content. The founders also believe there is a virtuous circle involved: The more people are able to use the platform to collaborate successfully, the better the content.

Marketplace’s Berger approaches the problem from the perspective of structured journalism. Achieving appropriate scale requires putting lots of up-front effort into building a digital product that doesn’t wilt with the day’s news. This means creating a database of content that the audience can dip back into multiple times and still draw new conclusions. The database can be regularly refreshed with new content to extend its life.

His Exhibit A is a Marketplace feature called Future Jobs-O-Matic, an interactive tool that lets you browse hundreds of professions to see how many people are employed as welders or what the average salary of a machinist might be (Answer: $39,000). The database is updated every two years, but people keep coming back to it, sharing it, using it in the classroom, etc. Buried in the data, of course, are also nuggets that traditional “article-producing” journalists can use as building blocks for stories.

The implications of what this all means from where I sit are far reaching. Much of what I do involves teaching students the rudiments of how to produce an article — which has an ever-shrinking economic value. Clearly, this needs to be rethought. And those of us who inhabit journalism schools need to create an environment that pushes students to produce journalistic artifacts that have a shelf life, that draw content from the crowd and that still provide a platform for storytelling and for meeting the information needs of the public. Should be a snap.

The project is called Sustainable Business Models for Journalism. What did we find? First, bad news: there’s no single, easy solution or amazing new business model that solves all the problems that traditional publishing models have.

But looking through some of the very grassroots operations around the globe, you find some similarities among the sites. Probably the most comforting lesson from these young and old entrepreneurs is the fact that there’s probably no need for an amazing new business model. Journalism is just going through a transformative period from a monopolistic, high-revenue and low competition model to a highly competitive global marketplace. And the ideas and advice we got from these entrepreneurs was not that much different from the advice you find in traditional business literature, startup manuals or even biographies of successful companies.

Here are some general conclusions from the 69 startups we interviewed.

Find your niche. Whatever you do, don’t do the same things as the others do. Or if you do, make sure you do it better in one way or another. Be faster. Or broader. Or more in-depth. Slower. Whatever you do, do it somehow differently than the others. As Ken Fisher from ArsTechnica.com says, don’t try to be 30 seconds faster with the same bloggy content that’s going to be on five other sites in 10 minutes.

Be passionate. Running a website is hard work and you can’t do it with a 9-to-5 attitude. If you truly love what you do, it makes the long hours more tolerable and gives you a competitive edge: you’re willing to work an extra hour. My personal guess is that the readers can smell the passion as well. Especially in France and, surprisingly, in Japan, the divide between “us” — the free journalists — and “them” — the established media — seems to be a strong driver.

Keep it small and agile. The old model of publishing was to design a publication and then hire people to do it. The new model is to have one or two people and see what kind of publication they are able to create.

You are the brain of your own business. Many of the journalists interviewed for our study said they hoped that someone else would do the business side of things for them: contacting possible advertisers, selling the ads and doing all the planning and calculation. David Boraks from DavidsonNews.net said it well: if you are starting a small business and you have a vision how to do it, you can’t turn it over to somebody else and expect it to happen the way you want it to.

Ask for support (aka money). If you know you’re doing a good thing, don’t be afraid to ask for support. Advertisers, especially local or niche ones, might actually like what you do. If they are passionate about candles and think your site about candles is worth reading, they are probably more willing to advertise on your site. If your readers can’t live another day without your passionate and unique candle reviews, they probably are willing to somehow give you money. “People are just looking for a way to support you,” says Doug McLennan from Artsjournal.com

These are just a few notes from our complete report, which you can read or download here. The website Submojour.net has all the case studies.

Pekka Pekkala is a visiting scholar at USC Annenberg. He is working on a book titled “How to Keep Journalism Profitable” with a two-year grant from the Helsingin Sanomat Foundation. Folow him on Twitter at @pekkapekkala.

That’s the question that’s bedeviled an uncounted number of start-ups, and established businesses, in the decade and a half of publishing’s Internet era. While many individual writers and small, community start-ups have found their way to ramen profitability online, big businesses (and aspiring ones!) continue to look for the formula that consistently allows them to build large-scale, national chains of profitable content-driven publications online, as companies such as Gannett and Scripps did with printed newspapers in the past century.

Two recent events involving AOL have brought this question back into my mind. The first was the leak earlier this month of The AOL Way, a strategy for the company’s writers to develop more (and more popular) articles on its various websites.

Critics derided the strategy as reducing writing to mere formula, with some comparing AOL to Demand Media.

Later this month came the second event, as AOL bought Huffington Post and appointed HuffPo founder Arianna Huffington to oversee AOL’s editorial operations. HuffPo’s given its share of critics the vapors, too, including the LA Times’ Tim Rutten who derided HuffPo as “a galley rowed by slaves and commanded by pirates.” (FWIW, HuffPo pays for its wire feeds of content from other news sources, just as the Times and other newspapers do. It also pays a staff of professional reporters, in addition to hosting blogs written by readers.)

