But are those readers, once again, ahead of publishers? Behind the scenes, I see increasing urgency among daily news publishers to get their products on the tablet, though the movement is less urgent and less creative than it needs to be. For the moment, though, put aside product and platform issues. Let’s consider something more basic: knowing customers.

After all this is the age that marketers are beginning to know everything instantly about us, their customers. Whether it is marketers tracking each breadcrumb of our digital lives (good, two-parter by Marketplace’s Stacey Vanek Smith) or giant vending machines looking at us (and determining age and gender) as we look at them, this is the age of customer identification, assessment, and, ultimately, satisfaction.

So against that backdrop, let me offer a cautionary tale about the newspaper industry’s readiness.

It’s just a little driveway story, but we can connect it directly to the digital age.

We recently moved to the Santa Cruz area, from San Jose. I may be print-to-digital news analyst, but I’m still a baby boomer, one eye on each world of print and online. So I wanted to get the local paper delivered.

I had called the Mercury News to cancel our San Jose subscription several months back and was surprised that no attempt was made to offer me the Santa Cruz Sentinel, the main daily in my new hometown, though both papers are owned by MediaNews. That was curious, but unsurprising from what I’d remembered of circulation operations back in the days when I was in the newsroom.

Then, one Sunday ago, I ran into a Sentinel booth at a local free jazz fair in the park. The retiree from North Carolina manning the booth wasn’t exactly doing a brisk business, so I sauntered over. We had a nice conversation; he gave me his Carolina-informed tout on who had the best BBQ at the adjacent food booths. I asked him for the best deal he could give me, exchanged a credit card, getting a little discount for two months.

“When will I get my first issue?” I asked.

“Around Wednesday.”

The “around” part would seem odd for most other purchases, but given what I knew about newspaper delivery, didn’t give me pause.

Wednesday, Thursday and Friday came and went with no paper delivered. On Saturday, with no delivery, I called “Subscriber Services,” finding the number on the website, since the “Santa Cruz Sentinel Subscription Order Form,” I’d been given at the fair contained all my personal information, but none about the Sentinel.

I told the customer rep the problem.

“What’s your address?,” he asked, reminding me that newspapers have long identified customers by address rather than name. That may be okay if you’re in the UPS business, making occasional deliveries, but when your customer is an ongoing, daily one, that’s an odd way to i.d. them.

“You’re in the system,” the customer rep told me. I waited a couple of seconds expecting him to say what that meant and that I would be receiving what I paid for, but didn’t hear anything but dead air. I explained that being “in the system” wasn’t what I paid for, getting the newspaper delivered was.

“Well the carrier probably didn’t see it [the new subscription],” he said. “This happens quite often. The carrier has eight papers, and didn’t see it. When we do it a second time, it usually works. If you don’t get it tomorrow, call us.”

Sunday arrived and no paper.

I called back and got a rep who made the first seem almost sympathetic.

“I’ll send the message to the carrier’s manager, and see if that works,” he said tonelessly. “I’ll send it to them.” Ah, the elusive “them.”

Who is the carrier’s manager? Wasn’t I calling — and had paid — the Sentinel?

“It’s an outside distribution company. We don’t have any control of it. I’ll send another message.”

Neither rep offered a “sorry,” and I had to ask for a “credit” both times. Monday, my paper arrived, but on Tuesday, it didn’t. Wednesday, it did. I know the Detroit papers have gone to a three-day-a-week home delivery schedule, so maybe the Sentinel was innovating a new alternate-day strategy.

This little snafu, which isn’t unique to my new hometown daily, has new meaning for the world we’re entering.

In the old world, identifying customers by address didn’t work very well, given that something like 20% of the populace changes address every year. Many newspaper companies, to be sure, have been upgrading their circulation management systems over the years, though, from what I hear, that’s still a work in progress at some.

In this new era of tablet reading, consider the new importance of identifying and knowing customers. Publishers that are ahead of the curve — like the Financial Times — and those that are scurrying to get to the curve, including the New York Times (which will launch its paid metering system early next year) know that customer i.d. is a newly urgent business necessity.

Why? As consumers, we’re expecting that if we’re going to pay a publisher for the privilege of reading their content, we’d better not get nickel-and-dimed along the way. Charge me for the paper, and for the website, and for my iPhone, and for my iPad?

That’s not going to play. Sure, offer me the chance to buy access on one particular device, if that suits my lifestyle, but make sure I’ve got a chance to send you one billpay payment and get what I call “all-access.” In fact, beyond a single price, I’d like my news provider to know which articles I’ve read and shared (and with whom) across platforms (old, dumb print excepted, of course).

The Times and others are working on that system. That work, though, isn’t trivial, given newspapers’ legacy systems of delivering tree pulp to driveways. Though not trivial, it’s fundamental to a business strategy that migrates loyal print readers to paying, digital readers. It’s a problem that must be solved, and my recent run-in with the forces of circulation makes me wonder aloud: Are newspaper companies at all ready for prime-time of tablet news-reading world?

It is a head-turner, which seems to be, at first, an only-in-Utah story. The Deseret Morning News, KSL TV, and KSL Radio, all owned by one company, the Deseret Management Co., a for-profit arm of the Church of Latter-Day Saints, are combining operations.

One headline: “Salt Lake City paper axes 43% of its staff”.

Another: “Deseret News a model of growth and innovation for the entire industry”.

One’s a fact; the other is aspirational.

