• 390,000 digital subscribers overall.
• Growth rate of 20% fourth quarter over third quarter.

Those are the public numbers. We’re left to extrapolate the dollars. My extrapolation is that the run-rate for the Times’ new digital revenue is about $86 million a year. We take the 390,000 digital subscriber number and assign an average revenue per digital customer of $221 a year. At its four-week (or 13X a year) billing rate, that’s a little less than $17 every four weeks. Full all-access (tablet + smartphone + online) costs $35 each period, tablet access $20, smartphone, $15. So let’s take the differing price points, rolling intro offers (99 cents for the first month), special deals and cancellations into account. Let’s believe that it’s the lowest price point digital product (online + smartphone) for $15 each four weeks generates the majority of buys. Let’s then use a $17 average.

That produces $86 million a year, or more than eight times what the Times took in annually from Times Select; time to bury that ghost. If we compare it to some other Times’ yardsticks, it takes on more meaning:

• It’s 12% of the New York Times overall circulation revenue for the year. That puts the annual circulation number in positive territory — up 3% for the year, and a lively 8% for the fourth quarter – reversing the 2010 trend.
• It’s $100 million less (about $186M for New York Times itself) than the amount of digital advertising revenue for the year. So it’s important, but the digital ad number still is more decisive in making up for the print revenue decline. Despite 10% digital ad growth for the News Media group (without About properties), the NYT property still saw a 3% decline in ad revenue for the year. One more way to look at it: the Times took in $22 million less in advertising overall in 2011, so new digital circulation revenue exceeded that decline by 4X.
• It’s 1.1% of the Times’ 33 million U.S. unique visitors, once we take out international buyers. That one percent seems like a tiny number, but it’s 34% of its print circulation. Anyhow, “total unique visitors” are getting to be close to an irrelevant number. Paid readers who also consume a majority or strong plurality of page views are the customers the Times’ care about.
• It’s four times ousted CEO Janet Robinson’s good-bye payout. That’s small consolidation to outraged staffers, dealing with their own 1% issue.
• It’s four times the dividend family members are hoping to see reinstated. The dividend paid out $20.8 million in 2008. Even they need to be kept happy to keep the Times out of public play, there are few new dollars to assuage them.

So, overall, the Times digital circulation seems to be an increasingly important part of the next-gen publishing model, but not an earth-shaking one. I think much of the story — and import — here is behind the scenes. As we look at the mechanics of selling digital access, we see a business model with birthing pangs, and one that may lead to anticipated and unanticipated healthy development. In talking with Paul Smurl, VP of paid products for the Times, this week, I picked up some related datapoints that help us understand what this first year may lead to:

• 70%+ % of the Times’ print subscribers have now “authenticated.” That’s hugely important. Several years ago, the Times began exhorting its print subscribers — through direct mail and e-mail — to sign up for online access to the Times, laying the ground work, intentionally and unintentionally, for the model of All Access that it introduced a year ago. In August, 2010 the Times had only 50% of Times subscribers registered. That didn’t mean that only 50% read the Times online. It meant that a significant portion didn’t read the Times online and that those who did, but didn’t register, didn’t associate much value with their print subscription payment. Why register, when anyone can go to nytimes.com and read for free?

Now, with three-quarters of print subscribers registered, the Times has climbed a major mountain. Paying customers increasingly see value in both print and digital. The Times can begin, as it has to link up print subscriber profiles (address, demographics, buying history, and more) with digital usage (what read on which device when and lots more). So through these initiatives, the Times is moving — as every smart publisher must — toward a single view of its reader customer. That view then informs the Times’ ability to better target advertising and to sell readers more digital and print stuff, like the New York Times Store. (And it’s all about stuff, as George Carlin timelessly reminds us.)

• Look beyond subscription sales. Hearst, Rodale, Conde Nast and other magazine publishers have led the way in producing new ebook specials. The future here — think of mining the NYT database — is game-changing. Smurl says he thinks of it as “SKU management,” a new discipline for a new publisher. Look for the Times to start with specials around events like the Olympics and the Oscars, feeling its way along as it figures out “cover price,” sponsorship and ad potentials.
• Compare old and new world costs of acquisition: It costs a lot for a newspaper to sign up a new subscriber. I’ve heard estimates from $50 to $200 per new customer. The cost of acquiring a digital customer can be as little as near-zero to a small fraction of the print cost. Here, we begin to get into the positives of the digital press shift; picking up new customers costs far less. CFO Jim Follo noted on this morning’s call that costs for the company will not decrease this (the first time in four years), and part of the reason is increased spending on digital marketing. The Times is pouring the limited cash it has in going to digital subs.
• Churn is less with digital than print customers: Skeptics opined that people might sign up, but then flee after sampling the paid digital product. The opposite appears true: Smurl says digital churn is less than print churn. Add together the low cost of digital acquisition and the lower churn, and you have a formula for much digital marketing experimentation in 2012 and beyond. Who is the Times trying targeting to buy? “Like-mindeds,” in Smurl’s parlance, those with curiosity, societal engagement — and education and income to match.
• About 12% of digital buyers live outside the U.S.: That’s a growing number. It’s an indication that the Times is becoming a global news medium. Of course, that’s always been true, in Internet times, but largely meaningless. It’s been hard to sell advertising outside the U.S. (other than the Times-owned International Herald Tribune’s traditional business) and, of course, there was no way to make money from digital readers. Now that’s changed. With only 5% of the world’s population (last week I focused on this upside in “The Newsonomics of the Global Media Imperative“), the Times has huge growth potential beyond its core market. By 2016, I wouldn’t be surprised if 25% of the Times’ digital subscribers — many with no access to print, remember — are non-U.S.
• Exploiting Sunday: It took about 12 seconds for Times’ readers to figure out the new subscription math, when the company when digital-paid last year. When they did the math and saw they could get the four-pound Sunday paper and “all-digital-access” for $60 less than “all-digital-access” by itself, they took the newsprint. Which stabilized Sunday sales, and the Sunday ad base. Then the Times was able to announce a near-historic fact in October: Sunday home delivery subscriptions had actually increased year-over-year, a positive point in an industry used to parsing negatives. Now, Sunday is emerging a key point of strategic planning. Keep the Sunday paper strong for at least several more years — and quite likely longer — and the Times gains a fighting chance to find a print/digital hybrid model to sustain its journalism.