So let’s revisit the question: Can a content business scale on the Internet? Can you run a large-scale, profitable news publication online? And if so, does it have to rely on hard, search-engine-friendly formulas or free writers to survive?

Writing begins as a personal act. An individual summons words from within his or her mind, then puts them to paper, voice or screen. That’s why I believe that seeing formulas put to screen enrages some writers. But unless you want to sound like the raving outcast on a random street corner, at some point a writer needs to employ some basic conventions to ensure an audience understands what you’re trying to say.

In that respect, all effective writing employs formulas.

Newspapers have been demanding formula writing from their reporters for generations: inverted pyramid, AP Style, citation rules, etc. Part of this demand lies in the desire to communicate effectively with a broad audience. But much of it also comes from a need to standardize production. Copy desks need consistent writing style from reporters so they can effectively edit large numbers of stories in a limited time. Wire services demand consistency in style and presentation so that articles can fit into a large number of publications.

Anyone who’s tried to crank out the copy for a daily paper knows that you can’t bother channeling your inner Faulkner (or inner Christopher Nolan, for OJR-reading movie fans), if you want hit your mandated byline count. You’ve got to stick with the formula.

So it’s no surprise that AOL would have wanted to play by those same rules. It just bothered to make those rules explicit for its growing army of writers.

There is another way to build a large online publication, however. And to do so in a way that allows individual writers to maintain more distinct voices. It’s the model employed by massively popular (and profitable) sites from Slashdot to Daily Kos to, yes, Huffington Post.

It’s to envision your site not as a top-down, centrally edited publication but as a community of individual voices.

This approach does not prevent site editors from influencing the direction, or even maintaining control, of the publication’s overall voice. But it does allow individual voices to publish without the hands-on editing of a higher-up in the organization (though members often have to abide by stated community rules, and in the case of HuffPo, get an invitation from an editor before being allowed to post.)

But is a free model fair to the people who write for these sites?

Personally, I find that question incredibly condescending. People aren’t idiots. If they don’t see themselves getting value in return for what they write on a website, they won’t write.

Thanks to Nate Silver, we now have a rough estimate of just how much hard-revenue value an individual blogger brings to HuffPo. And it ain’t much.

Silver demonstrates something that I’ve seen for myself in tracking the analytics on my websites for years: That pages revenue on websites adheres to a basic power law, and that per-page revenue diminishes sharply beyond a relative handful of high-earning pages. For most pages on a website, each individual page is worthless from an ad revenue perspective.

For both the writer and the publisher, value is found not in the ads served or clicked on those pages, but in the community surrounding them. For readers and contributing writers, their reward is being able to read and be heard within the community. For the publisher, the community creates a critical mass that creates ad and sponsorship value for the collection of its pages greater than its individual pages could leverage alone.

Don’t fall into the trap of seeing these writers as “free.” If a publisher isn’t cultivating a community of value for these writers, no one will submit a thing.

Of course, publishers can use community building and formula writing to create value. But I believe that community building offers one other huge advantage over simply employing an army of live or automated formula writers – it’s not nearly as dependent upon search engines to drive traffic.

Take Demand Media out of the Google search engine results, and where would that company be? (Hint: Getting less traffic than an old “All Your Base Are Belong to Us” photo mashup.) By contrast, take DailyKos out of Google, and would anyone even notice?

Communities drive their own traffic. They protect and cultivate individual voices. They create value greater than their individual parts. All reasons why, again, journalism leadership in the 21st century needs to move beyond the poorly-scaling editor-centric model and instead embrace the methods of community organizing.

Yes, content businesses can scale online. But only so far as the communities supporting them grow.

Put simply, syndication makes little sense in a world with URLs. When news outlets were segmented by geography, having live human beings sitting around in ten thousand separate markets deciding which stories to pull off the wire was a service. Now it’s just a cost.

If you happen to run a hyperlocal or niche publication, this prediction is a good one. Internet is built on the idea of having just one copy of everything, accessible to everyone. If you produce those original pieces of content, no need to worry. If you’re in the business of aggregating others content, prepare for a rough ride.

The idea of one copy surfaced last winter along with Jaron Lanier’s book You Are Not a Gadget. Internet pioneer Ted Nelson originally coined the term and Lanier summarizes it well:

Instead of copying digital media, we should effectively keep only one copy of each cultural expression.

Internet is the great antidote for the Gutenberg printing press: instead of enabling us to make copies cheaper and faster, it makes the whole idea of copying obsolete. Why copy if you can make a link to the original?

Anyone who has worked in an online newsroom knows the problem of copying. How much time we should spend following the other news outlets, copy their breaking stories with a punchier headline and a quickly written comment? And how much effort should be spent creating original content and our own breaking stories?