Remove the religious subtext, for a moment, and I believe we see a model that will appear ordinary in many American cities, within a few years. Think about it. If we as readers, viewers and listeners want words, photographs, videos, and audio, and expect it to be served up in an easy-to-use, relevant-to-me way, then why would the companies that produce news in those various forms be separate?

They’re separate, of course, because those words/picture/audio used to be called newspapers/magazines, network and cable TV and radio broadcasters. Those words, though, describe the old world, those packages the content came wrapped in. In our digital world, we’re seeing delivery blur through the Internet. And, that inevitably, and now more quickly, means that single companies will produce words, pictures and sound — and they’ll find ways to do it more cheaply and efficiently.

If you own the Salt Lake properties, or if you’re Tribune and own the Chicago Tribune, WGN-TV and WGN radio, you practically have a fiduciary responsibility to rearrange assets that will make the company more efficient. If you own a broadcast station or a newspaper, you can more easily see the rationale in buying or combining with the other, to meet customer (reader/viewer and advertiser) demands of the coming age.

So the Salt Lake Experiment joins TBD’s (“10 Reasons to Watch TBD“) in putting together the text and video pieces. They are the next generation in this attempt to make convergence work. Call it News Convergence 2.0, with Tampa’s Tribune/WFLA experiment the best poster child for 1.0. How well the Deseret operation (or TBD) executes is, of course, the key. Journalism isn’t about white-board theories, in any era; it’s about getting the news gathered, analyzed, and distributed to readers, and doing it better than the competition.

Let’s look at the newsonomics of the Deseret decision, though. The numbers in play are curious ones, as Deseret News President and CEO Clark Gilbert lays out a “less is more” theme in the major restructuring of his company. In fact, let’s use the more and less theme to gauge the moving pieces of the new business model.

• Less is More: Take that “43%” headline. The legacy news staff of the Deseret News has indeed been cut 43 percent — 85 jobs, including those of the editor and publisher of the paper. That number includes both full-time and part-time positions. So we’d expect a lot less coverage, right? With a bit of frustration in his voice, Deseret News President and CEO Clark Gilbert tells me bluntly “That’s an Old Media world view. We have access to more journalists, hyperlocal contributors, national sports figures than ever before.” His point, and his plan: The combined operations of the remaining Deseret News staff and the sister news staffs at KSL TV and radio will operate smarter and more efficiently.“Say there’s a story on Capitol Hill [in Salt Lake City]. Right now, the paper sends a reporter and a photographer and KSL sends a reporter and videographer. That’s four people, and that story may end up on B3,” says Gilbert. “Now we’ll send one.”So, step one: “Reduce duplication.”

  So the news math changes dramatically. The new staff of something more than 200 (Gilbert is being cagey about the number) will be expected to multitask, with remaining staffers increasingly cross-trained and “new employees expected to have those skills.” Do the math. If it took four people to do a story and now it takes only one, you can afford to jettison one of those positions and get more productivity out of the other two.

  Step two: “Deepen coverage,” meaning the re-allocating of resources to cover issues most important to the readers. Gilbert says that about half of the remaining news staffers will serve in the “integrated newsroom,” with the remainder staying in more traditional journalistic roles. In that integrated newsroom of roughly a hundred, a third will serve as first responders/rewrite and two-thirds as field reporters. “You’re sandwiching the reporters between first responders [getting to news and getting it out quickly] and rewrite [those taking the reporters work and purposing it for various platforms],” explains Gilbert. Those who first-respond also do rewrite — so that’s going to be a busy staff.

  The journalistic question: How do the new stories compare to the old ones?

• More Costs Less: Borrowing basic notions of getting cheap and free content from the Huffington Post and Demand Media, Gilbert is putting into action what he has long preached in academic and consulting circles. I’ve called this emerging time the Age of Cheap Content. That principle means that the new Deseret operation will leverage bigger-name writers (especially those consistent with its Mormon roots and values, like former BYU football star and current Philadelphia sports anchor Vai Sikahema) for little financial compensation. That’s the HuffPo model. And they’ll leverage Salt Lake and Utah reporters to address both topical and hyperlocal coverage, through the new Deseret Connect. That’s the Demand side of the idea, bringing together a large database of qualified writers — “not random bloggers,” says Gilbert — and keeping their payments low or non-existent. “Some of the best don’t write for money.”Deseret Connect already has received more than 100 applications, and Gilbert says he can see it scaling to a thousand or more contributors within the year, using management system techniques developed outside the news industry for BYU/Idaho faculty.Gilbert says the non-pros will work on a path from generalists to columnists to doing editorial features, with pay increasing along that continuum — though he’s clear to point out that people doing the writing won’t be looking to the company “as their main source of income.”

  So, looking at cost per content unit — a Demand-like analytic — the new company will be able to house lots more content under its brand, at a far lower cost point.

• More Beats Less: The Deseret play aims to bring together text stories and blogs, video, and audio. That supposes that readers want all kinds of coverage brought together for them. It’s a bet that products that converge video and stories for readers will beat the competition, competition like MediaNews’ Salt Lake Tribune, the biggest non-church-owned news presence in the state. One big question here: How will the customer experience be converged? In Washington, two ongoing TV stations folded their websites into the new TBD at launch. How separate and how unified will the DeseretNews.com and KSL.com sites be?