In addition to his day job, Smurl has been busy over the last year talking to newspaper publishers, near and far, about going paid. Dozens of people have filed into the Times to see what they can learn, and apply. In addition to the tricks of the trade, Smurl finds itself offering quasi-spiritual advice. “You can’t be apologetic about charging,” he tells his often down-hearted visitors. “Sometimes it’s as much a motivational session as anything else,” he says. Today’s motivational lesson heard all around the media world is summed up neatly in four words: 390,000 paying digital subscribers.

2. Didn’t CNN’s coverage of the Iowa Caucuses illustrate our screens future? John King has been the King of the Screens, and we can remember when his magic-touch screen seemed wildly innovative. Now in the touch-screen era, it was all screens all night — save Wolf Blitzer’s classic utterance of “OMG” in seeing Romney go up by a single vote — and CNN newbie Erin Burnett brought the right slapstick spirit to the uncertain screencraft. She whooshed one image off one screen on to the next one, sometimes successfully. CNN’s use of data, even as limited as it was for this election, showed how much we’ve moved beyond the world of still print infographics. The marriage of analytics and screens from tablets to livingroom monitors is forever changing how we take in information.

3. If AOL crumbles in one direction or another, what’s the future for smart cookie Arianna Huffington, who has parlayed personality and business model into an enviable perch in American journalism? Who might pick up HuffPo, one of the easiest-to-define business lines in journalism? How much will its relatively low rate of ad return (“The Newsonomics of ARPU” deter buyers? With the emergence of a broad international strategy (10 new editions) – “We’re now re-expanding back into a list of countries”, said CEO Tim Armstrong Tuesday – it becomes a more interesting play.

4. With Alibaba hot on the Yahoo tail, how much should we wonder about the future of big aggregators stocking up on a professional journalists? AJR estimated that Yahoo has hired about 200 journalists and AOL 250 (not counting the Patchers). Those hundreds have produced some pretty good journalism, particularly with sports scoops, and have proven that the term “as first reported by Yahoo,” isn’t a joke. The question of Chinese ownership is a knotty one (interesting Fortune take on American hypocrisy, here), but we have to ask questions about how free a journalistic corps would be under Jack Ma leadership. It might be well and good to uncover U.S. football corruption, and that’s a growth sport itself, but what about wider public policy coverage? For AOL journalists, the questions are even gauzier. With AOL’s deepening financial questions and investor pressure to cut back on non-profit-producing business lines, how long will there jobs be maintained, under current or potential new management/ownership?

5. Won’t be 2012 be the age of All-Access perfecting? Time Inc is among those getting its tablet act together well, with Time Magazine a fairly slick tablet app. In December, the company made a foray at convincing print subscribers that connecting the print sub with digital access is a good idea. The sign-on process is fairly straightforward, and seems to hold session to session, unlike some others. Yet, subscribing to more than one Time Inc. product — Time Magazine and Sunset, for instance — has to be done twice. Expect that kind of obstacle to be eliminated going forward. All-Access will be real all access, made easier for consumers. And All-Access is even trickling down very local as the Monterey (Ca.) County Weekly heralds its all-access availability through public radio sponsorship. Getting All-Access right — pricing, real tablet- and smartphone-appropriate apps, customer ease, giving subscribers cross-title benefits — is one of the biggest tasks for news and magazine publishers this year.

6. How could a single person be empowered to send a message on behalf of the New York Times to eight million people? The Times’ your subscription-is-ending embarrassment email showed the company at its worst in detecting and handling a crisis. My larger question is how, in any scenario, a single person has the unchecked power to send a message to eight million people on behalf of a big brand? The culture of checking and doublechecking (yes, the sorry Judith Miller tragedy aside) is so deeply ingrained in Times’ DNA. Why isn’t it part of the wider culture, especially in the one-click age?

7. What’s more local than language? The Times profiled Wordnik Sunday. It’s an innovative modern language company making the most of digital technology to surface new and real meaning of our living language in this fast-changing age. Noted in the story is that the Times and News Corp’s Smart Money are using Wordnik for glossaries? As local media look for ways to really be more local, knowing and presenting more about place is essential. So what about using something like Wordnik to create local language guides? It’s a small idea, perhaps, but one showing how even local media need to make more use of digital tools if they are to make future claims of relevance to local audiences.

8.Hasn’t Gail Collins turned out to be a just-right-for-the-times replacement for Frank Rich? Rich’s rich prose and panoramic view often left us breathless in its sweep, and well deserved a Pulitzer. Yet Collins — a New Yorker who recently pointed out that “John McCain came in fourth in 2008, with the support of 15,500 Iowans. This is approximately the number of people who live on my block” – has brought a Hee-Haw sensibility perfectly suited to the Wonderlandia of the Republican primary scene.