The idea of “do what you do best, link to the rest” is not new, Jeff Jarvis wrote about it already in 2007. But for some reason, linking seems to be really difficult for news organizations. The idea of having everything on your site comes from the old editorial culture. Newspaper is the complete package of yesterday’s events; TV newscast is today’s package of everything important. If you leave something out, people will probably change the channel or cancel the subscription. But in the Internet, there are no packages, channels or subscriptions. There is just one big mess of links.

When Ted Nelson was making the first designs for something like World Wide Web, it didn’t have copies but one giant, global file.

The whole of a user’s productivity accumulated in one big structure, sort of like a singular personal web page.

So the idea of Internet — and the technology behind it — is exactly the opposite to the idea of a traditional newspaper publishing. We are not creating our own publications or single ‘destination’ websites but building a giant, single web. Work against this principle and you’ll end up in trouble. This is why paywalls are failing on the Web, in mobile and will fail in most cases on iPad. Once you start blocking iPad users from your website to sell more apps, you are encouraging readers to make copies, not subscriptions.

But all this is great news for small publishers, such as hyperlocal news or niche sites. You can be a part of that single Web page of Internet news. Concentrate on the original content instead of copying; create the one copy only you or your organization can create. If you don’t believe me, listen to Gawker’s Nick Denton: scoop generates audience, which in turn generates advertising.

The end of syndication is good news for journalists as well. When publishers start creating more original content instead of hastily made copies, the human element comes back to the process of journalism. The creator of the original content becomes more valuable, because it is still pretty difficult to make copies of people.

I might sound like a technophile, but the irony is that Google News is already helping original content to surface above copies. Google News algorithm knows who published the original story first. If your news site covers the same story and doesn’t include the link to the original story in the first paragraph, you can kiss Google News front-page goodbye.

And it was Google News algorithm that made us aware of the syndication craze. Who could have imagined there were 12,000 copies of the ‘Somali pirates’ story without Google telling it to us. Now Google is punishing us for making those copies. Who saw that one coming?

Pekka Pekkala researches sustainable business models at USC Annenberg, is a partner at Fugu Media> and a technology columnist. He used to be the head of development at Helsingin Sanomat, the largest Finnish newspaper.

But, today, it illustrates just the latest example of backward-thinking by legacy media executives who’ve been left lost and clueless by the Internet revolution.

Microsoft needs to do something to distinguish Bing from market leader Google. (And simply renaming its Live search engine didn’t get that done.) News Corp., like any business looking for growth, wants to find a new source of revenue.

So, instead of making its content available for indexing on all search engines, News Corp. could decide to make it available only to one search index, in exchange for payment or some other consideration from that search engine’s owner. On the surface, the deal makes great sense for both sides: News Corp. gets cash (or some other payment of value) and Microsoft gets unique content in its search results – pages that readers can’t find elsewhere.

That’s the way many successful content deals have happened in the past. Think how sports leagues sell broadcast rights to their games to selected networks or channels. Or how cable and satellite companies have split popular channels across several packages, “encouraging” customers to move up to more expensive subscription tiers. It’s all about exchanging cash for access.

But that model is beginning to fail. The benefit to Microsoft in a potential deal with News Corp. is having News Corp. pages in its Bing search results that readers could not find elsewhere.

Except… they can. Tim Berners-Lee’s analogy of the Internet as a Web is complete. Content no longer exists solely within silos, accessed only through its defined channel. Online content is enmeshed with that web – linked to, and thereby accessible from, countless outside sources.

News Corp. can close its content to Google’s spiders. But Google will continue to index the millions of other webpages, including blogs, Twitter feeds, discussion forums and other news sites, that link to News Corp. webpages, from Fox News reports to Myspace profiles. Those linking pages will continue to provide access to News Corp. content through Google and other search engines, even when (or if) News Corp. changes its robots.txt file to block Googlebot.

Some bloggers and other writers have reacted to the news of a possible deal with glee – hoping that exclusion from Google will render News Corp. content invisible on the Web. Heck, I’d love to see all references to the Fox News’ cynical Republican-propaganda-masquerading-as-news disappear from the Web, too. But even if News Corp. withdraws its pages from Google, the references to those pages will not disappear. Taking News Corp. out of Google won’t make sites like Red State and Real Clear Politics vanish.

Producers have attempted to close these backdoor channels for content before. Who remembers the battles that many sports franchises fought with bloggers and even newspaper reporters to prevent them from posting scores and descriptions during games? The teams feared that online “broadcasts” of their games would compromise lucrative deals with radio and TV partners.

Today, those battles are mostly over. If anything, sports teams have moved on to trying simply to keep their athletes from Tweeting in the middle of games. Forget about the folks in the press box.

So what’s the value to Microsoft? Perhaps if News Corp. websites used Bing for their internal site search, there’d be some value in driving more readers to Microsoft’s search engine. But that’s a different deal, one that does not require exclusion from Google’s index. Perhaps News Corp.’s conservative audience might be convinced to use Microsoft’s Bing out of ideological loyalty, but let’s not forget that Microsoft is the “MS” in the right wing’s hated MSNBC. So that’s likely a non-starter.

