It’s easy to get cynical about hyperlocal news on the web. People have been working to figure out a scalable model to support it for years. But news-model fatigue shouldn’t be mistaken for permanent failure — it’s just that no one has yet found success.

Community journalism pioneer Steve Buttry, now heading up community engagement at Digital First Media, says he is buoyed by disruptive-change theorist Clayton Christensen’s notion that 90 percent of successful startups start out with the wrong strategy and often take three or four attempts to get it right. That makes some kind of web sense. For those of us trained in the arts of journalism, though, it’s probably a tough lesson: We’re trained to get it right thefirst time.

With that in mind, let’s look into the next round of hyperlocal, the emerging newsonomics around Patch’s aim to become profitable, just as Digital First Media (DFM) dials up its own hyperlocal strategies. Though many newspaper companies are testing hyperlocal strategies, individually or through their chains, Patch and DFM stand out for the scale of their intent. We’ll stick with the term “hyperlocal,” even though it’s a squishy one, because it still best describing the kinds of close-to-where-we-live school news, local sports, police reports, and government coverage we find useful. It may a community of 20,000 or 80,000, but for many of us, it’s less than a whole city.

Let’s start with Patch. Each quarter, as AOL announces its financial results, CEO Tim Armstrong sticks his head in the boxing ring, and lets it get punched around a bit. He took over a newly independent Time Warner spinoff and has been madly transitioning it beyond its sinecure of the old-timey Internet access business.

I won’t debate here his hits and misses, his romancing of Arianna (or was it the other way around?), or the half-life of AOL, given its trajectory and the fact it haslost more than $800 million since its 2009 spinoff.

For the news business, two facts stand out. First, Patch is doing journalism, employing more than 1,000 journalists. Second, it is testing a model that needs testing, however Patch’s history is eventually written.

That model may be getting a rocket boost of revenue, if January’s trends hold up. In an interview last week, Patch President Warren Webster says that January booked ad revenue alone equaled half of all of 2011 ad revenue. If that trend were to continue, we’d be looking quite differently at Patch’s chances of making it into the black before AOL’s investor patience runs out. Just last week, Starboard, an “activist fund,” increased its AOL stake to 5.1 percent, pushing for strategic changes, and Patch is in the middle of its sights.

[Update, 2:52 p.m.: Some added context to the Patch ad revenue increase: The January ad revenue noted above should be noted as bookings for the year as a whole, committed by January. Further, Patch says that, as of today, it now has commitments for more than 75 percent of the total revenue that it recognized in 2011. Those are ads that it has sold and that will run some time in 2012. It recognizes the revenue, like almost all ad sales companies, when ads run. Indeed, January 2012 is up manyfold over January 2011, but in terms of the yearly revenue contribution, it will be relatively small given that January is a light ad month throughout the industry. While it's impossible to extrapolate whole year 2012 revenue, based on the data so far, the sharp turn up in trajectory portends a major boost in ad revenue in 2012 — how large and how sustainable, still to be seen.]

That model may be getting a rocket boost of revenue, if January’s trends hold up. In an interview last week, Patch President Warren Webster says that January ad revenue alone equaled half of all of 2011 ad revenue. If that trend were to continue, we’d be looking quite differently at Patch’s chances of making it into the black before AOL’s investor patience runs out. Just last week, Starboard, an “activist fund,” increased its AOL stake to 5.1 percent, pushing for strategic changes, and Patch is in the middle of its sights.

AOL won’t release specific Patch financials, but we can piece together numbers — Patch CSI — that tell us the story so far. AOL has said publicly that one quarter of its 864 sites are making $2,000 a month or more of revenue. That would also mean that 645 or so of its sites are making less than $2,000 a month in revenue.

On revenue, let’s be generous and say that one-quarter of the Patch sites are making an average of $2,500 per month. That would mean $30,000 a year. So 215 (or one-quarter of the sites) at $30,000 kicks up to $6.45 million annually.

Let’s say that on average the other three quarters of sites are earning an average of $1,500 a month, or $18,000 a year. Multiply that by 645 and we get $11.6 million.

So annual 2011 revenue would come in at about $18 million. That matches up with other extrapolations, guesses, and the like, which put the number around $20 million.

We know that AOL is spending $160 million a year on Patch. So on an operating basis for 2011, total revenue of $18 million would leave Patch with a $144 million operating loss.

But wait. If January was that good, equaling half of the 2011 revenue rate, that would mean Patch took in $9 million in that month. If it could sustain that number all year, it would be up to $108 million in revenue. Yes, its sales cost would increase, so let’s add in another $20 million for those. If all the other costs were constant, 2012 costs would be $180 million. 2012′s revenues would be $108 million.

You could look at that number two ways:

— It would still be losing $82 million a year;

— It would have erased 43 percent of its operating loss in a year.

A Patch half-green, or a Patch half-brown.

On the green end is Patch’s maturing approach to ad sales. For instance, Webster is enthusiastic about its recent initiative to add a third leg of revenue, in addition to national impression-based advertising and largely sponsorship-based local advertising.That third leg is better monetizing of its directories. “In the last two months, we pushed our sales team to push claims.” “Claiming” is getting local merchants to verify their free business listings. Of course, the next step is to get them to advertise and to enhance those lists. “We hit an all-time high recently,” he says. “We got 400 claims in a single day across Patch.” Patch says its claimed-listings rate is up roughly 124 percent over the past six weeks.

The big potential payoff here: Claiming is lead generation, and Patch has found claiming merchants to be 4 to 5 times more likely to advertise once they claim. These enhanced directories offer video profiles, highlighted listings and “owner messages.”

Journalistically, what does Patch have to do to win a race towards profitability, a marathon that will probably last at least three more years? Fundamentally, it needs to fulfill its promise: “Hi there, we’re Patch, your source for local knowledge you can’t live without,” a promise it curiously makes on its overall entry page, but not on its town sites.