9. With a call-out to Ken Kesey, isn’t 2012 the year when you’re either on the cloud … of off it?

The New York Times is slimming down to bulk up. It is no longer a newspaper company, with a strong national newspaper, a Boston cousin in the Globe and regional newspaper interests. It is a global news company whose future is mostly digital, and it will live or die on that adventure. It is a company that now sees 63% of its revenues (last from the third quarter) coming from the Times print and digital operations. Over the past several years, the Times — despite its many trials (selling its flagship building, participating in Carlos Slim usury, before paying back the 14% $250 million loan to the Mexican magnate) — has outperformed financially both the regional group and the Globe .

That only makes sense. Borrowing lessons from Google, Microsoft, Yahoo and many others, the global Times is about scale. You can pay a Times reporter to write a story that can reach some of the Times ‘ 50 million global monthly unique visitors, three-fifths of them in the U.S. Or you can pay a Gainesville or Tuscaloosa reporter a little less to write a story that can reach a hundreth of that total. Do the math, and the future bet is on the company with the big global news brand and the reach.

The regional news companies, important as they are to their communities, have been but a business distraction. The Times has tried to sell them before, pulling back as market conditions forced it to do. Now Halifax Media Group seems set to complete its deal, which we’d have to believe is in final form given its inclusion of the NYTRNG papers on its website (courtesy of Romenesko), now taken down. Halifax is part of new generation of newspaper property buyers, believing they can make a go of these distressed properties, through more consolidation of jobs and other efficiencies. (“Now at Fire Sale Prices, a Few Newspapers…and Maybe More,” Newsonomics, Dec. 2, 2011)

For the Times now, and going forward, the competition is CNN, the BBC, News Corp, ABC, NBC, the Guardian, Bloomberg, Reuters and several others. Who indeed will be among the most trusted names in the (digital) news business?

The spasms of change at the Times come ironically after one of the most relatively successful years for the company. Yes, profits are still tough to come by — a measly $33 million in the last quarter — but the company pulled off a digital pay scheme that has established a modest beachhead. It begins to provide the Times a second digital revenue stream, in addition to advertising. Circulation revenues grew 3.4% for the last period, as the Times’ new digital All-Access push circulation had netted 324,000 “digital” subscribers of one kind or another and enabled the first Sunday home delivery print increase since 2006. It has positioned itself well with apps for emerging tablet and smartphone platforms, moving quickly into the Apple Newsstand, for instance. It is aiming for ubiquity and is in the lead of the newspaper pack, with the Journal nipping and biting along the way.

Yet, ominously, print advertising revenues decreased 10.4 percent and digital advertising revenues decreased 4.5 percent in the last quarter. 2012 looks like another down year, in high single digits. In fact, there’s an array of numbers that offer a quite uneven path to success next year, as I described in the Newsonomics of 2012′s Magic Formula, last week.

Consequently, the company is barely keeping even, and will likely have to accelerate cuts next year to stay profitable. So the plow must be sped. With less than a quarter of its revenues now driven by digital, the Times has to move quicker. It may balance (smartly as its done with its Sunday print/digital pricing) package print and digital, but it is has to grab mind share and market share in all the emerging digital spaces, tablet, smartphone, connected TV and web.

Expect the new CEO, most likely from the outside to be focused on three A’s: audience, advertising and analytics. Arrange those three in a virtuous circle, and you have an efficient spinning of the new digital economy. That’s clearly what Time Inc has in mind as it hired Laura Lang from the ad world.

The new CEO must also drive a faster kind of decision-making at the Times Company, a company now seeing both CEO Robinson and digital head Martin Nisenholtz leaving at the same time, the latter by retirement. Famously balkanized, with numerous power centers, the company has been both innovative and plodding. That’s an odd combo, but one fitting its prudent-above-all news culture. With one distraction removed (and now we wonder about the Boston Globe, its own pay scheme innovation underway, and how long it will remain a Times Company property), the new CEO aces a tough terrain. Given that the company, even post NYTRNG sale, is 90%+ newspaper-based, it suffers in its ability to grow. News Corp, CNN, Reuters and Bloomberg all are part of large, diversified companies that can buffer them from the permanent print ad downturn. As Janet Robinson found, the path forward is an extremely narrow one.

So what do we make of the three recently announced sales? In each case, there’s a strong, willful buyer, bucking conventional business sense to bull ahead into 2012.

In Omaha, we’ve got Warren Buffett, the man who said just two years ago: “For most newspapers in the United States, we would not buy them at any price. They have the possibility of nearly unending losses. … I do not see anything on the horizon that sees that erosion coming to an end.” Unfortunately, the owner of the Buffalo News, investor in and long-time (now retired) board member of the Washington Post Company, is right. The erosion was deepest — almost 20% in the depth of the recession — but the bleeding in higher single digits has continued since then and it will continue into 2012. The U.S. industry is literally half the size, in revenue, that it was five years ago.

So is the Oracle of Omaha’s vision now blurred? Doubt it.

Buffett is an American hero, generously giving away more than half his fortune through the Gates Foundation and making the common sense point that those Americans who are among our wealthiest can, and should, afford to help out their countrymen in the time of great distress (witness just today’s New York Times’ story on the intense, and long-lasting, pain of permanent unemployment). His company, Berkshire Hathaway, is buying out the employee-owned Omaha World-Herald for $200 million, including debt assumption. Why? Warren Buffett understands the link between news and democracy, especially in his home state of Nebraska, where the paper sets a lot of the agenda with its coverage. You’ve got to believe that the World-Herald’s management, facing the same dismal picture as all metro publishers, looked for the whitest knight around, and turned to Buffett.