• More is More: The new Deseret operation doesn’t just focus on geography — Utah’s more than 700,000 households. It’s taking a twin approach to being a general interest news site — and a new worldwide voice for the Mormon faithful of 13 million or so worldwide. In the company’s strategy, that’s described as a values-oriented approach, and you can already read that six-point values mantra widely. The six: “the family, financial responsibility, excellence in education, care for the needy, values in the media, faith in the community.” They make for a strong philosophy, but in marketing, that’s quite a straddle — one that may be difficult to pull off, especially as Salt Lake City itself has become majority non-Mormon.

The economics of it are clear, though. Pay (or don’t) to get a story written or a video shot once, and then distribute it many times over. It’s basic Internet economics, with a nichy, religious angle, one of many variations we’ll soon be seeing on these increasingly popular themes.

Start with several cups full of daily newspaper and broadcast types. Take a teaspoon of the Christian Science Monitor. Add in a dash of HuffPo spice. Ladle a tablespoon of Demand Media into the mix. Borrow ingredients from two Washington D.C. news companies, the 143-year-old Washington Post and the one-month-old TBD.com. Now, into the hyperchange of late 2010, let it shred, dice, slice, puree, whir and, finally, blend.

That, in short, looks to be the new recipe in Salt Lake City. There, today, the Deseret News pulled together many of the innovations of the day in the news business and redefined the company, its workforce and its products in one sweeping move.

The immediate news that caught the attention of the news world: The Deseret News — one of two dailies in the market, in a joint operating agreement (shared business operations) with the MediaNews-owned Tribune — is cutting 43% of its newsroom, or 57 full-time and 28 part-time employees. That’s big news in and of itself, but in this case, only part of a much larger story.

We have to look at the Deseret News announcement in the context of another, USA Today’s (“It’s (About) Time for the Next Re-Invention“) last Friday. The news business is now blowing itself up, claiming radical reinvention, acknowledging that experimentation around the edges won’t get the job done.

Won’t the cuts mean lots less news coverage?

“That’s an Old Media world view,” Deseret News President and CEO Clark Gilbert told me today. “We have access to more journalists, hyperlocal contributors, national sports figures than ever before.”

I first met Gilbert in the mid-’90s, when, as a Harvard prof, he talked to Knight Ridder editors and publishers about creative disruption, the then-vaguely academic-seeming phenomenon that would wreak havoc in the news business. Gilbert got the opportunity to apply his intellectual mettle to the pedal of news management when he assumed his job in Salt Lake City a year ago. Among advisors on his board is Clayton Christensen, the oft-quoted and but-too-little-applied author of “The Innovator’s Dilemma,” and “The Innovator’s Description.” Newspaper company CEOs long discussed his work, but their companies have become textbook examples of what he preached, making moves that were too little, too late to meet the challenge of epochal disruption.

So let’s take a quick tour of the new Deseret recipe:

• Start with several cups full of daily newspaper and broadcast types. The newspaper had about 200 staff positions. Now, the newspaper staff and the news staffs of KSL TV and KSL Radio, all owned by Deseret Management Co., a for-profit business arm of the Mormon Church, are part of a single, combined media company. Gilbert says the new size of the combined staff is “north of 200,” but doesn’t want to disclose the actual number, given competitive concerns. Also tossed into the mixer is the company’s digital team, which has been working across print and broadcast for the past year.
• Take a teaspoon of the Christian Science Monitor. The Monitor has long served as a example of a religiously based journalistic organization, one that applied its otherworldly beliefs to the here and now. The new Deseret plan takes that idea, and intends to feed it the rocket juice of digital age, allowing its “values-based” journalism to carry to every corner of the earth, via the Internet. In fact, Gilbert lays out six values — the family, financial responsibility, excellence in education, care for the needy, values in the media, faith in the community –  that the journalism the company will now focus on, and the word “values” pops up repeatedly both as “mission” and strategy. People in Salt Lake — now a majority non-LDS community — will tell you (KUER’s “The Future of Utah Journalism,”) that the Deseret News has long had one foot in the church camp and one foot in traditional daily journalism, tilting one way or the other, depending on the story, the editor and the pressures of the day. Now, it appears, the company is unambiguously grasping its faith, injecting into the very fiber of its news operations. Mark Willes (yes, the former publisher of the Los Angeles Times, of the pre-Zell, Staples Center ad debacle period), has headed the parent Deseret Management Company since February, 2009, bringing in the values-based media strategy. Willes brought in Gilbert, the intellectual yin to Willes yang. Gilbert has brought in Christensen, among other national advisors. All three — Willes, Gilbert and Christensen — share the Mormon faith.
  
• Add in a dash of HuffPo spice. Vai Sikahema, sports director and anchor for NBC10 Philadelphia, host of the “Vai & Gonzo Show” on ESPN Philadelphia Radio and “Tongan Warrior”, is prototypical of the kind of high-profile writer that is an increasingly part of the new Deseret mix. That’s a page borrowed from the Huffington Post: get high-profile celebrities, who will write for nothing and bring their fans with them. Gilbert says you can expect many more Sikahemas, drawn from around the world.
• Ladle a tablespoon of Demand Media into the mix. Deseret Connect is the new take on Demand’s Pro-Am business model. Already, Gilbert says the company has received more than 100 applications for the new user-gen service. “It won’t be their main source of income,” says Gilbert. The company is seeking “high-quality people, who fit the values and will be edited,” to write about its key topics. How many?: Maybe as many as a thousand within a year.
  