If I were giving out grades, I’d give many sites As and Bs for vitality and enthusiasm — and those are good starters in journalism. The better sites do give us a sense of townness, a tribute to the reporters running ragged around their geographies, snapping photos, doing quick interviews, promoting Patch, and more.

In news, they’re in and out — no real competition to good daily newspapers, even with their diminished staffs. They’ll hit on good stories here and then, but can’t be depended upon to do it. I thought that the March 2011 acquisition of Outside.In would lead quickly to better news aggregation from other local news producers — creating a better local news briefing — but so far I see scanty evidence of that.

Blog posts are increasingly numerous — Patch is up to 14,000 active bloggers, Webster says, or 16 per site on average. But they run a wide gamut in quality and readability.

In utility, Patches are hit and miss. Lots of local events can be found — to the gratitude of civic-minded organizers of them — but the presentation isn’t the most user-friendly.

As sources of finding a good new restaurant or a handyman or the best child care in my neighborhood, they fail. The city guide vacuum (“The newsonomics of the Swift Street Courtyard“) — still left in place after the Sidewalks, Digital Cities, Real Cities, and more have come and gone — is a market opening for Patch. Yet its directories are utterly generic, not distinguishing an above-average eatery andJack in the Box (“Whether you’re looking for a quick bite for breakfast, lunch or dinner, or a late-night snack, this Jack in the Box, conveniently located on Ocean Street near Water Street, is ready to serve you 24/7. You’ll find favorites such as cheeseburgers, Sourdough Steak Melts, Chicken Fajita Pitas, shakes and fries, as well as specialties that include a chicken teriyaki bowl, deli trio grilled sandwich and grilled breakfast sandwiches. Salads, tacos and a kids’ menu are also available.”)

That may explain the recent hiring of Rachel Fishman Feddersen, late of Bonnier’s Parenting.com, and an early city-guide staffer, way back in 1995 for New York City’s Metrobeat, which was later bought by CitySearch. A feature pro and a mom in Montclair (once the hyperlocal capital of the country, when Patch, Baristanet, and NYT’s The Local competed there, and now still deeply competitive even after the Times pulled out), she’s into her second week on the job. She told me that her job as chief content officer will range from “the unsexy stuff” — things like page load times, better SEO, newsletter-sending time — to showcasing Patch best practices to coming up with winning editorial features.

Patch is also experimenting with new more visually interesting designs in a couple of dozen markets. Webster acknowledges that the directories in particular and other parts of the site “are not yet built out.”

What else might AOL and Patch do to close the profit gap faster? It could grow its audience more quickly by better connecting Patch to other relevant parts of AOL. Huffington Post, for example, doesn’t automatically recognize local visitors and give them easy access to a local Patch site. Find the “Local” tab, and you can choose one of HuffPo’s city sites — but there’s no Patch content to be seen. That seems like a no-brainer. Further, a dedicated tablet app (rather than the 2x smartphone product) seems like it should be in place by now.

“Everyone wants us to fast-forward to the end of the movie,” Webster notes. He has a sensible point. Given how each Patch rumor — two sites consolidated here, freelance budgets cut back there — is treated as forensic evidence, Webster is in relatively hardy form. He admits that Patch, with its fast expansion, took too much of a one-size-fits-all approach to site deployment, and was too “cookie cutter.” Some of the changes in budgeting — for instance, devoting some site budgets more to marketing awareness and less to paying stringers — derive from overall understandings of the market; others attempt to learn that needs in West Des Moines are different than in West Orange.

That’s only fair, I think. Whether the moves have been right or not, it makes sense to tweak this hyperlocal business and journalism model, and each change shouldn’t be a cause for suspicion. Let’s remember that at the same time Patch may be cutting out freelance dollars here and there, daily newspapers are continuing to remove dozens of full-time jobs.

Further, as Buttry points, it takes time to get things right — though it’s not clear how much time Patch has, given growing competition.

Advertising competition is ubiquitous, with Google, Facebook, and Yahoo all taking new runs at local treasure. Buttry’s Digital First is making moves of its own. The company, which is making itself famous for developing dozens of new local, digital advertising products, is now in a couple of big Patch territories, particularly Connecticut and California, as Digital First digs deeper into MediaNews management in both Northern and Southern California.

People increasingly will compare Patch and Digital First. Says Buttry: “We get a lot of attention because of the geographic overlap, and we have big ownership [Alden Global Capital, in Digital First's case]. But we are transforming whole newsrooms, not setting up one-person shops.” Digital First’s Connecticut Group Editor Matt DeRienzo outlines the coming competition even more directly, pointing to the strengths of his Connecticut test lab in Torrington, a model soon to spread to Oakland and New Haven, with numerous variations elsewhere. He makes three points — ones that all legacy newspaper companies would have to use against insurgents like Patch:

• “A larger staff, and a newsroom structure with reporters who have editors on site leading and counseling them;
• 134 years of history covering the community (and in Torrington, we opened our entire archives for free access to the public, one of the most popular features of the newsroom café);
• A physical gathering place that is built more like a community center than a newsroom (free public meeting space for the Garden Club, Little League board of directors, Young Republicans, etc., classes and workshops for the public, open story meetings, etc.).”

And yet: Digital First, at this reading, has about 1,000 bloggers within its cities, compared to Patch’s 14,000.

Then there’s the overlap question: Aren’t these guys doing the same thing? Well, sorta, kinda. Buttry even says Digital First could reach out to Patch, offering a partnership or aggregation arrangement of some kind, though he hasn’t done that yet. “We should include them in our local networks.”

So it’s not David vs. Goliath, nor David vs. David, nor Goliath vs. Goliath. In fact, these may be two Davids both fighting against the Goliaths of Facebook and Google, which are rapidly gaining digital ad market share on everybody. It’s just another front in the digital wars, one perilously close to our homes.

Let’s look this week at the journalistic turmoil in the world’s eighth-largest economy: California, a.k.a. the Golden State (beta motto: “We get post-IPO Facebook capital gains taxes — you don’t”).