In Chicago, a buyout group led by two business leaders,  Michael Ferro Jr.and  John Canning Jr., is in talks to buy the Sun-Times group, which bought the paper out of bankruptcy (alas, Chicago doesn’t win the prize for city with most bankrupt dailies; that goes to L.A., which has had three) two years ago.  The reported price: $11 million plus assumption of debt. Both Ferro and Canning have been deeply involved with the Chicago News Cooperative, former Trib and L.A. Times editor Jim O’Shea’s effort to provide independent, high-quality news in Chicago.

Meanwhile, last week, the San Diego Union-Tribune’s most recent sale (we need flow charts to follow the now-rapid movement of some properties) was announced. Local businessman and developer Doug Manchester are buying the paper, and its underlying real estate, for about $110 million from Platinum Equity (“San Diego’s Union Tribune: Out of the Private Equity Pot and Into Local Political Fire“). John Lynch, the CEO-to-be once the sale closes, wasted no time in laying out the paper’s quasi-journalistic instincts:

“Lynch said he wants the paper to be pro-business. The sports page to be pro-Chargers stadium. And reporters to become stars.

“It’s news information, but it’s also show biz,” Lynch said. “You get people to tune in and read your site or the paper when there’s an ‘Oh wow’ in the paper.”

He wants that sports page to be an advocate for a new football stadium “and call out those who don’t as obstructionists.”

“To my way of thinking,” Lynch said, “that’s a shovel-ready job for thousands…”

“We’d like to be a cheerleader for all that’s good about San Diego,” Lynch said. “Our motivation, both of us, was to do something good for San Diego.”

Expect the newest U-T to support the new owner’s business and (conservative) political interests, and do so with relative national impunity. When Sam Zell talked about bringing some pizzaz to the Tribune, he won lots of coverage. But that was the Tribune, with a half-dozen substantial metros. This is San Diego, though the second-largest city in our largest state, off in a corner of the country far away from media watchers.

Reporters with whom I’ve talked rightly ask if these three deals in the making are a trend. Yes, of sorts, we’d have to say.

First, let’s consider how little money is changing hands in these deals. We could say that Warren Buffett’s $200 million offer is generous; that’s almost twice what the San Diego quasi-monopoly daily is selling for. If someone had told you 10 years ago that the World-Herald would sell for twice the Union-Tribune, you would have laughed them out of the room. U-T owner Helen Copley was courted by the royalty of Old Guard ownership, from Knight-Ridder and Tribune among others, letting her know they were ready to open their wallets to the tune of well over $500 million when the will to sell struck her. It never did and when she died, her family sold, to pay taxes and in panic, in the depth of the recession to Platinum Equity, which swooped in and is now making some decent profit ($80 million+) on the deal.

Important to the trend/no-trend question is price. These are fire-sale prices, mere pocket change to the 1%. So for reasons of altruism, preserving local voice and journalism or bolstering one’s own personal or business agenda, the price is right.

Given that, will we see more sales to motivated, individual (yes, we know Berkshire Hathaway bought the World Herald, not Buffett, but we also know who made the decision) buyers? Probably.

If and when the squabbling Tribune debtholders and bondholders ever release the hostage company out of bankruptcy, several Tribune cities have would-be owners queued up, if management wants to sell. When will the new Digital First get its properties in sufficient financial order, so that owner Alden Global Capital can begin to make its exit? At what point do companies like Gannett, Gatehouse and CNHI start to let it be known that individual properties may be bought? That’s an unknowable question at this point, but with ad revenue headed further down next year, selling something to somebody — it is appears there are buyers here and there — becomes a more intriguing option.

Interestingly, we’ve heard little from would-be “community trust” buyer groups. There was much talk of community-oriented, non-profits, with some support from the Newspaper Guild, a couple of years ago. Maybe, it’s fatigue, felt by everyone in and around the business, save apparently a few bright-eyed businessmen. In the tumult of the last two years, the voices have gotten quiet. The intriguing start-up models of MinnPost, Texas Tribune, Voice of San Diego, CNC and Bay Citizen don’t seem to have ignited a wildfire of imitation across the country. Only AOL — with HuffPost city sites announcing rapidly and Patch outposts in place — seems to making a substantial local play.

It’s an odd environment out there, with all kinds of characters still to come out of the woodwork.

The San Diego Union-Tribune moves back to private ownership, after Platinum Equity swooped in during a seeming bottom of newspaper recession — 2009 — and turned its $35 million investment into a sale for $110 million. Nice cash pick-up for Platinum, a classic vulture move, sprucing up the carcass turned loose finally — and way too late by the Copley family.

Now $110 million isn’t a lot of money for what was once one of the most coveted newspaper properties, one that could have fetched ten times that if the Copleys timed their sale better. And the seeming tripling of “value” in two years has left a lot of people confused about what newspaper properties may be worth today.

My sense: The supposed tripling only tells that the Copleys panicked in selling so low two years ago, or that the details of the real-estate-influenced deal are obscuring actual news to news value. Whatever, here’s what we know about the deal:

• The Union-Tribune, like all other metro dailies, is seeing an interrupted trail of print advertising woes. I’ve written recently how most metro forecasts put print ads down another 5-12% in 2012. That means the Union-Tribune, like all other metros, is now taking in less print ad revenue than it was when it was sold two years ago.
• Any current or future profitability scenarios have got to be based more on increased cost control than ad revenue increase. The Union-Tribune deserves some credit for being a leader  in Groupon-like local deals, having created a highly successful program, th0ugh, digital ad increases — while a long-term solution — are still an inadequate band-aid for print losses. Fact of life: The only way to maintain 2011 profitability for the Union-Tribune’s new owners will be to continue to cut expenses, including people, or subsidize shortfalls.
• Private equity’s endgame — and think Alden Global Capital’s growing Digital First play — is to get out. Whether it’s real makeover (the Journal Register Company) or lipstick on a pig, the idea is to get local news enterprises into such a state where someone will pay top (of the moment) dollar, and move on. (And now, it’s an odd moment of loss, as some San Diego community members lament the mild progress Platinum has brought to some of the UT’s journalism.) Platinum has now moved on; when will Alden? Last week, I mentioned a vision of local (Digital First-run) newspaper editor who talked about the potential of the community reclaiming its newspaper:

“If Alden [invested strongly in his company as it is in a number of chains] ever wants to sell, I think I can put together a group of 40 families willing to step and invest. They wouldn’t do it to make a big profit, though maybe they could make some, but they’d do it maintain a community voice.”