I’ve heard many legacy news managers complain that the advertising model is dying online. From personal experience, both in my own ventures and watching others, I can attest that’s certainly not the truth. The model remains viable, even if it can no longer deliver the level of profit margin at the sales volume to which the news industry’s grown accustomed. (In math terms, the “model” is the equation that describes a relationship. The numbers that the model spits out can change even as the model remains the same.)

The Internet is killing one legacy media business model, however, and that’s the supply-side model based on creating value by restricting access to content. That’s the model upon which the News Corp.-Microsoft deal is based. While it might have worked in a pre-Web, channel-driven world, the public simply has spun too many ways around content-control deals to make this one worth Microsoft’s time or investment.

Bing will have to find another way to distinguish itself from Google.

And Rupert Murdoch will have to find other ways to make money off his crud.

“If we really want to reconstruct American journalism, we need to look at more than the supply side; we need to explore the demand side, too. We need to start paying attention to the trail of clues in the new media ecosystem and follow those ‘breadcrumbs.’ What ailing industry would look for a fix that only thinks of ‘us,’ the news suppliers, and not ‘them,’ the news consumers? I don’t hear from any of those consumers in this report.”

Alan D. Mutter, whose Reflections of a Newsosaur blog, provides a good share of the small amount of rigorous, economic-centered thinking that’s gone into the journalism crisis, also gave a mostly scathing review to “The Reconstruction of American Journalism.”

Downie and Schudson come to their drastic recommendation of a “National Fund for Local News” using the kind of sleeves-rolled-up but shallow analysis that typically informs newspaper editorials on big issues (e.g., health care reform and the U.S. role in Afghanistan) A typical sentence from the report: “With appropriate safeguards, a Fund for Local News would play a significant role in the reconstruction of American journalism.” What are “appropriate” safeguards? What are the con’s as well as the pro’s of letting the federal government, through funding decisions that are made by appointed “national boards” and “state councils,” “play a significant role in the reconstruction of American journalism”?

Downie and Schudson focus, appropriately, on the threat of continued editorial staff downsizing to journalism’s “‘accountability reporting that often comes out of beat coverage and targets those who have power and influence in our lives—not only governmental bodies, but businesses and educational and cultural institutions.’” But creating a spider-web-like network of grant-dispensing boards sets the stage for all kinds of abuses that, ironically, would provide fodder for accountability reporting.

Missing from the Downie-Schudson report are the basic elements of critical thinking:

• Digging for causes instead of reacting to symptoms.
• Measuring as well as marshaling evidence.
• Recognizing all the stakeholders.
• Asking “why” questions.
• Testing conclusions and recommendations.

Perhaps it’s unfair to hammer the Downie-Schudson report too hard. It’s symptomatic of what passes for analysis of the crisis in American journalism. We get too much rhetoric. The rhetoric is often well phrased – after all, it’s usually written by journalists – but we don’t need more rhetoric, however polished it may be. What we need is more case-method and other critical examination. Journalist/teacher/consultant Jane Stevens pointed the way with her studies of three community sites – CapitolSeattle.com, QuincyNews.org and WestSeattleBlog.com. Stevens and her co-author Mark Poepsel, a University of Missouri School of Journalism PhD candidate, take a close look at what the sites are doing on the journalistic, community and revenue fronts. The studies, if they are expanded to other websites, may lead to a flexible business model that can be tailored to work in a variety of communities – without federal money being doled out by national and state boards packed with patronage appointees.

(Stevens, by the way, gives Newsweek a well-deserved whack for its recent superficial take on the future of community journalism, which came to optimistic conclusions, but for the wrong reasons.)

Maybe the Downie-Schudson report will provoke enough tough reactions – on top of Schaffer’s and Mutter’s – that, cumulatively, will prod journalism’s practitioners and thinkers finally to start thinking critically about a crisis that won’t be solved with rhetoric, no matter how elegantly and urgently it’s framed.

These intensely local news sites, now firmly established on the emerging journalism landscape, offer readers more than news about chicken dinners and church functions, of course. Many of them devote energy and money to produce meaningful journalism from and about under covered urban neighborhoods and isolated rural communities. These places are not the easiest communities to write about; distrust of the media runs high, especially in urban communities of color. But enhanced coverage of urban, working-class neighborhoods of color — long ignored by mainstream media — is one of the emerging trends of hyper local news sites, including the new USC Annenberg School for Communication news site, Intersections: The South Los Angeles Reporting Project, recent winners of a $25,000 grant from the J-Lab: The Institute for Interactive Journalism through its New Voices program, a community news initiative funded by the Knight Foundation: http://www.j-newvoices.org/

Intersections: The South Los Angeles Reporting Project, www.intersectionssouthla.org, is a multimedia news site with multiple layers of community engagement, classroom instruction and different forms of news delivery. Willa Seidenberg, a colleague and director of the award-winning Annenberg Radio News, and I have collaborated for the last year on this project, building community and school ties, constructing infrastructure, rethinking our classes and offering new courses designed to give students a deeper understanding of urban America and its institutions. It’s all an effort to engage residents in telling their own stories and to train a new generation of journalists to see communities as a whole.