The massive changes we’re seeing in California journalism portend even faster journalistic change across the country. We Californians like to believe we’re always at the birth of the new new, from Hollywood to Silicon Valley. Certainly, that’s been true of news change — and now that change has greatly accelerated, doing spins, free falls, reversals of fortune, and lots more. It’s not really change — it’s chaos. No one can tell what the journalistic landscape of the state may look like in, say, 2014. All we can say with certainty: we’re witnessing the death and life of California news.

Who will own the biggest news media? Who will manage the biggest news media? How much of a life in print will be left for newspapers as they go digital? And, of course, how many journalists will be paid to get the news to the state’s 37 million residents and to the rest of the country? Already, well over 1,000 daily newspaper journalists have lost their jobs over the past five-plus years.

How many new combinations — among news entities formerly known as newspapers, broadcast, and digital news startups — will emerge and grow to scale? Those combinations are already beginning to tax legacy imaginations, and as of this week, we’ve got a new intriguing model to add to the mix.

The promise of California Watch’s model

Tuesday, we saw a new model birthed: the friendly takeover of one digital news startup by another. California Watch, the almost-three-year-old statewide-oriented model of a modern news agency, is merging with Bay Citizen, the two-plus-year-old Bay Area-oriented news startup, which has had more than its share of birthing pangs.

Both sites were born in the depth of the recession and a relatively dark period of Bay Area journalism. (See “Bay Area Online News Renaissance: 7 Pointers Forward.”) Both hired talented staffs (from voluminous applications) and won journalism awards. Yet California Watch, built on $5 million in foundation funding, developed under the wing of the Center for Investigative Reporting (itselffounded way back in 1977). It has prospered, grown, and earned quick legitimacy and even respect from the state’s major media, which run its stories. CIR, which has long focused on investigative pieces of national import, is now largely synonymous with California Watch; it’s one organization made up of 30 journalists (writers, editors, producers, data analysts, and more) and nine other staffers.

We’re seeing in the merger the greater strength of the California Watch model. Call it B2B (business-to-business), a statewide news agency re-imagined for this century. It’s a model being eyed by journalists in some of the other 49 states: Produce muscular, multimedia journalism once (with a little tailoring of stories by market) and distribute it to many news outlets, from Voice of San Diego to KABC-TV in L.A. to the San Francisco Chronicle. These news distributors pay small sums for the stories, but the money is adding up. Increase the flow of journalism, in the Bay Area specifically and California more widely, and the networking “new wire” importance of California Watch grows, especially as struggling dailies continue to cut their own content-originating staffs.

Bay Citizen foundered on leadership and strategic disagreements, on personalities, on the editorial priorities muddied by the otherwise-valuable feeding-stories-to the-regional-edition-of-The-New-York-Times program, and more. That’s all history now.

CIR/California Watch executive director Robert Rosenthal, and his former boss at the San Francisco Chronicle, Phil Bronstein — the two served as managing editor and executive editor, respectively in the last decade — now face strategic and operational decisions on how best to put together the combined nonprofit. Bronstein, who has served as president of the CIR board, now serves as the executive chair of the merged organization, in part owing to the last wishes of the Bay Citizen benefactor Warren Hellman, who died unexpectedly in December. Two long-time daily newspaper guys, now able to build a new news model outside the constraints of constant cost-cutting and legacy hand-wringing. The foundation is set, with such stories as “On Shaky Ground” (“The Newsonomics of California Watch’s Single Investigative Story,”), which won over many editor skeptics.

For the moment, the big news out of this move is this: the potential to establish a new local model of scale and capacity. California Watch/Bay Citizen will be able to move forward with an editorial staff of more than 50, providing a scale that’s been needed to fill the yawning vacuum of local and statewide coverage. National investigative nonprofits from ProPublica to the Center for Public Integrity have stepped up their work, in volume and value, as newspaper-based coverage has slipped. In America, though, it’s a local-to-statewide news — across the 3,500-mile expanse of the country — that’s been crying out for bigger, new models to build on the successes of the MinnPosts and Texas Tribunes.

MediaNews dives into Digital First

The merger isn’t the only big news news in the Bay Area; it’s just the most public.

MediaNews — the largest news publisher by circulation in the state, with more than 30 dailies and great strength in the Bay Area, north of the Bay Area, and in greater L.A. — is about to be shaken to its Dean Singleton foundation. Singleton built the company, deal by deal, and assembled a coalition of willing executives to run the businesses and newsrooms.

They clustered, they cut, and they maneuvered through bankruptcy, and now their leader has been pushed into retirement, replaced by the wild, private-equity-bankrolled revolutionaries from Digital First/Journal Register Company (JRC). CEO John Paton and company moved rapidly (especially in newspaper time) to turn the financially and editorially bankrupt JRC upside down, lopping legacy costs, shooting voluminous video, opening newsrooms, and jettisoning anything and everything that didn’t smell of local.

That’s easier done in New Haven and Macomb that it is in San Jose and L.A. Applying faster, digital-first fixes to larger newsrooms and newspaper operations offers a complexity of challenge that will makes good drama for the rest of us. Expect to see rolling retirements of the Old Guard, with Denver Post CEO Jerry Grilly already announced.

Reorganizing newspapers on paper (or computer) is one thing — the new management knows its toughest and first challenge can be summed up in one word: culture. Yes, after the newspaper industry has been half-sized, culture, good, bad, and silly, is usually the first challenge new management faces in pushing change.

As MediaNews’ California properties change, they’ll change the landscape around them. Expect differing kinds of new competition and new potentials for unorthodox partnerships. Partner up, in fact, the MediaNews turmoil with those of another high-profile experiment: Patch.

The hyperlocal shoot of AOL, it has made a big bet on California. Of its 800-plus sites, 132 are based here. Many of the sites are lively, with good features, calendars, and lots of local, if episodic, bloggers — even if the sites don’t come close to living up to Patch’s tagline: “Hi there, we’re Patch, your source for local knowledge you can’t live without.” AOL, of course, won’t release traffic data, but its latest financial report showed that its $120 million investment isn’t close to bringing in enough ad revenue. That’s confirmed by checking on the sites (national ads prevail) or attending a local Patch-sponsored community meeting, as I did last Friday. Second question from the audience: “Why don’t you have local ads?”