A family-owned (or families-owned) newspaper future? Back to a future?

Our editor can keep his model safely tucked in his desk drawer for now. We need several things to happen to test the idea: (a) willing sellers; (b) models of community investment and ownership, which could be adapted from other enterprises; (c) a taste of Silicon Valley fervor”.

In fact, the world, as we now know it, intrudes. In the Union-Tribune’s case, it’s Doug Manchester, a strong right-wing advocate and major land developer who is buying the paper. That’s the sense it makes. As the silliness of our current politics distracts America, as a nation and in too many communities, from the common work of building our future, this silliness can well infect daily newspapers. Will Manchester honor long-held separations between impartial news reporting and opinion?

Don’t hold your breath. Manchester’s new CEO-to-be  John Lynch, sounded something Sam Zell — with conservative, pro-development, anti-tax and anti-gay rights positions added – in talking about the coming sale, as quoted in the Voice of San Diego (and that’s a fledgling institution whose importance now grows):

“Lynch said he wants the paper to be pro-business. The sports page to be pro-Chargers stadium. And reporters to become stars.

“It’s news information, but it’s also show biz,” Lynch said. “You get people to tune in and read your site or the paper when there’s an ‘Oh wow’ in the paper.”

He wants that sports page to be an advocate for a new football stadium “and call out those who don’t as obstructionists.”

“To my way of thinking,” Lynch said, “that’s a shovel-ready job for thousands.”

More changes will be evident after the deal closes between Nov. 30 and Dec. 15. Lynch said they want a stronger editorial page and to attract younger readers. Lynch hopes to bring other media into the building. He wants to be a newspaper industry precedent-setter.

“You change now or you die,” Lynch said…

“We’d like to be a cheerleader for all that’s good about San Diego,” Lynch said. “Our motivation, both of us, was to do something good for San Diego.”

We can see where this is going. The ideologically inclined see the bully pulpit value of these declining economic assets — assets still owning significant community sway and agenda-setting abilities — and pick them up. Traditional journalistic standards are simply collateral damage in a world of too much change. Who knows the difference; same masthead, right?

It’s a lot easier for a single, monied advocate, regardless of political stripe, to buy a cheap property than it is to put together a group of 40 to reclaim it for a “community.”

In San Diego, we’ve moved from an old-fogy, often clueless, newspaper family (the Copleys) to on-so-private equity and now onto more overtly political ownership. The saga of dailies is taking some odd turns, and I fear this is a new chapter we will soon see written in other cities.

Important Details: Newsy is an unusual project. It’s a for-profit enterprise, housed at a university. It’s an aggregation product in the largely single-title environment of the tablet.  And it’s a digital product that is tablet first, smartphone second and, the web, a distant third.

Newsy now produces 25 to 30 video stories each day, seven days a week, on an 18-hour cycle. Its stories are unusual. They run two and a half to four minutes in length, anchored by a staffers. Newsy benefits from the its partnership with the UniEssentially, they are summaries of the day’s news, drawing from both video (NBC, CNN, Fox News, BBC and more) and text (newspapers) sources. The sources are prominently featured, in short video clips and paragraphs displayed behind the speaking anchor.

Usage of clips is covered by Fair Use law, just as text aggregators, such as Google, built their businesses, says Spencer.

President Jim Spencer, a veteran of MSNBC and AskJeeves, moved his fledgling operation to Columbia, Mo, home of the University of Missouri, receiving economic development incentives from the City of Columbia (REDI) and substantial tax credits from the Missouri State Department of Economic Development.  Newsy benefits from its partnership with the literally across-the-street University of Missouri, providing hands-on instruction to students and then hiring the cream of each year’s crop. He credits the lower-cost location and enthusiasm of the student/University community with helping to rapid growing the business.

“They [the students] intrinsically get it,” Spencer told Outsell, talking about their grasping of the new product form. “They’ll stay up two days in a row working on an initiative.” On the development path: personalization in various forms, and new Mandarin- and Spanish-language versions.

Key to Newsy’s strategy is the engagement mobile news providers are finding with delivery to the new tablet devices. On its iPad product, Newsy has found that more than 45% of sessions are greater than three minutes in length, with 15% of all sessions being greater than 10 minutes. Shorter sessions are conducted on the iPhone, consistent with most publisher experiences: Newsy is finding users generally spend one to three minutes, and watch fewer videos (2.3 videos “initialized” compared to 3.4 for the iPad user). Median session length on the iPhone app is around 150 seconds, says Spencer. All those numbers compare favorably with industry online usage.

The two-and-a-half-year-old Newsy now employs 18 full-time and 12-15 part-time staffers. It is expanding its advertising presence, using 15-second pre-rolls and bottom of the page banners as  its main business model, with others in the offing.

Implications: Outsell believes the Newsy model in and of itself is of great consequence to news creators. It’s an intriguing tablet native product that manages to grab a hold of much of what makes the new platform such a mind-boggling reader and advertising opportunity.

