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From Pew Research: "The financial crisis facing news organizations is so grave that it is now overshadowing concerns about the quality of news coverage, the flagging credibility of the news media, and other problems that have been very much on the minds of journalists over the past decade."

From Editor and Publisher: "The McClatchy Co. reported at the close of the market that total revenue in February slid 11.7% to $156 million while advertising revenue plunged 13.3% to $130 million on weakness in the classified category."

From Dow Jones, via CNN: "The digital wave washing over newspapers has turned into a tsunami in the past several weeks, as hundreds of newsroom layoffs coast- to-coast are raising fears that the push for profits and a dismal economy are teaming up to accomplish the unthinkable -- putting the print industry in its grave."

OK, I think we're past the denial stage now. So who's responding in an interesting way. I don't mean interesting as in gee, "who's getting canned now?" I mean interesting as in reorganizing the newsroom to work more efficiently, redesigning the products to be more interesting and relevant, retargeting the advertising sales process to go after new money from new customers?

A crisis is a terrible thing to waste. Are there any success stories out there, or are we all just sitting around and whining?

Forbes has a profile of McClatchy Co. after its absorption of Knight-Ridder that's titled "McClatchy's Fall From Grace." It includes this data point: "The [share price] decline leaves McClatchy, the nation's third-largest newspaper publisher by daily circulation, with a market capitalization of barely $1 billion."

That's about what McClatchy paid for the Star Tribune in 1998.

Ben Compaine cites an economist's study of the Washington Post that provides "another data point" in the online paid-content discussion:

With 30 pages of assumptions, explanation and calculations, Gentzkow makes a well substantiated finding that, The Washington Post would have been better off charging a modest sum for its online version (on the order of $6.00/month) until about 2004. After that, however, the growth in online advertising expenditures crossed over to affirm that it is significantly more profitable to set a zero price for the online edition when one factors in even a small transaction cost for online payments. He suggests that his findings are robust enough that they would likely apply to other big city newspapers.

Interestingly, the study includes a calculation of the “consumer welfare benefit” of providing free content in the Washington Post's market.

According to E&P, Bank of America analyst Joe Arns says the value of an online reader to a newspaper company is on the rise:

Based on the total ad revenue per reader, in Q2 Bank of America estimates that on average, newspaper publishers generated about $25 to $38 of ad revenue per daily online reader compared with $70 for each print daily reader. This suggests that online readers are worth about 36% to 55% of the value of print readers, up from 28% to 42% in Q2 2006.

I'd like to see the full "show your work" calculations. I continue to believe that the readership claims of newspaper websites are inflated by irrelevant, drive-by traffic that bloats the unique-user count and depresses derivatives such as revenue per user.

It's been a couple of years since I did any heavy-duty behavioral analysis on a newspaper website, but I don't think the numbers have changed all that much. What I found then was an easily identifiable, but small, group of habituated users and very large population of one-hit drive-by visitors.

If you ignore the drive-by traffic and divide revenue by habituated users, you get a pretty powerful story about the potential of local Internet advertising revenue ... and you can see that our challenge is to build that habituated readership.

As I've said before:

... the problems are much more driven by a weakening ability to deliver an audience in any medium than by any inherent weakness of an online advertising model. At the end of the day it comes down to a simple question: Are your content and services relevant to consumers in your market?

Fortune has a piece on the challenges facing the newspaper business that asks: "Can newspaper publishers turn the Internet from a threat into an opportunity ...? It's a long shot, but it's their only hope. Their plight is something not often seen in business: Newspapers remain important institutions, providing a valuable public service, but their business model is slowly, or maybe not so slowly, going away."

It's a lengthy piece full of facts and sidebar graphics and illustrative anecdotes about the Washington Post, but I can boil it down to one simple truth: If your business model is predicated on scarcity and you're suddenly operating in a world of surplus, you're in deep doo-doo. Time to come up with a Plan B.

The story makes a passing reference to some interesting innovation projects at newspapers: BigLickU, the moms site from Dallas Morning News, Palm Springs Desert Sun's FoodPsycho.com. But instead of looking ahead at what might be, it's mostly a rehash of everything you've seen/heard over the last year.

There's been quite a bit of negative reaction to Lauren Rich Fine's reported claim that print will continue to dominate online revenues for newspapers until 2036. It seems to me that the only thing such predictions are good for is to stimulate conversation, and I say that because I performed similar calculations a couple of years ago.

Fine assumes a much lower growth rate than most healthy newspaper companies are showing online, and also assumes a sharp reduction in online growth six years from now. I made no such assumptions in my projections. Instead, I took real data from the previous five years -- remarkably consistent growth -- and did a simple projection until the online curve crossed the print curve. Naturally I came up with a radically different answer.

I don't know what Fine's research report actually says -- apparently it's just for Merrill Lynch customers, and I'm not one of them. But I was very careful in my "analysis" to point out that it was complete hogwash, intended only to fuel a "what-if" discussion, because change doesn't happen that way.

Real change is full of discontinuity. Sometimes it's driven by technological breakthroughs. Who in 1990, just one year before Tim Berners-Lee invented the Web, could have predicted the arrival of the Internet as a consumer experience, destroying the giants of the online world (Prodigy, Compuserve)? Sometimes it's driven by economic tipping point.

Economist Robert Picard has graphed the transition points at which print becomes cash-negative (and is supported by online profits), and print becomes unsustainable (and presumably is dropped by newspapers, unless they simply cease to exist). These are theoretical transitions and Picard provides no guidance as to dates and levels of revenue. But what Picard's analysis tells us is that change will not come in a state of continuous slow decline; at some point it will be fast and vicious. For some newspapers with severely sagging market penetration, it could come at any moment. You can't run a mass medium business model if you're not a mass medium.

Shoot, if you believe Vernor Vinge and Ray Kurzweil, we're coming up on the Singularity anyway.