• Borrow ingredients from two Washington D.C. news companies, the 143-year-old Washington Post and the one-month-old TBD.com. From the Post, Gilbert takes the ability to be two things, simultaneously, a worldwide political news leader and a company plying the waters of hyperlocal; he believes that in the digital age, you can difference faces for differing audiences. In this case, you can be both a worldwide Mormon vertical — serving a potential readership among 13 million co-religionists — and the newspaper of Salt Lake’s and Utah’s smaller communities.

Deseret clearly is following the same path as the brand-new TBD, as well, pooling text, video and audio skills. In reorganizing those skills sets, Gilbert is injecting a newly named staff of Rewrite/First Responders. That group, maybe a third of the new “integrated newsroom” of about 100, will work on both sides of the “field reporters.” The Rewrite/First Responders staff comes from a diverse digital/broadcast/wire background, and they form the hub expected to produce the kind of content in the best form (story, post, video segment, podcast) through the news day. In the moving arithmetic, it’s important to note that only about half of the combined newspaper and broadcast staffs move into the “integrated” operation. The others — roughly another 100 or so — stay in more traditional (“enterprise, investigative”) roles. Out of these moves, and through greater use of cross-trained (video-shooting reporters, text-writing photographers), Gilbert aims to reduce duplication of staff and focus more resources — Pro and Am — on stories deserving greater coverage.

The overall new math: “Our net news coverage goes up.”

• Shred, dice, slice, puree, whir and, finally, blend. And it’s all something of a blur, especially the view from outside the unique culture of Utah.  The deep talk of values and mission is enough to give an old newsie hives, and we’ll all have to watch to see how much “news” coverage is skewed by religious beliefs. In addition, though, the Deseret media company is a creation that immediately emerges as a new multi-media, multi-platform, Pro-Am- hugging, cost-cutting model. New NAA chairman Mark Contreras, a Scripps senior vice-president, was quick to laud it as one to watch: “The Deseret News team has showed courageous leadership, not just to make the difficult decisions around costs, but to define a broader and more digitally-focused future”. With the USA Today and Deseret announcements of the past five days, expect 2011 to be a year of fire-breathing change.

This week, we see a notable project, harnessing the power of a local network to do — journalism.

With the deep recession making homelessness a widespread and enduring phenomenon, the Seattle Times, worked with seven local blogs (West Seattle Blog http://westseattleblog.com/blog/, Beacon Hill Blog http://beaconhill.seattle.wa.us, My Edmonds News http://myedmondsnews.com/, Seattle Local Health Guide http://localhealthguideonline.com/, Rainier Valley Post http://www.rainiervalleypost.com/, Mercer Island – Surrounded By Water http://mercerislandblogger.wordpress.com/ and Aurora | Seattle http://www.auroraseattle.com/).

The notion: to put a more intimate face on the problem. Take a look the project of 10 stories, 6 videos and more than 75 photographs, “Invisible Families: The Homeless You Don’t See” and you do get a different kind of appreciation of the issue. The blogs’ postings vary in journalistic quality, and add a grassrootsy dimension to metro paper coverage. A great model for others to test.

In LA, the Times has drawn criticism for lending its nameplate to advertisers while in Washington, the Post lost a blogger who violated its uncertain guidelines. Welcome to the new pressures — and opportunities — of news brand management.

Important Details: For centuries, newspapers have acted on their birthright to call out the excesses, foibles and miscues of government. In Los Angeles last week, the tables were turned.

All five members of the Los Angeles County Board of Supervisors  formally censured the Los Angeles Times for running a four-page ad for Universal Studio’s King Kong attraction, an ad section that carried the nameplate of the Times across its front and wrapped around the Times’ LATExtra, the newspaper’s breaking news section.  The elected officials’ protest letter was addressed to Sam Zell, chairman of the Tribune Company, which is now in its 17th month of bankruptcy, with a vote by creditors on the latest reorganization plan due on August 6th.

The protest letter didn’t mince words, urging the Times “stop selling its front pages to advertisers, especially in such an offensive and alarming manner. The cost of this distasteful practice to the people of Los Angeles County is far greater than any short-term gains by the Tribune Company….Today’s mock section makes a mockery of the paper’s mission.”

Times Publisher Eddy Hartenstein responded by article the evening of the protest, saying, “The Universal Studios Hollywood ad wrapping Thursday’s LATExtra section met our advertising guidelines, including a large, red ‘advertisement’ notification on top of the page.  Our readers understand the ad-supported economic model of our business, which allows us to provide the outstanding journalism they rely upon 24/7.”

Meanwhile, across the country, the Washington Post struggled with a brand problem of a different kind, as editor Marcus Brauchli quickly accepted the resignation of Dave Weigel, a Post staff blogger of three month’s tenure, whose private online comments about some members of the country’s conservative movement — the beat he’d covered for the Post — became public.

Post ombudsman Andrew Alexander, after talking to a number of staffers at the Post, concluded that standards were vague: “Like readers, some in The Post’s newsroom are perplexed. Internal guidelines say reporters should not “offer personal opinions on a blog in a way that would not be acceptable in the newspaper.” But they also are encouraged to blog with attitude and “voice,” which seems incompatible with neutrality”.

Implications: Welcome to brand management — quite unfamiliar terrain traditionally for newspaper companies — in the age of blurring boundaries. Many large companies consciously focus on brand management, its protection, its meaning and its extension as a key part of business strategy and operations. For newspaper companies, it’s traditionally been more of an unexamined given. The brand, exemplified by that old Black Letter type nameplate, has implied a commitment to public and community service, to being fair, to getting it right, and avoiding any perception of influence by the powerful, whether public official, company CEO or advertiser.