It’s a plus product, as in: Mobile + Video + Social + Curation, all on the foundation of News. On the tablet, these factors aren’t separate from each other; in fact, the confluence of them is, in part, what gives the tablet platform its game-changing power. It’s not just news publishers, or broadcasters, who can take note. All producers of information can learn lots from taking a look at the Newsy product and business model.

As Spencer notes, it’s the tablet that is the center of his business, because of its unique capabilities; mobile accounts for 70-80% of the traffic. The web, meaning desktop and laptop? “I publish to the the web as the platform of last resort.” That’s a mind-turning idea, and one that legacy companies can think through, tossing print into that “what’s your best platform for this product?” question.

The whole question of aggregation products for the tablet is a work-in-progress. While Google, Yahoo!, AOLand MSN have dominated the online space, the single brand-encouraging interface of the iPad has transformed the picture — for now. We see services such as Flipboard and Pulse out early with curation/aggregation products, but the big guys aren’t yet well represented. At the same time, both newspaper and magazine publishers (think Next Issue Media) are trying to figure out if industry aggregation plays, long discarded for online, may be resuscitated. Newsy, then, gives those companies and industries something to think about, and in its get-it-done, get-into-the-market-cheaply momentum, a model from which to learn.

Today’s numbers tell us this:

1. Publishers can keep growing digital ad revenue while partially restricting access to their sites. The Times News Media Group (which includes all the company’s regional papers and the Globe) reported a 15.5% increase in digital revenue for the quarter. That’s a healthy number, and shows that the hit in page views taken because of the restricted access isn’t hurting that growth.
2. Publishers can turn around declining circulation revenue. That’s key. Circ revenue had been rising until a year-plus ago, largely because almost all daily publishers had priced up their subscriptions and single copies, even as circulation volume continued to decline. Now the Times reported a 1.6% increase in circulation revenue for the Times specifically, after three down quarters with an average decline of 3.3% over that period.
3. The 3% Threshold is going to be hard, but not impossible, to get to. The Times, at the 281,000 digital sub number (including Kindle, other e-readers and all digital subs, including those four-week trials, of which we don’t know how many converted to subscribers) is just below the magic 1% number. That’s as in percentage of U.S. domestic unique visitors it can nab as paying customers. The Times gets between 30 and 34 million uniques a month in the U.S., so figure 300,000 would get them to one percent. If 300,000 becomes a stable number, then that’s a first big threshold. My 3% number — 900,000 — would give them substantial new circulation money. That’s got to be a two-to-three-year goal of the Times. A potential trouble point here: the rate of digital circulation growth is slowing, according to the Times.
4. The Times pricing, derided by some for its complexity, looks like it is working, spurring both new digital subs and getting some people to buy the Sunday paper, or Weekender deal, to get “free” digital access. The Sunday-as-separate-product movement will gain steam.
5. The Times pay-related marketing plans — share-your-access is the latest, following its Lincoln “sponsonship” (“Inside the Lincoln deal“) — show ways to charge and selectively give away access toward the goals of growing the business overall, but taking precautions along the way.

So let’s look at one important number: new circulation revenue.

After all, that’s one big idea here: Open a second pipeline of digital revenue — digital circulation revenue, or bundled print/digital circulation revenue — to join the digital advertising revenue, which is growing, but not sufficiently to make up for print losses. (Note that overall, Times Company revenue dropped another 2.2% and ad revenue fell, despite the digital gains, declined another 4%.)

So, the Times itself (not the whole company) improved its circulation revenue performance by 1.6% for the quarter.

What’s that mean? At the pre-pay-plan trajectory, the New York Times had been losing (over the three previous quarters) at about a 3.3%  rate in circulation revenue. If it can hold that 1.6% increase, that would be a 4.9% differential. Let’s call it 5%.

In 2010, the New York Times took in $683 million in circulation revenue. So a 5% change in that number is about $34 million annually. That’s our key number of the moment. A trajectory to add $34 million to Times revenue, without negatively affecting print or digital ad revenues. It’s not the only number that matters — stabilizing the print numbers, which we think we’ll see reflected in fall print circulation reports — should marginally help print ad revenues and better digital ad targeting of new Times core customers should help on that line as well.

For now, though: $34 million. That compares to a zenith of $10 million from Times Select, for those of you keeping score at home.

$34 million is a positive sign, and if it can triple (moving that almost 1% needle to 3%), it’s $100 million. That would be a win. In and of itself, it doesn’t “save” the Times, but it’s a first indicator of an emerging, evolving new hybrid digital/print business model.

How important is the circulation money? Circulation revenues now make up more than 40% of overall Times Company revenues. That’s larger than most daily publishers — and indicative of where the business is going. With so much change in ad spending and placement, the Times is coming to rely — and build a model — on having readers pay about half the cost of the business.

That American context is a revealing. As the British investigation deepens and widens —  Scotland Yard scorned is not an enemy anyone wants to have (as its chief resigns due his own footsie playing) and politicians of all stripes rush out into the light of the streets to cry freedom from fear of tyrannical tabs — look for News Corp to become an even greater American company than it is today. It is, of course, based in New York already, and, yes, it’s CEO and Chairman is a naturalized American. The numbers, though, scream “American” even louder. Fifty-four percent of News Corp’s overall revenues are generated in the U.S. and Canada; only 29% in Europe and 16% in Australia. Further, “U.S. customers” generated $17.3 billion for News Corp in 2010, while UK customers provided a relatively paltry $2.7 billion; the split between U.S. and UK spend has widened each of the last three years.

Yet, NewsCorp has had a split multinational identity, one that has served it well in business and in influence, of course as those two virtues reinforced each other. That was then, this is NoW (News of the World) core meltdown time.