Or as Seidenberg puts it: “Urban communities like South Los Angeles are often neglected by the news media, or only covered in relation to the poverty, violence and problems that plague these neighborhoods. But beyond these facts of urban life is a vibrant community that contributes to making Los Angeles an exciting city in which to report and live. South Los Angeles may not have the money and clout that other LA neighborhoods have, but it has a wealth of characters, stories and lessons to be learned about the ways in which we have let our cities down. As the journalism industry moves from traditional forms of media to digital delivery systems, residents in low-income neighborhoods cannot be overlooked. The Intersections website and its experiments with mobile delivery of news offers a chance to pull together all sectors of this dynamic and changing community to create a meaningful dialogue and a source of valuable news and information.”

These “new voices,” as billed by the J-Lab, were always there, of course. Mainstream media either weren’t listening, or weren’t listening closely. But Intersections, among other hyperlocal websites, hopes to take readers to a place where South LA residents can consume all the news about their communities – good and bad — on a computer, on radio, or via cell phone. The news, too, will be framed and written by residents themselves, in addition to USC Annenberg journalism students, who also need to learn the lessons mainstream media have long forgotten: Local news that reflects all classes of urban and rural residents matters. Further, explanatory journalism about the nation’s urban condition, with intersections of race and class may, in fact, be more important now than ever.

Some see the emergence of the hyperlocal site as a mixed blessing. Jack Driscoll, a 40-year veteran of the Boston Globe, and a scholar at the MIT Media Lab, is the recent author of Couch Potatoes Sprout: The Rise of Online Community Journalism Driscoll contributes to Rye Reflections, a citizen journalism site run mostly by retired residents of Rye, New Hampshire. He shared his views about community news sites with the official blog for the Association for Education in Journalism & Mass Communication, http://aejmc.org/talk/?p=2898

“It’s almost like the old-time discussion clubs where people want to have some sort of substantive activities,” Driscoll told the AEJMC blog. “I think this meets civic needs and intellectual needs and social needs.” The payoff for participants, he says, is the kind of intellectual stimulation that studies show lead to longevity and better health. “For the participants, there’s value. And for the community, because the participants are reporting on their communities, the communities benefit.”

But beneath the hype over hyperlocal, Driscoll sees a futility in overly relying on citizen journalism: “I do have this huge concern that a lot of people have misunderstood the value of good reporting. I’m afraid we’re going to lose a whole tier of quality professionalism in the media. The impact of that, I think, is going to be huge. What I’ve been involved in is hyperlocal. But who’s covering state government? Who’s covering the courts? Who’s covering science and medicine? The Globe just closed its science and medicine section, and when I heard that I nearly died. I was the one who started it.”

Exploring untold stories

We don’t propose to supplant any of the three weekly newspapers or the daily La Opinion now serving South Los Angeles. Nor do we pretend to be able to make up for the loss of manpower at the Los Angeles Times, whose ranks have been thinned by repeated buyouts and layoffs. We will offer a tangible news product to the community; residents themselves will have a great voice in determining our news coverage through their contributions and feedback.

Our website may differ from most on several fronts. Intersections supports three disparate but related concerns: filling a void in South LA news, better multicultural training for our journalism students and a high school mentoring project that addresses media literacy. To this we add a critical component: the deep study of urban communities through research conducted by Annenberg colleague, Dr. Sandra Ball-Rokeach and her doctoral students for the Metamorphosis: Transforming the Ties that Bind Project, http://www.metamorph.org/

The Metamorphosis Project, one of the Annenberg School’s signature research projects, explores the multi-layered characteristics of immigrant and working-class neighborhoods in South LA and across the city; it deftly analyzes the socio-economic differences between first-generation and second-generation immigrants, and its research has been used by public officials and policy makers. Sandra’s research may be LA-centered, but its fundamental lesson for journalism students and journalists is universal: Understand the communities you cover.

Buoyed by Meta research, South LA’s untold stories have found a home on Intersections. USC second-year print graduate student Adriana Venegas-Chavez produced a well-crafted profile of a young woman recollecting herself after a life of drugs and gang affiliation. The story was accompanied by a stirring slide show of the young woman’s life, narrated by the young woman herself. Undergraduate Timothy Beck Werth explored the rising tide of homelessness in South Los Angeles, as downtown development has pushed men, women and children to an area of the city with the fewest resources for the most unfortunate of our citizens. And undergraduate Kaelyn Forde Eckenrode complimented Timothy’s story with a magazine-length article about how South LA storefront churches are shoring up the lives of residents in tangible and intangible ways; her report, like others found on Intersections, includes a slide show with both video and still photography in which residents and ministers talked about the adhesive provided by the area’s numerous churches.