That long-standing position is now threatened by several forces, and Outsell believes the news industry’s mettle is being tested, as it is forced to address what news brands really mean in the digital age.

When the Fourth Estate is criticized by one of the first three, it’s a reversal of form, one made possible by the declining financial and political clout of newspapers, particularly metro newspapers. Weakened, newspapers both leave themselves open to attack — and to doing foolish things that trifle with the continuing value of their legendary brands. The LA Times, back to the Staples Center ad debacle of 1999 through the innovative ups and downs of the Zell era, has seen more than its share of controversy, but it’s far from alone. All newspaper companies face unprecedented pressures to blur the lines, as ad revenue becomes harder and harder to get.

Outsell believes that in the coming digital decade, news brand management will become more important than ever. Since the internet age dawned, news publishers have thought of the print product and the dot.com. Now in the age of the smartphone, iPad and TVs becoming monitors, those news brands that endure and prosper will be ones that master ubiquity. That means that those brands, merrily crossing and re-crossing platforms, become even more important identifiers, stamps of recognition — and one would hope, trust — as digital ubiquity both complicates and simplifies our information worlds.

Finally, Outsell believes that the re-envisioning of news brand is essential. Take the Post’s contretemps. The Post’s instinct in hiring Weigel to bring a fresh voice to conservative movement coverage was on the money. It extended the Post’s franchise, putting more valuable-to-the-reader content under its brand. In its seemingly contradictory directions to its staff, the Post displayed its uncertain footing in the new terrain, an uncertainty shared almost universally in the trade. As Kate Phillips pointed out in a New York Time blog post, Weigel could have gotten a lesser penalty and continued to add value to the Post. Instead, faced with an affront to its credibility, the Post made an either/or decision and his work was gone.

There is a middle way, and it is fast emerging among newspaper companies. It’s the big tent approach to amassing more valuable-to-readers content under a community news brand — and at lower cost. Down the street from the Post, its new competition, TBD.com, formally launching in the fall, has already signed up 82 local blogs for its TBD Community Network, and daily newspaper brethren from the Seattle Times to the Miami Herald to several Hearst papers are taking a similar approach. It’s possible to aggregate lots of useful news and opinion content, at pricepoints from low to high, and let readers know that the content is coming from partner sites — not from the newspaper itself. Readers are smart, and with a clear news site disclosure, they’ll be more flexible about differing standards of staff and non-staff content.

The Austin-based news site, along with California Watch, are creating models indicative of the future of journalism.

Important Details: In the fall of 2009, Texas Tribune was a promising idea. Nine months after its launch, it’s a fledgling success. To date, the $4 million privately funded non-profit start-up has:

• Built a substantial audience: The site reached the level of 240,000 unique visitors this month, with more than three million page views, well ahead of its 2010 goals already.
• Set up partnerships with major media throughout the state: The Tribune’s work has been published in the state’s major publishers, including the Houston Chronicle and the San Antonio News-Express. KUT, Austin’s NPR affiliate, decided on a partnership with the Tribune before the site launched. It has now “embedded” a reporter with the Tribune. That reporter reports both for KUT on air and writes for the Tribune; the Tribune then pays KUT for time taken away from radio duties, which the station uses to pay for other political reporting. “They shared our values. We know the principles,” KUT General Manager Stewart Vanderbilt told Outsell. That embedding may have wider significance as KUT plans its own local news push in early 2011, following the lead of numerous public radio stations across the country.
• Persuaded about 1700 people to become members of the site: at a price point averaging about $100
• Signed up more than 100 corporate sponsors: each pays at least $2500 annually
  
• Produced solid journalism in key areas of public policy: this includes such current hot-button topics as health care, transportation, education, immigration, energy and the environment. The site employs 24 people, half of them journalists.
  

Evan Smith, who serves as CEO and editor-in-chief, makes the case that a focus on statewide news coverage is one of the major areas impacted by the cutback in the daily journalism workforce — and he makes the connection between under-reporting and low civic engagement of the populace. On a macro level, he points to the roll-up budgets of the 50 US states ($1.4 trillion) and compares it to Congress’ “discretionary spending” ($1.04 trillion). He then points to Texas’ own budget of $72.8 billion and the fact that Texas ranks 43rd in voter turnout.

Against that backdrop, he says that Texas state government press corps, based in Austin, is half the size it was 20 years ago.

Funding is about building a wide base,  Smith tells Outsell. “We’ve gotten AT&T, JP Morgan and a lawyer who puts out a shingle on Congress Avenue” to join up. Smith says his aim is a funding model built on thirds, a third each from membership, corporate sponsorships and earned income. The latter category incudes advertising and event programming. Already, the Tribune has broken out of the box with community-reaching programs including “Texas Tribune Conversations,” “The Texas Tribune College Tour,” “the Texas Tribune Ideas Festival,” and “Texas Tribune Sponsored Events.” In so doing, the Tribune has made a relatively big splash in a big ocean.

Implications: Outsell believes the regional news start-up model has numerous lessons for the trade. It’s clear there’s an appetite and a market for aggressive regional reporting. Texas Tribune joins California Watch, a project of the Berkeley (Ca.)-based Center for Investigative Reporting, in taking a new approach to statewide issues, and tackling them with a small, but strong and passionate, staff of experienced reporters.