Given Digital First’s open-newsroom strategy and philosophy, Patch is particularly vulnerable to the MediaNews changes. MediaNews can do what Patch is doing — and cover the news with more than single reporter/editors. Or MediaNews properties could partner with Patch.

Don’t think that Bay Area media change is restricted to text and print. KGO Radio, the market’s long-time talk leader, saw its talk line-up of multiple decades jettisoned one night in December — to public uproar, where else, but on Facebook — as it embraces the all-news (broadcast and digital) mantra and goes head-to-head with KCBS.

Public radio on the move in L.A.

Moving briefly to the south, we can see that the change is only prologue.

If Californians like to be first, they can be the first to claim one metro area with three — count ‘em, three — bankrupt daily newspapers. That would be metro Los Angeles. Both MediaNews (Los Angeles News Group, or LANG, with holdings like the Daily News, the Long Beach Press-Telegram and the Pasadena Star-News) and Freedom Communications (Orange County Register) fell into bankruptcy and emerged quickly from it, with banker and private equity owners. Then last summer, the two tried to mate, as Alden Global Capital, holding about 40 percent of each, tried to arrange an arms-length (tough to negotiate with yourself within the bounds of law) marriage and somehow failed. Tribune’s Los Angeles Times entered bankruptcy in December 2008 and has yet to emerge from equity owner/bondholder hell. Those three companies continue to gyrate in the marketplace, maneuvering within their increasingly limited options.

With L.A. Times publisher Eddy Hartenstein assuming the Tribune CEO title as well last spring, the Times has been shaking up its strategy and management, edging into its own digital-first territory. One clue: the November appointment of a quartet of new VPs tried to find new harmony in digital revenue. They include Jennifer Collins from Variety and Andrea Nunn from HBO, giving an indication the newspaper company is trying to stretch well beyond its roots. They move in as long-time Times chief revenue officer John O’Loughlin moves out, having just assumed the president’s job in a exec-suite reorg at the Houston Chronicle.

Among the Times’ many options: a flipping-the-switch bet that would have it abandon some print to cut costs and become more heavily digital faster.

Ahead of still more staff cuts, the Times lost its change-oriented editor, Russ Stanton, in December — and then saw him hired by public-media mover KPCCas VP of content. Even a few years ago, that would have seemed a bizarre career move. The editor of The Los Angeles Times goes to lead the news effort at a local public radio station?

Yet when you compare the two enterprises — today — you see one in decline and one believing in its own upside.

Yes, The Los Angeles Times still has (today) 500-plus newsroom people, and KPCC can claim fewer than 60. But as the Times cuts, though, the Southern California Public Radio (SCPR) board has given the go-ahead to double its newsroom to more than 110 by July 1, 2014, needing to raise $24 million over four years to do it. Already raised toward that goal: $8 million so far. Already hired: 20 people in the last year. For 2012 alone, the plan is to bring in at least 13 more news positions — including producers, editors, bloggers, and hosts.

Those numbers are curious ones, but still seem small. Don’t, however, under-estimate SCPR president Bill Davis. Davis is a public media exec in the mold of his mentor Bill Kling, the Minnesota Public Radio visionary entrepreneur who first outlined how public radio could become public media and move into the local news vacuum. In fact, MPR, through its joint parent American Public Media subsidiary, is a sibling to KPCC.

Davis knows how to raise money, and he sees the journalistic devastation that’s enveloped his city. Add that energy and ability to the mix and the journalistic arithmetic begins to change. Five hundred newsroom people at the L.A. Times sounds like an army. Peel off the parts of that army that are devoted to sports, entertainment, and the production of content (as opposed to the creation of it), and you may be down to a couple of hundred who report the local news.

That local news — sans entertainment and sports — is what the expanded KPCC plan aims at. So let’s say that KPCC could get to 100 (Kling’s magic number) in the next several years, as public-spirited citizens (a la Philadelphia and Chicago?) chip in to create and sustain a local news alternative. Let’s say the Times continues to reel, run aground on the shoals of legacy costs, and its newsroom, already dispirited, trims down to 150 local news creators. As Rick Santorum said not long ago in Iowa: Ballgame.

Finally, let’s head to the border. There, the San Diego Union-Tribune, worth a billion dollars a decade ago, has been sold twice in three years. This time, local developer Doug Manchester bought it and promises to turn the newspaper of record in California’s second biggest city into a booster sheet. Across town, online startup Voice of San Diego — a California Watch affiliate which just had to cut staff due to budget cuts — has recently partnered with the local NBC station for news coverage.

Mix ’em, match ’em. It’s a Mating Game that seems like it could only come out of California.

What’s your signature content?

Quick: If somebody buttonholed you in an elevator, a school play, or a bar, and said, “Why should I pay you for that?” — what do you tell them?

Each passing week, it seems we’re further into the age of signature content. That only makes sense: If the death of distance is now old news, if everything is available everywhere at the touch of button or the swipe of a finger, then what makes any news or entertainment brand stand out amid this plague of plenty?

Closed systems — from three or four TV networks to less than a dozen big movie studios to a half-dozen major magazine publishers to geographically dominant newspapers — made signature content less important. Sure, big shows and big names have always driven media to some extent, but now, media without big names or big shows are going to get lost in the ether. Take Hulu’s announcement last week about Hulu Originals. You do have to wonder if Hulu’s fictional 13-episode “Battleground,” about a dysfunctional political campaign, will be bested by the Republican reality show in progress when the show debuts next month. Hulu is also bringing a Morgan Spurlock series for a second run, and probably will feature one other new program. The Hulu announcement joins Netflix’s own foray into signature content. Three years ago, would the thought of Netflix signing up Little Steven to do an original comedy series have crossed anyone’s imagination?