Our citizen journalists include teachers, students, South LA residents, all writing about the rhythm of urban life in its various incarnations. They also include high school bloggers who also produce slide shows as part of Intersection’s high school mentoring program spearheaded by USC Annenberg second-year graduate journalism student Emily Henry. One 12th grade student group at Crenshaw High School, just south of the USC’s main campus, explored the impact of the plummeting economy by interviewing day laborers. Others reported on teenage pregnancy by visiting with Crenshaw’s teen mothers. Racial profiling was scrutinized by yet another Crenshaw group, with students interviewing security guards and people who believe they had been racially profiled by the police. The ninth grade class also produced radio commentaries documenting their aspirations, as well as answering the question (which they chose themselves) “why don’t youths take their education seriously?” In the months ahead, we hope to significantly expand contributions from seldom-heard South LA youth.

The last piece of our South Los Angeles initiative is significant. Addressing the digital divide. we forged ties with yet another USC Annenberg colleague whose cell phone delivery of stories and blogs by immigrants embodies the spirit of “citizen journalist.” Mobile Voices, http://vozmob.net, recent winners of a $135,000 grant from the MacArthur Foundation, features rich observations from a perspective seldom explored by mainstream media. The day after Barack Obama’s election, for example, one Mobile Voices blogger used her cell phone as she rode the bus to her work as a cleaning lady in West LA to interview fellow passengers about Obama’s election. Another Mobile Voices correspondent submitted a photo and audio, alerting readers to a reasonably priced clothing store in South LA. The vozmob site has created space for Intersections, http://vozmob.net/southla, allowing undergraduate and graduate students in the South Los Angeles urban affairs reporting class I teach to experiment with delivering their stories by cell phone; in time, we hope to pair reports by vozmob community reporters with stories produced by USC students. The collaboration with vozmob also will serve as a pilot for the citizen journalists we hope to recruit for Intersections.

Training cultural-savvy journalists

The power of technology greatly enhances news coverage, but Intersections has always been about fundamentals. From the beginning, the community website was designed to offer a community more and better coverage, while also producing young journalists who bring deeper understanding and more sophistication about coverage of urban America. The second goal meant the study of history, reading academic papers about wealth building in urban communities, becoming familiar with the conclusions of the Kerner Commission, studying the disparities in public education and why they exist, examining the health care divide, among other issues. We are, in short, educating community residents about disparities even as they educate us.

“South L.A. is by far the most interesting part of Los Angeles,” Henry told fellow graduate student Amanda Rossie for a project Rossie produced about South Los Angeles.

“It takes a really good journalist, and a very specific type of person, to report South LA. It’s a lot of work, and I don’t think many mainstream journalists want to deal with the hassle of coming out of their comfort zone. Instead, they let people stew in the stereotypes perpetuated by minimal and negative reportage. I’m just about as different as can be from most of the people I spend time with in South L.A., but the similarities between us all far outweigh those superficial differences. Fundamentally, we’re all struggling against the same things.”

If you think about what made newspapers viable for so long it was the fact that they had two products/businesses that were largely unrelated but delivered by the same organization. Newspapers have had a news-and-information business monetized by display ads and a classifieds business monetized by classified ads. The classified business was enabled by the distribution and audience of the news franchise. However, it’s been clear that that second revenue stream doesn’t translate on a sustainable basis online.

To date, most local Internet plays have struggled to make it work relying solely on display ad revenue. I’ve come to the belief that it’s going to take a similar dual business model to support local media (we’re working on doing that ourselves). Unfortunately for many local news organizations, it has been more about dueling business models (i.e., worries of cannibalization) than recognizing that what they need is a dual business model to make their online business much more successful.

So the question is what will be the accompaniment to the display ad business? We’re seeing a few different approaches explored. For example, micropayments and non-profit/foundation support are oft-discussed. I don’t believe those have much opportunity to scale beyond some exceptional situations which are terrific but hold little promise for most media organizations.

Then there’s the problem of transitioning from a for-profit to not-for-profit model which typically begins by laying off the entire staff and getting the investors to agree to donate all of the assets of the enterprise into the new nonprofit entity. My friend Jonathan Weber expanded on this in his Endowed and Out piece. There are a number of other potential second business models but I think the Search-related model is a viable “other” business model.

The interesting and loose parallel with the classifieds being enabled by the news distribution historically is with those sites selling online directory solutions bolted on to a news site. Since most local news sites have the highest PageRank in their area, the PageRank is a form of “distribution” advantage that the news sites have and usually don’t recognize. One could argue when we see the demise of newspapers like the Rocky Mountain News that one of their most valuable assets in a liquidation is their high PageRank. When you have a high PageRank site with a leading directory solution, the businesses in that directory should show up very high in SEO and thus the news site has some unique value they are adding to those local businesses competing to be found.