Clearly, this model works best, and most easily, in big states like Texas and California. We’d have to believe though that the principles, if not the scale, are widely applicable across the US and in other nations as well.

It’s important for traditional publishers to see what these sites have and haven’t done. They haven’t reinvented the wheel, but they’ve rounded it differently. Statewide and regional issues reporting has long been a mainstay of strong, metro papers. Most of them are still doing that reporting, but less of it while the public policy issues of the states and the wider society multiply. One “secret” of the Texas Tribunes and the California Watches is the singular focus they bring to their reporting. As start-ups with newer foundation funding giving them the belief they are at the beginning of something, they’re taking a spirited approach to the issues before them.

The Tribune’s numerous outreach programs bear study as well; it is boldly and publicly taking its news mission to the public.

Outsell believes that dailies — and TV stations as well as the ethnic press — have been smart to partner with these regional news operations. On a simple economic basis, they are now able to buy “outsourced” high-quality journalism at way-below-market prices, with the Tribune in fact making its stories freely available, while California Watch charges a nominal sum. That’s a no-brainer.

Beyond that simple economic transaction, dailies can also learn the new, digitally enhanced value of statewide news sharing, and of an emerging syndication market for any good journalism created that transcends city limits. This innovation also poses a challenge and an opportunity for the Associated Press. With its long presence in statewide reporting, it’s got to assess these start-ups as to how they affect its operations and business models, and that reassessment could help both AP and its member dailies.

“It’s the legacy crap,” one veteran with feet in both camps told me. “Instead of burning it down and starting all over, they just experiment.”

“Patch expects to be the largest hirer of full-time journalists in the U.S. this year,” says the AOL release.

Let’s put this Patch push into perspective. About 400 new sites, spread out across the country. Five hundred new journalists being hired. Let’s remember, though, that this is one journalist per community, communities that range in size from 10,000 to 80,000 people. One journalist per community.

The fact that Patch is getting such recognition, and discussion, is another indicator of how thoroughly journalism has fallen on hard times. The announcement of the hiring of a single journalist in a single community? That was the stuff of internal newsroom memos not too long ago. It’s as if the news industry is struggling to rebuild itself, cell by cell, just as researchers are figuring out how humans themselves can regenerate lost limbs and organs.

Still, we should take the news as good news. The more journalism, the better — especially if it can be sustained. Now-independent AOL, though, is a profit-seeking company, at the moment chastened a bit by its just-released quarterly earnings report. Patch has lots of promise, but it will have a tough slog to profitability, as mano-a-mano battle for local ad dollars only intensifies.

As we parse the Patch news, here are a beginning nine questions about the initiative:

1) If this is a big national, hyperlocal play, is that oxymoronic or does scale really help? It seems to me that scale is a plus in a couple of ways: 1) national ad sales (witness the Pepsi Refresh campaign running across the current sites) and 2) technology costs, with one centralized production and presentation system, one that should be able to get to market quicker with tech innovations. In two important ways, though, scale will be of a lot less help — and these are core to the site’s promise and success: 1) local content production and 2) local ad sales. Patch, with its organizational structure, will get some efficiency boost through regionalized ad selling and some content sharing (as sites with a common school district may combine coverage, for instance). In the main, though, the hard work of gathering local news and selling local merchants isn’t greatly helped by the national brand.

2) How do I parse the Patch taxonomy? Okay, you’ve got your sites. Each one covers a geographical area with some identity, with the sweet spot of population somewhere between 40,000 and 75,000 — large enough to be an audience/market, yet small enough not to be an anonymous “metro” area. (That’s the same size as Backfence’s Mark Potts averred in the first hyperlocal go-round.) Each site has an editor, and Patch recently decided to add a 13th editor to each cluster, for back-up.  Each editor has a freelance budget equivalent to about one FTE, more or less, depending on the geography, and will pay stringers to extend what that single editor can do.

Then, you’ve got 12 sites per cluster, each cluster headed by a regional editor and regional ad/marketing manager. Expect between a dozen and two dozen ad sellers per cluster, as they try to divvy up territories to take advantage of their overlap in communities.

Then, you’ve got a block, which is two clusters. Those blocks then roll up to four editorial directors and four sales directors, who divide the country into sections, reporting back up to Patch HQ.

3) So who’s the ad competition? Maybe we should ask, who isn’t? Most importantly, in going after ad dollars, it’s a free-for-all. With Borrell Associates 2011 projection of $16 billion in 2011 local online advertising the mantra many companies repeat, the competition is intense. McClatchy is saying it is taking in $2.5 million annually in hyperlocal ads, Gannett is moving more aggressively through GannettLocal and, its recent broadcast site partnership with DataSphere and every other newspaper company sees that local merchant future. The question is how well they’ll execute on the emerging vision. Then, there are local broadcasters in general and Yellow Pages companies knowing that printed behemoths tossed on our doorsteps are endangered species. The target of all these legacy companies: SMB, the millions of small- and medium-sized businesses they used to largely ignore, but which now must be romanced with digital dreams, as bigger-money advertisers make bigger and earlier moves digital.

But, wait, that’s just the old companies.

Then, there’s Examiner.com, which has been replicating its own sites, on its national templates, served by national advertising.

It’s not 2005 anymore, so now we can dozens of local bloggers, independent sorts, scratching for their own livings, from veteran BaristaNet to sites everywhere. Most of these sites are out there selling ads and/or sponsorships. And now, there are ad networks forming. Consider the Miami Herald’s ad network around its partnership with local bloggers and the new TBD’s Community Network, a local blogger ad network out of the chute. (Newsonomics: “10 Reasons to Watch TBD“). GrowthSpur is working with TBD and others to train blog ad pitchers. Then there’s BlogAds and Addiply, among many other newer hyperlocal ad plays.