Hulu and Netflix both need to distinguish themselves in the market — not only from each other, but from Comcast, DirecTV, and Time Warner, among others. They need to buy protection as supposed masses consider cutting the cord on packaged services, Roku-ing and Apple-enabling Internet video onto their living-room screens. In movies and TV, we’re quickly morphing from a world of news and entertainment anywhere — get all of these things, somewhat haphazardly (Comcast Xfinity, for instance) on all of our devices — to one in which consumers ask, “What special do you have for me, in addition to my all access? Yes, All-Access, the cool feature of 2011, will quickly graduate from a wow to an expectation.

Why as consumers should we pay $7.99 (down from an initial $9.99) to Hulu Plus, when the same stuff (kinda sorta) is available through Boxee, or Apple TV, or Netflix, if I can find it? Why am I paying $7.99 a month (apparently the magic price of the moment) to Netflix for a catalog of films that is both voluminous and too often lacking what I want? Consumers are going to be asking that question a lot more.

Publishers, distributors, aggregators, and networks all want more money, and they’ve seen — courtesy of tablets and All-Access — that consumers are now more ready to pay for digital content than ever before.

Forget “content wants to be free.” Now content wants a fee. And everyone from Time Inc to The New York Times to the Memphis Commercial Appeal to Hulu’s co-owners (Fox, Disney, and Comcast) see gold. They see another digital revenue stream, in addition to advertising or to cable subscription fees. Yet they are increasingly believing they’ve got to up the ante (and Hulu is raising new funds to buy original programming) to compete and to win those consumer dollars.

News companies — at least one in ten U.S. daily newspapers and many consumer magazines — are rapidly embracing digital circulation revenue and All-Access. Yet results have been quite uneven. That makes sense: Consumers will pay for digital news, feature, and entertainment content, but they don’t want to overpay, and they’ll increasingly be forced to make choices. Buy this; let that go.

Let’s be clear. Paid media is paid media, and the original-programming pushes of the video companies have great meaning for news and magazine companies, global to local. For them, the calculus is similar. News and magazine brands can launch new products, though that’s out-of-their-DNA-tough for many. So they’ve focused primarily on sub-brands, many of which are people. These are the faces of news and magazines; many of these have become hot commodities over the last several years (“The Newsonomics of Journalistic Star Power“) as companies try to distinguish themselves — and give readers and viewers a reason to pick them out of the crowd.

How, though, can media companies afford to pay a premium for branded, promotable talent, talent that may open consumers’ pocketbooks? That’s easy: spend less on other content. So we’ve got the rise of user-generated content, obtainable free or cheap, and all kinds of new syndicate action from Demand Media to startup Ebyline (and maybe NewsRight), all trying to make it cheap and easy to get more medium- and higher-quality content more cheaply. What’s old is new again — as a young features editor, I got regular visits from syndicate and wire salesman, ranging from high-quality to the Copley News Service, that sold its stuff by the pound.

Another prominent model no news or magazine company can afford to ignore: The Huffington Post. Back to the early days when Betsy Morgan first teamed up with Arianna, HuffPost has worked this evolving content pyramid. At the top, a few highly paid site faces, many opinionated faces (some paid, most not), and then low-cost aggregation, much of it AP, headlined with the site’s recognizable swagger.

Then, of course, there’s the old standby: staff cutting. We’ve seen lots of staff cutting. In fact, these days, while we see some announcements like Media General’s big Tampa cut, most of the bloodletting is less public, but no less real. If you need to pay more to stars, and ad revenues are still declining, staff cuts of less than premium content (and those that produce it) make economic sense (“The Newsonomics of the New News Cost Pyramid“). It’s the new news math.

These newsonomics of signature content are getting clearer. Netflix is planning to spend 5 percent of its expenses — or $100 million a year — on original, Netflix-defining content. Hulu is spending about a quarter what Netflix’s total, or $500 million in total, on all content licensing this year. We don’t know how much of that is for original content, but observers believe “Battleground” will cost $15-20 million for its 13 episodes. With its other forays, it will probably spend closer to 10 percent of its content budget on original content.

Curiously, many newspaper newsrooms constitute only 10-20 percent of the overall expenses of a daily newspaper company. So we’re starting to see some new, and old, arithmetic play out here.

Simply, Andy Forssell, Hulu’s SVP of content, explained the cost/benefit ratio to Variety: “…having an original scripted series that hasn’t been seen anywhere else yet is considered the best tool for standing out with either advertisers or viewers.”

As usual, we see the bifurcation of the bigger national brands — those with more audience to gain and more money to spend — and local news brands. While many local newspapers have cut to the bone, with too much of the tissue in the form of experienced, name-brand metro and sports columnists cajoled or drummed into “early retirement,” we see increased branding of stars at places like Time, The New York Times, Fox News, and ESPN. The sports network may be the classic business model of our age, and in its anchors and top analysts — many initially lured from daily newspapers — it has shown the way for many years now.

At the Times, consider business editor Larry Ingrassia’s build-up of business columnists, from veterans Gretchen Morgenson and Floyd Norris to new(er)bies Andrew Ross Sorkin, Brian Stelter, David Carr, Ron Lieber, and David Pogue. And the Times more recently picked up James Stewart from archrival Dow Jones.

At Fox News, Roger Ailes has cannily built the most successful cable news operation not on the interchangeable blondes that provide so much fodder for Jon Stewart and Stephen Colbert, but on O’Reilly and Hannity.

At NBC, the news franchise is so built around Brian Williams that his well-received newsmagazine “Rock Center with Brian Williams” is synonymous with its host.

At Time Warner’s CNN and Time, we see the building of a worldly franchise on Fareed Zakaria’s clear-eyed, no-nonsense view of our times.

And then there’s the more local and regional press. Newspapers have long believed that it wasn’t any one or a half-dozen names that sold the paper. They’ve believed the news itself was the star, and the daily information report was the brand. That may be still be true of the Times, the Journal, the Financial Times, the Guardian, and a handful of other national/global news organizations — all of which have substantial, multi-hundred newsrooms that produce branded, unique products. It’s less true of regional and local dailies, many of which still present too much commoditized news in national, business, entertainment, and sports coverage, and have bid goodbye to many faces familiar to readers. Those that have retained familiar faces must do what they can to keep them; all need to recruiting more.