The challenge remains setting up a winning sales model to capitalize on this. I wrote a couple of pieces for David Cohn’s and Jeff Jarvis’ NewsInnovation.com site expanding on this.

• Five Fatal Flaws that are killing local Internet plays
• Ten Point Plan to (Re)Building a Successful Local Media Salesforce | Networked Journalism Summit

The approach I’d espouse is much closer to Dell than it is a traditional local media sales force, which is generally ill-equipped to sell these new products. When I was at Microsoft and focused on the local space (I was part of the founding team at Sidewalk), we often thought that the biggest asset that the incumbent newspaper and yellow page companies had was their local sales force and relationships. Having gotten closer to “the last mile” of the Internet, I’ve come to observe that in most situations the local sales organizations of the incumbent media is more encumbrance than asset.

Consequently, the smart incumbent media should setup a parallel tele-sales based model that are filled with “hunters” and leave the existing “farmer” sales force to harvest the longtime advertisers as long as they can. It is important to note that this outbound tele-sales organization is dramatically different than the typical “call center” that newspapers have for classifieds. Thus, thinking that that group will have success is a long shot. The sort of tel-esales organization that exists at a place like Dell is able to prospect and close business into the low six figures. In other words, it’s not taking a $150 classified order over the phone.

The sooner local media businesses recognize it’s critical to have dual business models rather than dueling business models, the sooner we’ll see hiring rather than firing being the storyline of local media.

I’m no economist, but I think the problem comes down to this: The Internet is a single, efficient market governed by the laws of supply and demand*. Because there’s surplus ad inventory online — particularly low-grade inventory — prices are falling. But what if the surplus inventory is largely the result of a glut of duplicative content? Would the problem go away if news organizations simply stopped doing about half of what they do and focused on the stuff nobody else is producing?

Consider a scenario: Newspaper A posts a local scoop to its website. The story is picked up by other news organizations. It’s rewritten, repackaged, sent out on wires, and within hours that story or some version of it — sans additional reporting — is on a hundred different websites. Much of this duplication is automatic, but some of it is done by human editors. (See Google News any day for an example of this.) Best-case scenario, a few of those sites actually link back to Newspaper A.

Now let’s say most of the duplication stops. Because there are fewer versions of the story, more eyeballs now find their way to the original scoop on Newspaper A’s site. Good. But aren’t many of these additional eyeballs just single-page, out-of-market visits that have little value to advertisers? Maybe, but if Newspaper A is sticking to its core mission of covering local news, it will be able to deliver an audience that’s more cohesive on the whole — and therefore more sellable — than if its content is all over the map.

Those of us who have worked for years in online news remember a time when repackaging news from all over was a large part of what we did. At some point most of us figured out it was a waste of time. But sadly, there’s still a lot of duplication going on in mainstream media websites, in part because it’s seen as necessary for a newspaper to be a broad and semi-comprehensive sampling of the day’s news and information.

Well, no more. You want comprehensive? Go to the BBC.

If newspaper bosses are serious about preserving the kind of journalism that makes newspapers great, here is what they must do right away:

1. Stop wasting time on stuff other people are already doing. This means focus obsessively on local or topical content. The era of the newspaper as bundler of many varieties of content is over. If you cover a community, do nothing that doesn’t relate to that community. If you cover a topic, do nothing that doesn’t relate to that topic.
2. Stop syndicating valuable content to other websites. Let them link to you. (And for goodness’ sake, link out. Do it for the karmic rightness of it all, or do it because it adds significant value to your own content. However you justify it, putting your stuff squarely into the clickstream is essential to staying relevant. You can’t just be the endpoint.)
3. Scale back or cancel wire service agreements. They’re not helping your online product and they might be stealing value from your own content. I have a lot of respect for The Associated Press and the work that all wire-service journalists do, but I just don’t think the AP’s ownership structure and funding model make sense anymore. (If Reuters can thrive as a standalone news organization, maybe AP can too. But newspapers can no longer afford to subsidize the creation of content that doesn’t benefit them directly.)

Am I saying I think newspapers can increase the value of their content to advertisers simply by reducing inventory, the way OPEC does for oil? No (and we can see how well that strategy’s worked for OPEC recently, too). Ad inventory, unlike oil, is not a fungible commodity. This isn’t about reducing inventory in general. It’s about reducing low-value inventory: all those impressions from random walk-ins who aren’t a sellable audience because they have nothing in common.

We talk about the newspaper’s unique status as a profit-driven public trust and the threat that ongoing structural changes pose to that fragile duality. But how big does a newspaper actually need to be in order to fill the public service role we ascribe to it? Could the Los Angeles Times effectively and profitably cover Los Angeles with, say, 300 journalists (half its current staffing level)? My guess is it could, if that’s all those 300 people did.

I feel for my dedicated and talented industry colleagues who have lost jobs in the U.S., the U.K. and elsewhere. This disruptive event is clearly a painful one for journalists. But if newspapers make smart choices this year, maybe it won’t be a crisis for journalism.