Now, the company needs to build as much of a firewall between the tawdry events in the UK …. and the rest of its story, worldwide, especially in the U.S. and Australia.

News Corp can try to make itself over, as completely and quickly as it can, as an American entertainment company, with global investments (Britain, Italy, Germany, India, the Middle East). That initiative — we may presume a new CEO some time in the not-too-distant future — will focus on non-newspaper assets, and try to divorce itself from the London-based mess. Of course, that strategy has its own issues, as the U.S., too, is dragged into the inquiry, due to alleged 9/11 wiretapping and more insistent calls for investigation here; Sunday headline on WSJ.com:

News Corp. Scrambles to Contain Damage in U.S.

(Even Australia, Murdoch’s home base and where he controls two-thirds of the press — excellent BBC/The World report on that —  is no safer a haven, as calls for inquiry have been heard there as well.)

Should the U.S. become even more News Corp’s identity, we’ll have to see how America reacts, and that will be a fascinating second act to the thunderous opening of this affair.

Let’s consider, top-line for now, how the company’s further Americanization may play. First, it will emphasize its entertainment and distribution assets. Those, in fact, are the core of the company’s revenues and profits.

The two biggest revenue sources for News Corp are its filmed entertainment (read Hollywood) and cable TV (Fox News, Fox Sports) businesses. Those are the businesses that are throwing off the profit. I’ve pointed to the great advantage News Corp’s newspaper holdings have, being less than a fifth of the company’s overall revenue and being able to be subsidized, as needed, by the likes of Twentieth Century Fox’s Avatar, with more than two billion dollars in worldwide sales.

In 2010, the company Cable TV division operating income (profit after operating costs) increased 37%, led by Fox News and Fox Sports, to $2.3 billion. Movies added another $1.3 billion. Newspapers, at $530 million, made up only about one-eighth of the company’s operating income, and this year that contribution will be even smaller.

Many investors and even News Corp execs had argued against the 2007 acquisition of Dow Jones, and the continuing subsidizing of the New York Post, but they have been drowned out by the all-powerful CEO, Rupert Murdoch. With its news operations strongly tainted in the UK, it only makes sense that the company will tout itself as the company of Avatar, Glee and football.

If, and as, it pursues that strategy, we’ve got to wonder how much of the UK scandal will play here. How far will a U.S. investigation go? If it only involves “rogue” British tabloid journalists, it could be dismissed a somebody else’s problem. Inevitably, questions are being raised about the Wall Street Journal and the New York Post. The Post is a tabloid, right, so what’s the difference, which journalists, like Time Magazine’s “Tabloid Bits Man“, are scurrying to explain to the American public. The Journal’s oversight board, which had itself appeared to be an oversight of the 2007 purchase, made its public presence suddenly known Saturday, saying that though it conducted no inquiry and planned none, it knew of no related-to-London-scandal issues at the Journal.

My sense is that the Journal, and the Post, should do more. The Journal is a hugely important American institution, staffed by some of the top editors and reporters in the country. The savvy it brings, and exercises, in business news reporting is an important check and balance in the Republic. Many of us have noticed tilts and tweaks in the Journal’s coverage, headlining and play since the News Corp purchase. Yet it has maintained its respectability, untainted — so far — by its Fox News cousin’s advocacy, though it shares New York City quarters. It’s essential that it remain respected, and respectable, into the future. (Update: Today, it published a defensive editorial blaming others for magnifying News International’s wrongdoing, taking a tack that will take it nowhere.)

To that end, I believe it needs a clean bill of health from an independent inquiry. After all, its publisher Les Hinton — with 12 years of potential connections to the UK wrongdoing — made a speedy exit Friday, and its well-regarded editor, Robert Thomson, comes out of News International as well, though from the Times of London, so far not caught in the crossfire. For the Journal’s sake, as well as for the journalists who work there, it’s best to strongly advise the public that it has never practiced what News International did in the UK, and won’t.

Beyond the Journal, might the focus on News Corp’s unorthodox approach to news — tabloid partisan on cable — get a closer look? Jon Stewart has been leading the charge, and while there is no allegation of any illegality, the practice of using “the news” to support friends and punish enemies is practiced daily by Fox News. That approach is now being pilloried by everyone from Prime Minister James Cameron on down. Who will pick up that torch in the states?

When the FCC hearings on cross-ownership begin anew, look for News Corp’s New York holdings to again come up.

When the subject of political donations comes up, look for renewed controversy. In the last election cycle, News Corp stepped up its donations to Republicans, causing a minor firestorm.

News Corp itself isn’t a well-known brand in the U.S. We know the Journal, the Post, Fox News, Fox Sports and Fox Searchlight, for movies. Will Americans make the Rupert connection and how much will it bother them? If you are running News Corp, or as Edelman may well advise, expect the Americans to be far kindlier than the Brits. Complete the Americanization now.

That would argue for selling off the damaged News International, the holding company for its UK newspaper assets, recently headed by Brooks and by Hinton.

That makes sense for several reasons. One, Rupert Murdoch’s own powerful political influence in the UK is forever diminished. The investigation itself will take at least a couple of years to wind through. Yes, Rupert has been the comeback kid, but this kid is now 80, and this scandal is his last act in the nation that created his mythic power, most notably in making or breaking elections, especially Tony Blair’s.

Second, the UK newspaper operations are a minor part of the News Corp business. The Times of London and the Sunday Times both lose money, as do all their quality paper brethren in London, save the Telegraph. Murdoch’s tough Times paywall isn’t turning things around, as the daily Times leads in daily print decline. Yes, News Corp can add a SunonSunday to replace News of the World, but the Sun itself is now itself embattled in suit (man-undercover Hugh Grants‘), and, at the minimum, the appearance of guilt by association.