Soon, the neighborhood florist will have to wear a flak jacket, just to ward off the dozen “hyperlocal” sales guys and gals, all rediscovering the joys of local — at the same time.

But, wait, here’s the real payoff, for those that can wait: Mobile advertising and marketing. Again, the Borrell number is causing mass salivation, and I’d bet it’s whetting the appetites of the AOL Board as they swallow the investment in Patch. Local mobile ads, which fetched $285 million last year, are projected to bring in $4.7 billion in four years (2014). (Interesting fact: At the moment, Patch, unlike TBD, has no smartphone apps ready for its sites. )

4) Who’s the news competition? Same players, more or less. In fact, we may begin to believe that some local communities will soon be better covered by journalists (though metro coverage still suffers) in this digital age than they were in the analog one.

Examiner, with those hundreds of templated local sites, displays a growth trajectory a year ahead of Patch’s — and so its audience stats, provided by The Nielsen Company — greatly outpace Patch. The gap, though, is narrowing. And in sessions per month, and maybe time on site, Patch may be moving ahead. That would show that readers are seeing some value from Patch’s truly local news push, as compared to Examiner’s often shared-content across “local sites.” (Newsonomics: “Examiner: New Local Competitor or Faux Local?“)

5) So how do we make sense of Patch and whether it’s good for journalism? It may be too early to know. Patch is hiring hundreds of journalists to do journalism; that’s novel. Those journalists include 20-year veterans as well as twenty-somethings a few years out of school. It has provided new opportunities for editorial leadership jobs, and that’s a good thing since journalism-schools-as-refuge may have reached a limit.

Most importantly, for the moment, readers will get more news.

The question, here, is one of sustainability. Certainly, there’s the question whether Patch can sustain itself, as its parent AOL struggles to find a new identity and growing business model. Then, there’s the question of the sustainability of hyperlocal journalism already being done from coast to coast. These are true start-ups, often one-man (or -woman) bands, invented by journalists truly passionate about community coverage. Pre-Patch, it’s been the fledgling blog ad-and-distribution network experiments that gave hope that more money could be found to support these ventures. Now, we have to wonder whether Patch — which will link to other sites it finds useful, but won’t network them — will make the sustainability of these more organic, non-templated local blogs more questionable.

Once again, we’ll come back to the question not of how much coverage a community needs, but just how those doing it are going to be paid.

6) What’s in the secret SEO sauce? Wouldn’t a lot of legacy publishers like to know? As I pointed out in a quick post on a breaking Bay Area story covered by both Patch San Ramon and the Contra Costa Times, Patch’s story appeared at the top of Google (web & news), though the CC story was more detailed and more recent. Check on many local news stories. Time and again, Patch and Examiner will rise to the top, besting newspaper content. That’s the mastery of search engine optimization, a science too many publishers still flunk. Maybe the Knight Foundation, in its quest to bolster news content generally, should move up on its to-do list tools that help publishers finally master SEO.

7) Is there any connection between Patch and AOL’s Seed, beyond the garden-metaphor-approach to naming digital start-ups? Yes, in fact, though, just in the testing stage. Seed — AOL’s Demand-like, Associated Content-like Pro-Am news business — may feed freelancers into Patch. As each site’s editor decides how she wants to use that freelance money, one logical place to check will be Seed’s database of contributors, which, of course, is geo-tagged. Consider this a work-in-progress, but one way AOL will seek to connect the dots within its content-creating business, now including AOL Finance, Politics Daily, Engadget and more.

8) Who may the biggest winner out of the intense hyperlocal competition? With all those new players in action, we’ll see lots more content, even if the ad battle is brutal. So, look to the aggregators, like OutsideIn (partnered with Tribune+), FWIX (partnered with New York Times+) and OneSpot (partnered with Wall Street Journal+). Creating content is expensive; aggregating is cheap.

9) If hyperlocal is such a good idea, how come Rupert Murdoch’s not investing in it? Murdoch is ubiquitous in the talk of journalism’s future — Alesia bundled content site, new platform for tablets, a tabloid tablet product, pay walls and lots more — but we don’t see him in the hyperlocal space. Does he know something Tim Armstrong doesn’t? Or is the retail of block-by-block selling from Portsmouth to Pleasanton just too small potatoes?

Thirsting for good news, the welcome given TBD.com by news observers has been a bit overwhelming. In a desert of too-scarce good news about the news business, TBD represents one of the potential oases, like its smaller — and largely nonprofit — counterparts from San Diego to Austin to the Twin Cities to New York.

Most of the first appraisals have focused on the site’s product innovations. Let’s now take an early look at the size of this possible oasis and the unique business model under it, to gauge what kind of a test it may be. Let’s look at the Newsonomics of launching what is the nation’s first combined local online news startup/24-hour news channel.

That combination is the most basic to understanding the business of TBD, informing both TBD’s cost structure and revenue models. If TBD turns profitable within two to three years, it may become a prototype for digital/video/TV city-based news businesses.