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* Most of what I’m saying here has already been said by various people, so it shouldn’t sound particularly radical. After I started writing about supply and demand, I noticed Nicholas Carr’s thoughtful piece along the same lines. And of course, Jeff Jarvis and others have been making the case for linking over syndication for years.

But innovation is sorely lacking in the new business models proposed; the truth is that many of them have been around since the early 1900s.

In 1923, historian James Melvin Lee outlined in his History of American Journalism alternative business models that newspapers had tried to remove themselves from dependence on advertisers and circulation growth and that now seem strangely prescient: the endowment model, the municipal news model, an adless newspaper, religious news, and what can only be called the “bazooka gum” approach to circulation.

Even before Pro-Publica could be imagined, our predecessors were strategizing how to create an endowment-supported newspaper. Hamilton Holt, editor of the New York City Independent outlined what such a model would look like to other newsmen at the first National Newspaper Conference at the University of Wisconsin-Madison in 1912.

The endowment model immediately had its critics – with much the same response we hear today. James Kelley of the Chicago Herald argued that an endowment newspaper was an “impossibility” for only the “people” could truly endow journalism without it being disinterested. In other words, whoever provided the cash was likely to have the dominant influence.

Lee worried that the endowment model was championed by academics and was unlikely to work because no one was willing to front the cash. He wrote, “The nearest that the endowed newspaper has come to a realization in America was a promise of Andrew Carnegie to be one of 10 men to finance such a venture. It would take just about ten men of Mr. Carnegie’s wealth to establish successfully an endowed daily newspaper.” Looking around in today’s news environment, the St. Petersburg Times stands alone as an independent, endowed print newspaper.

Lee mentions another curious model that seems strangely reminiscent of the turn toward hyperlocal blogging: the municipal newspaper model.

Los Angeles in 1912 had evening and daily newspapers, but it also had the first, and possibly only Municipal News. Financed by the city of Los Angeles, 60,000 copies were distributed by newsboys and to homes. It was under the control of a municipal newspaper commission, composed of three citizens who served without pay and who were appointed by the mayor. They were to hold office for four years and were subject to recall and removal by referendum.

The mayor, the city council, and political party that had more than 3% of the vote were guaranteed column space. Financial support came from an appropriation of $36,000 set aside by the city of LA. Ad revenue was a second stream of income, but the newspaper did not support any major department store ads. Civic minded, it had a special student section.

The Municipal News was truly hyperlocal – it didn’t truly compete with any LA papers because it didn’t cover national or state news or carry wires. Lee is unclear on how long it actually lasted, but was voted down by the city council due to cost.

Some newspapers in the early 20th century tried to do without ads entirely. On September 28, 1911 the Day Book, an adless daily newspaper appeared in Chicago. It began with only 200 copies and sent personal agents of the paper to subscribers to generate revenue. Eventually, circulation got up to 22,938, but when the price was raised from one to two cents and the cost of paper increased due to World War I, it died a few short months later. A major downfall – the lack of department store ads failed to attract women readers.

Still, Lee suggested that people ought to be willing to pay for quality and that adless papers could be a reality: “The adless newspaper may possibly be a part of the journalism of to-morrow, if fifty thousand people will be willing to pay ten cents per copy for their daily paper and will agree not to cancel their subscription orders even through displeased with the presentation of the news or offended at the editorial policy adopted by the editors.”

One form of news that was increasingly popular was a turn toward news financed by religious organizations. Lee dismisses most of these for being too narrowly focused on spreading religion to attract a broad audience, with one exception – the Christian Science Monitor, which kept its religious news to the back and even then was noted for its international outlook. Other religious newspapers are still running strong: The Desert News, affiliated with the Church of Jesus Christ of Latter Day Saints, acts as a competitor to the Salt Lake Tribune. And the Washington Times‘ conservative stance pursues its agenda from the Rev. Sun Myung Moon’s Unification Church.

The Christian Science Monitor is reinventing itself as we speak as one of the first major dailies to switch from print first to an online daily with a print weekly. Lee’s refinement of religious newspapers as a distinct model may be reflected in the Monitor’s bravado: perhaps religious newspapers are hotbeds of innovation.

The final model Lee proposes and dismisses is what can only be called the Bazooka Gum Model and reeks of the gimmicks and cereal box circulation efforts ad departments have tried for years to boost revenue.

For Lee, these efforts were a lost cause. He told the sorry tale of the 1905 United States Daily of Detroit, which offered people little trading stamps that they could exchange for things like bicycles if they collected enough. Coupons failed to bring in enough circulation – and the newspaper died after 68 days.

A return to our history books provides a useful warning and reminder: we don’t have the answers yet. We didn’t have them in the 1920s, and we’re still searching for them now.

But even without answers, news innovators of times past were willing to experiment. We should take our cues from the past, and consider new business models as opportunities for our industry rather than signs of its failure.