Guilt. Guilt by association. Taint. T’aint fair, some may say. Public perception of this scandal, and how it traverses the Atlantic, will be as strong an element as the now endless legal proceedings.

The week’s news has bolstered the Guardian, in particular in U.S. readers’ eyes. All of us checking our iPhones and iPads in bed now have to do it on different cycles to mesh with the five-to-eight hours difference with London. The Guardian’s live-blogging, onrushing news breaks and first-day, if not first-hour analysis, shows us the joy of finalizing delivering The Big Story after a 70-plus-month gestation period of starts and stops. The coverage — and the cross-linkages between the UK and U.S. in the Murdoch/News Corp/what’s wrong with the press story — also reinforces how much the English-language press is making a mockery of the Atlantic (“The Newsonomics of the British Invasion“).

Media across the world have been trying to get a grip on the story for days. Family dynasty drama? Fall of Murdoch? End of the tab? Journalism’s hour of repentance? Big, often overblown topics, befitting, well, a tab.

As we breathlessly await each new newsbreak — what will David Cameron say today? — let’s quickly look a few of the myths of Murdoch now in wide circulation.

1. This is the end of Rupert Murdoch. Don’t bet on it. The wily Murdoch was probably smart enough to maintain a deniability about all the multi-year transgressions of law and ethics. His remarkable record of surviving disaster and finding new triumph will be sorely tested though. He’s head of a company with $13 billion in cash and $2.5 billion in net profit. That’s quite a safety net.
2. News International is toast, to be sold off, the next step in washing out the stain of UK wrongdoing. Maybe. News International isn’t what it once was. The daily Times of London has been suffering the largest circulation drop of any UK quality weekly, down 11% in the last tally. Its pay plan can’t be called a success — a run-rate of maybe $18 million – and a loss of too many page views and unique visitors, which must be affecting online advertising. The quality daily business is a financial loser in London; remember that Guardian CEO Andrew Miller recently made the point that his company would run out of money in three to five years unless it moved profoundly “digital first” and cut back its print costs. Word is that only the Telegraph, with more home delivery than most of the quality dailies, may be profitable. So if News of the World with maybe $100 million in annual revenues (and maybe 10-20% profit) is gone, that leaves the six-day, soon-to-be-seven-day Sun. The Sun is popular, but may well be caught up in this Murdochian scandal as well, as tabloid competitors double their circulation runs in an attempt to take away the Sun’s market share, amid roiling reader and ad boycott. The Sun will recoup some NOTW readers and ad revenue, but only some.
3. The scandal will have no effect on News Corp. Or the opposite, the scandal will break apart News Corp. You can mark it: News Corp will concentrate even more on non-newspaper businesses into the future. That was inevitable as the 80-year-old Murdoch eventually loosened his newspaper grip, anyhow. Now, it will be accelerated. News Corp isn’t a newspaper company, despite its name and its founder’s passion. Fewer than 16% of the companies’ revenues come from newspapers, and probably no more than 8% of its profit — if that. The newspapers have long been a drag of News Corp’s earnings and focus; it’s a global, diversified TV and movie company that wants badly to expand its satellite/pipes of the future footprint. It will now — post scandal — get on with that, spurred by governmental, shareholder and even internal executive (including next-generation Murdochs) pressure.
4. It’s not about the News of the World; it’s about the press overall. In David Cameron’s public handwringing (“We’re all in this”), he generously shared blame for his at-best egregious hiring  judgment and choice of summer house buddies with anyone in sight. Certainly, the UK coziness, part class, part power and a lot of Fear Factor (see Sarah Lyall’s excellent NYT piece on that) bears deeper examination, and will drag in, rightfully, some other tabloid practices. But, please, don’t tell me we’re “all guilty,” as well. We’ve heard a lot of citing of ABC’s checkbook journalism controversy, equating it with the litany of crimes apparently committed by those calling themselves journalists. Treading on society’s victims lives, paying off police for years and apparently conspiring to hide and destroy the truth all transcend checkbook journalism. Yes, we are all on increasingly slippery slopes as journalism quickly morphs these days, but there’s a big difference between sliding, debating that slide, and those who fell into the cesspool of arrogant lawlessness. Let’s make sure we don’t confuse the two and take on those who purposely annex them for political gain.
5. It will have no impact on U.S. operations. In the short term, that may be true. As News Corp rationalizes its newspaper holdings — ironically, newspaperman Murdoch has been at the head of line saying they have little future at current trajectories — it’s hard to believe it will keep the New York Post open. The Post still loses tens of millions of dollars a year. Financially oriented executives would also question how well the Wall Street Journal investment (NYC edition and global/national non-business news expansion) is working out. The New York Times doesn’t look like it is being killed off by the moves, instead putting a successful stake in the ground with its new digital circulation strategy and today, repaying early some more of Carlos Slim’s loan. News Corp has a unique, global business news asset in Dow Jones, and that’s where smart money, not ideological leadership, would take the strategy.

The bigger question is Fox News. Yes, Jon Stewart was comically dumbfounded Monday evening with Brit John Oliver’s review of the Murdochian scandal. Yet, his razor-sharp media criticism almost daily draws a direct line between Fox News’ use of “journalism” as a political weapon and what Murdoch has done, quite legally as well as illegally, with his UK papers. We all know the difference between journalism, however clumsy, which attempts to report fact and the partisan masquerade that too much consumes Fox News. Will Fox News be chastened by the scandal? I doubt it, but Fox does stand out as America’s real mainstream tabloid news medium.