Then they may have a good answer to the question, in one form or another, consumers and advertisers will increasingly ask: What’s your signature content?

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.

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.

Ask most publishers or editors about games, and they’ll tell you their business isn’t about fun and games. It’s about the serious, semi-Constitutional role of informing the public.

Game dynamics may change that thinking.

When we think of games these days, our minds move to enraged birds or fortune-seeking farmers. We think of the little games now app’d onto our smartphones, a diversion, something trivial. But think of the playable game — the fun — as the hood ornament. The business of game dynamics — or gamification — is what happens under the hood.

Game dynamics isn’t about time-wasting. Au contraire: it’s about a seductive, powerful drawing-in of human habit. It’s about changing those habits, leading us to do new things (over and over again). This being America, those habits increasingly have a lot to do with selling stuff, with commerce. On the Internet, they increasingly help companies chase greater engagement with customers, be they buyers, readers, or both.

Silas Lyons is a pioneer among newspaper people in understanding the potential value of game dynamics to the news business. “It’s basic human psychology,” says Silas Lyons, editor of the Record Searchlight in Redding, Calif., VP of new media content and a co-chair of one of the Scripps’ task forces that pushed forward with the game dynamics idea. “We’re not trying to solve an audience problem — we’re trying to solve an engagement problem. The reader is being rewarded for consuming, sharing, commenting, and finding insight.”

Lyons explained the new notions to readers, in a column, entitled “Civilization comes to Redding.com.”

The goal here isn’t simply to build core customers. It’s to bring greater civility and perspective — what Lyons calls “insight” — to the site. Readers now can mark others’ comments as “insightful,” resulting, over time, in higher ranking of commenters the community seems to value. You gotta love it, at this time and place in America: Let’s play civilization.

The Redding Record Searchlight (circulation of 25,000 on Sunday, 22,500 daily, and more than a half million unique visitors monthly) is an E.W. Scripps newspaper located in northern California, about 200 miles north of San Francisco. It’s far from big media markets and a paper of record for its far-flung geography. In print, it’s long been a little center of civilization, a community center. Online, it hasn’t, like most newspaper websites. The new initiative, partnered with gamification pioneer Bunchball, is an effort to apply old values on the new medium.

Take a look at the two-week-old new features page on Redding.com. Readers are invited to check it out with an invitation at the top of the home page: “Redding.com now recognizes users who contribute to the community. Explore the new features“.

It is prize- and recognition-based. “Badges recognize you for being a valued member of our local news community”. They can earn points a number of ways, including viewing stories or photos, sharing news on Facebook or Twitter, or commenting on a story. The more you participate, the more points you earn. Your points build on your profile page — your own place on the site, your “trophy case” — and allow you to compete for placement on Redding.com’s leaderboard.

Overall, the two- to three-week-old metrics are promising. Registration is up 35 percent and comments are up 19 percent. 7,600 users are in the game. (Redding.com’s top user has toted up 8,800 points already; profile here.) 16,200 comments have been rated “insightful.”

“We’re seeing some very strong movement in engagement — users commenting, marking other comments insightful, sharing our content, registering, opting in to email products and news alerts,” Lyons told me this week. “If these trends hold up, they give us a very strong foundation on which to build. The key to making this work so far, and potentially to building it out in the future, has been the Scripps development and user experience teams. They’ve been working deep in the code and templates so that the game dynamics are tightly intertwined with the full experience on the site, and they’ve created something that relies on our technology partner, but is really unique. It doesn’t feel bolted on, because it’s not. Strategically, that’s where we want to be.”

In addition to the civilizing effort, what are the newsonomics of game dynamics? More page views and greater audience data-for-targeting for advertisers, for starters. Engaged core customers who really make Redding.com a starting point, a center of their digital lives will be a great market to serve anything from daily deals to special services to new products, and possibly to charge for digital access (as Redding watches Scripps’ digital circulation initiative soon to be tested in Memphis.)

The Redding experiment is an intriguing one and good start. It forces us all to think about what community, community engagement and civil behavior should be in this digital age. Redding.com is emphasizing commenting out of the chute. That may be worthwhile — it’s high-minded to hope that insight can be rewarded — and we’ll watch eagerly to see how it succeeds.

But commenting, I think, is at best the tip of iceberg here. We really want to greatly re-engage local readers in community, engagement far beyond what was ever possible in print. That print newspaper was a wonderful community water cooler — with 50-percent-plus household penetration — but it was tough for readers to go beyond discussion.

Now we have the tools to do that. So let’s start to think about the kinds of additional engagement that game dynamics could incent, re-enforce and help build. We’re five years into thinking of readers (courtesy of Jay Rosen) as the people formerly known as the audience. Readers are a lot more than audience these days, but can we use habit-forming incentives to create new pro-news behaviors? For instance, what if news companies provided a wider array of incentives for help in:

• Crowdsourcing: Occasional news tips are great. What if community tipsters got points?
• City guide population: MediaNews’ new TapIn Bay Area tablet product is big into points as well, as it seeks to have readers help it build its next-generation city guide product. Newspapers have something of value to offer those who help populate city guides that Yelp doesn’t: digital (and/or print) subscription discounts, better daily deals and ad discounts for merchant contributors.
• Blog writing: Gamification can support pro-am community blogger outreach. “Pay” ongoing contributors with points.
• Buying stuff: Why not earn points by buying stuff from advertisers? It’s co-op, game-inflected capitalism for the 21st Century.
• Data crunching, visualizations: The Guardian and The New York Times, among others, are open-sourcing more of their code, inviting wider collaboration. Why not incent this behavior as well?
• Design: Build a better site section, a better app or a cool new product. Give major points — major benefits — to those who make major contributions.

For one great example of applying incentive techniques to business building, check out WSJ’s Andy Jordan’s Tech Journal video segment, “From Web Surfer to Successful Inventor.” It tells the story of New York invention start-up Quirky, “a social product development company,” a great tale unto itself. But catch this quote from Quirky’s 24-year-old CEO Ben Kaufman: “For literally centuries, it’s been really, really hard to make stuff. You needed access to capital. You needed to know the right people. You needed to be multi-disciplinary between design, engineering, manufacturing and retail, and you needed all these things to push one new product out into the world. We’re just not okay with that.”

So Quirky uses its widening community to refine dozens of products in invention. It incents contributors with something we all understand — money — and shows their small, but growing, receipts (based on the value they add to the products) in real-time on a website.

Creating new physical goods is in many ways harder, and different, than new digital news goods, but the thinking is immediately applicable. Are the rewards points, or badges, or money, or community standing? We don’t know yet, but there’s clearly a new ability to value readers — and for readers to value news/community centers.

That belief is increasingly shared. Scripps, along with MediaNews’ TapIn, is one of the leading-edge experiments here. Hearst and Morris are testing out gamification. Even The Economist tells me it is looking at testing game dynamics over the next year.

These game techniques are beginning to pervade our lives. They are used by media more widely, and by merchants of all kinds. Mike Earhart is vice president for marketing at Silicon Valley-based Bunchball, Scripps’ technology partner. The 40-employee company was into games “too early,” he says, before mobile ignited casual gaming. So it turned to helping established companies use game techniques. It counts 125 million unique visitors through its products, with those visitors executing 2.3 million “actions” a month.

Bunchball has worked with NBC (“The Office”), Bravo (“Top Chef”), Meredith National Media Group, and Wendy’s among others. Using game dynamics to jumpstart new business strategies may seem like a stretch — initially — for both marketers and media. Yet, says Earhart, it boils down to using the new techniques to answer an age-old question: “What are you trying to get your users to do?”

Here’s my take, below, and a link to others’ takes:

PICTURE the journalist in the new social era. She is twitching, nervous system all lit up by the pings and arrows of outrageous (and occasionally insightful) comment traversing across her screen every waking moment. After being forbidden to participate in the social universe only a few years ago, her employers have now made getting involved part of the job description. Tweet, make new friends, “link in”, for godsakes.

At this early point in the socialisation of news, our nervous systems are most affected. Evolution is only beginning to change our brains and our hearts, and to build new muscle. We’re learning how to crowdsource, how to use audiences to find stories and angles, how to detect trending topics that really help us decide what to report.

We are learning that we are not islands of wisdom and knowledge. As the old gates rust, the old gate-keeping mentality is disintegrating with it. We were arbiters of what our readers could read. A monopoly metro was not just commercial (and why do you think those high ad rates are so hard to match online?), it operated as a community monopoly mindset. Editorial page writers called it agenda-setting, but it was really deciding what was best for everyone.

Now that world is fast fading into history. I think the best metaphor for what is replacing it is this notion of circles, most lately appropriated by Google. Digital life works best when it augments our long-honed human habits in positive ways. We’re used to consulting circles of close buddies, some associates, a few family members and sometimes a wide group. We know what to share with whom and what we’re likely to get back. We’re now trying to recreate that in the digital world. Technology is helping, but is still clumsy; witness the unending invitations we all get to join this or that group.

Inevitably, journalism is getting socialised. It is really a model of shared governance, borrowed from other professional cultures. Power is not as absolute, and can be better informed. Yes, readers are becoming their own editors, as I pointed out in the first law of Newsonomics. But the role of the editor and the passionate journalist, in leading (whatever the popular trend of the day) remains just as vital a part of this new sharing. The Guardian’s steadfast leadership in the News Corp scandal is one great reminder of that.

Sure, there are some publishers who recognise the business value of cheap user-generated content, and are ready to dispatch professional journalists to their earlier and earlier retirement. I think that is a losing play. I believe that readers expect us to lead, and listen, and lead.

As important as how journalism is changed by socialisation is how socialisation is changing the business of newspapers. We already know, in talking to numerous publishers, that the social/news link is valuable. Those who track incoming links (Google vs Facebook vs Twitter) will tell you that social links convert better. More registrations. More pages read. More likelihood of becoming a new reader of the site. That’s testament to the power of social recommendation—ancient, village-spawned word of mouth exponentially multiplied in our time. Algorithms will help us master this social whirl, recreating communities and circles of readers, in part inspired by the integration of game dynamics into news sites that we already see developing. What now seems like social guesswork is becoming science, and it will drive the news business in distinctly new and better-informed directions.

That’s the dream that the MediaNews’ new made-for-the tablet, TapIn taps into. Potentially – and I cannot emphasize that word too much — it may become a prototypical product for the news industry, pointing a new way out of the hollowing-out landscape into which the news industry has meandered.

TapIn, which launches today (you’ll find it in the iTunes app store as an iPad app), is parent company MediaNews Group’s big play for the iPad, “a better version of Patch,” says MediaNews exec Steve Rossi.

Debuting in the Bay Area (where MediaNews is the largest daily publisher, and recently centralized its Bay Area titles, including the Mercury News, Contra Costa Times and Oakland Tribune, under a single editorial structure), it will launch in Los Angeles later in the summer. In fall, it will take flight in Denver, home of the MediaNews’ flagship Denver Post. It’s a fresh start, in thinking and in content presentation for a traditional newspaper company. It’s the combined brainchild, about nine months in the making of MediaNews digital leaders and of Tackable, a BayArea start-up, whose technology grows out user-generated photo aggregation, intending to become the “Twitter of photos,” according to Luke Stangel, CMO and a co-founder. (Good Q & A with Stangel, at CJR.org)

It’s a $4.99 a month product (after the free trial period, which carries into the summer) — and can be paid for in cash or in points earned through techniques strongly adapted from gaming companies.

When you open up TapIn Bay Area, it greets you pleasantly, colorfully and youthfully; it’s a visual product in three modes tilted toward a younger demographic than read newspapers, or newspaper readers aspirationally who would love to look young and vibrant again.

It’s a product that works on the metaphor of layers.

Browse through “on tap,” and you find photo/video feature stories and galleries.

“Explore” with the Bay Area map, pinching in or out and find the same photo/video features, located by geography.

“Find” maintains the large map, but taps into the potential power of newspaper editorial and commercial databases. Behind this screen is the real power of the interface. Choose from among above-the-map icons for features, deals, events, a business directory, movies, news and “gigs.”  You can open one, several or all of the icons simultaneously leading you to deeper into the product, by your neighborhood or region.

This is not your father’s replica or replica-plus product. Such text-centric replicas, done on the relative cheap by and for news companies are placeholders. They offer up the brand of the newspaper — and its re-purposed print/online content — but they embrace the promise of the tablet. They don’t delight. Delight, of course, is what newspaper city guide products have been after for 15 years. From Digital Cities to Real Cities, from Sidewalk to Zip 2′s Just Go, from the Washington Post’s Local Explorer to Zvents and OutsideIn’s appropriation of Google mapping, we’ve seen all kinds of attempts to both harness event-based information and to present it in useful ways.

What is TapIn? You can see Yelp or Kayak in it more than a newsprint legacy. In fact, my first reading says it works better for city guide/directory/doing stuff than for news itself.

“It’s as much a new media type as the website was for the newspaper. I don’t know how well it will play on the desktop,” says Jeff Herr, vice-president for digital for the California Newspaper Partnership, which publishes 34 dailies and 50 weeklies in the region. MediaNews drives CNP, which includes Gannett and Stephens Media holdings as well. ” We’ve set up a product platform.”

That indeed seems to be the best word for it. I’ve plumbed around the prototype. As with any early product, there are a few head-scratchers and missed linkages, lots of questions of depth and breadth, but overall I can see how the product could become a daily point of usage. That would make it stand out from the first 15 years of newspaper-company websites.

I’ll point to four characteristics of TapIn that distinguish it:

• Tablet native product: Largely, it’s not starting with the website and porting it over, though its news pages look too mercurynews.com for me,  complete with small ads. It’s highly visual, interactive and has, at best, a feel of Flipboard about some of its presentation. Remember all the pub Rupert’s The Daily got, a few months ago. That’s greatly attributable to it being made-for-the-tablet. This is the first, big regional news initiative made for the tablet.
• Commercial platform: TapIn begins to change the marketplace dynamic. Website advertising has been a dud for most local newspaper companies, returning low ad rates on display ads, while offering some ability to “digitize classifieds”; the whole newspaper industry takes in $3 billion annually in digital advertising, compared to the $20 billion+ it has annually lost in print. TapIn’s immediate commercial play can best seen in its deals — GotDailyDeals.com is MediaNews’ Groupon-like play here — giving those deals their own button and making them geo-findable. Its interstitials — in photo/video galleries — offer the kind of tablet immersiveness that advertisers are starting to test. At best, TapIn can support the new regional digital agencies initiatives, undertaken by many local newspaper companies (“The Newsonomics of Eight PerCent Reach,”), from selling SEO to SEM to couponing to display to social. I also talked with Herr about all kinds of e-commerce revenue share possibilities, from movie ticketing to Open Table to StubHub, and he acknowledges the platform is well set up to take advantage of those and many more. Curiously, there are no classifieds in the launch product; the issues of tech integration, there, are numerous.
• The incorporation of game dynamics: For Herr — and increasingly the mantra heard newly throughout the digital news industry — it’s all about engagement. Engagement, we’ve learned, means going well beyond presenting news. So TapIn customers will be able to earn points for everything from commenting on stories to posting photos to reviewing restaurants to sharing TapIn with friends. In fact, the prominent Gigs button — a centerpiece of the Tackable photo product play — allows editors to ask for specific user-gen coverage of community events. As TapIn users engage, they gain points, points that are currency and can be used to pay for the TapIn subscription.
• Syndicatable, networkable platform: In addition to rapidly rolling out the platform through MediaNews, the company is already in talks with a couple of other newspaper chains, about licensing the technology. For companies looking for a next-gen tablet play, it will be attractive — assuming reader and ad results tell an early, good story.

All that said, TapIn has a long way to go to be commercially successful, a point which Jeff Herr, a leading digital innovator, understands.

First, it must port in lots of content. It offers a movies button, but no trailers, ticketing or professional reviews (local or Rottten Tomatoes-aggregated). It has restaurant listings, business directory-like, but no reservation functionality nor built-in reviews. It lacks the utter usefulness of a Yelp, which, especially in the Bay Area, is a bible for local finds, and avoids. Newspapers first thought one of their key competitive advantages was their restaurant and movie reviews, for instance. Having failed to win the local wars with that ammunition, many are now just starting over, fresh, seeking user-gen reviews; my sense remains that combining the two, Pro and Am, still offers the most reader value. Starting “fresh” sounds appealing, but in 2011, the product starts out far behind Yelp, Open Table, Angie’s List, Rotten Tomatoes and many others for reader comment and in utility.

I do think the tablet can spawn a new digital marketplace, quite distinct from the print newspaper, the online newspaper site or the patchwork of Google/Amazon/Yahoo commerce of today. As a location-based commercial center, allowing me to personalize and customize (potentially coming, says Jeff Herr), it holds lots of consumer promise — and of several new revenue streams. Putting a $60 a year price on it will be counterproductive to creating, quickly, that marketplace. (Putting a price on news — the whole digital circulation debate — does make sense to me, but more as a bundled print/digital play.)

Which gets me to my final point, for now, on TapIn: It does work that well, yet, as a news vehicle. Its news mapping is clearly a work in progress. It’s hard to both give a sense of the most important regional news, and let readers zoom in on the dozens of more local stories with relevance to them. The connections so far in place don’t do that well, and I’m not sure the tablet real estate works effectively for a region as large as the Bay Area, with its population of seven million.