While there may be two dozen or more metro news channels in the U.S, none has yet combined with a online news site to the extent that TBD is doing. The only parallel may be Cablevision’s News 12, its longstanding Long Island/Connecticut/New Jersey-oriented station that got a new cousin when the parent company bought Newsday from Tribune in 2008. In a post on that acquisition, I noted the potential synergies in the deal:

1. Joint ad sales.
2. Synergistic news-gathering and production.
3. Monetizing cable-produced news video through Newsday’s site.

Since then, we haven’t seen a lot of that synergy in New York, as the cable news site and Newsday.com remain separate, with those who don’t subscribe to either having to pay for direct access. A cursory look at the sites doesn’t betray much sharing, but there may be more under the hood.

It is those three principles, though, plus an all-important fourth one — promotion — that should define this next, and bigger, experiment, as TBD.com and TBD TV, which has been rebranded from the former NewsChannel 8, take flight.

Let’s look first at the costs of TBD. TBD has added 50 new positions, all additional to the approximately 50 jobs ported over from the former NewsChannel 8. Jim Brady, TBD’s general manager, outlined the 50 for me: “About 30 doing news, including 15 reporters, six editors, two senior editors, six community engagement people. Another 20 doing tech, sales, product, and design.”

That tells us that the nut for TBD is about $3.5-4 million, salaries and operating costs combined. It needs to find new revenue — exclusive of what the former NewsChannel 8’s sales staff of seven brought in — to get to profitability. Profitability is a key goal for this for-profit company, and one key to proving out the model for use in other metro areas. The cost side is one of the areas that distinguishes the TBD experiment; it’s two to four times bigger than most of the local online news startups we’ve seen.

Key to our understanding here is that TBD — the website and the cable news station — is one organization. Brady is in charge of the P&L of it, though he has a dotted-line relationship to the ad sales heads. While it adds costs to do 24-hour cable news as well as 24-hour digital news, it offers more revenue opportunities as well.

The key synergy: a kind of virtuous circle of promotion to stoke growth of audience and advertising dollars.

“They have the big megaphone [of promotion],” points out Phil Balboni, now CEO of startup GlobalPost, but also a veteran of New England Cable News, which he built and operated. “They can push TBD on every program. Within a short period of time, they will get great brand awareness.” So, yes, TBD TV pushes people to the website, but TBD.com also pushes people to the cable news channel. And WJLA, the ABC7 affiliate also owned by Allbritton, promotes both. JLA’s been the second-ranked station in the broadcast market.

The idea: Big promotion drives in samplers. Then the site must convert a good 20 percent of them to regular customers.

So what does TBD need to get to profitability — and make itself the model to match? Let’s quickly look at the two big qualifiers, audience and sales.

A big audience: Let’s remember that TBD starts with a significant audience, though one far smaller than WashingtonPost.com, just to drop a name. It gets traffic from both WJLA and the former NewsChannel 8; both of their former websites now point to TBD.com. According to Nielsen, WJLA pulled in about 327,000 unique visitors and 1,516,000 page views in July, while NewsChannel 8 appeared to attract a small fraction of that.

Make no mistake: Gaining attention in a crowded media marketplace won’t be simple — and is one of the reasons for the fast-out-of-the-chute TBD Community Network of 129 bloggers.

The Post is formidable competition. It is a premier regional website (built by Brady and others) and in a June Nielsen report, showed a 5.27-percent increase in unique visitors year over year, to 10,089,000 unique visitors and 106,387,000 pageviews. It zigged — up — while the news category zagged down 2.74 percent overall for the same period.

So figure that TBD.com needs a web audience of between 10 and 20 million page views a month at some point in the next 24-36 months to get to profitability. That’s a fifth to a tenth of the Post’s online audience, which, we should keep in mind comes more from outside D.C. than in within it.

Significant new revenue from both TBD.com and TBD TV: The revenue will be mainly advertising. As a for-profit, TBD.com is taking a different route than non-profits MinnPost and Texas Tribune, for instance, both of which are focusing strongly on membership and corporate/institutional sponsorships. The nonprofits are thinking that maybe a third — or less — of their revenue will come from traditional “advertising.” For TBD, though, it’s all about the sale of advertising. Just as TBD TV is critical to TBD.com site promotion, its own revenue growth will be key.

Figure that as much as 30 percent of new revenue generated out of the new enterprise could come from new TV revenue; to the extent it does, the site’s growth could trend more to the 10 million monthly page views, than 20 million, and still be profitable.

Brady says a new online-only sales staff of four will drive both online-only and bundled sales, working with the established sales force. “You start with a sales force that has relationships with an auto dealer, for instance, ” says Brady. “You don’t need a million uniques to get a meeting with them.”

The questions here are familiar ones for local broadcasters and for newspaper publishers: How do you a traditional ad sales staff — one mainly used to selling “time” — to sell the web effectively? How do you blend the online-only sales force with TV-oriented one? How much do you emphasize online-only sales, or continue a focus on bundling with TV time?

It’s a complex sell, combining sales of space, time, and pay-for-performance advertising. “They need to sell four or five different kinds of advertising,” says Arul Sundaram, an industry consultant who formerly was vice-president of strategy for Internet Broadcasting, which has powered dozens of local broadcast station websites. Beyond selling cost-per-thousand display advertising, Sundaram ticks off various pay-for-performance (largely search-based), video, and mobile ad products that the operation should learn to sell as well.

Pioneering models is a tough business. As the news business looks for new models, the man of the moment is man behind the TBD curtain, Robert Allbritton, CEO of his eponymous company. Allbritton’s gotten credit for seeing, and seeing through, Politico, his first web venture, to on-again, off-again profitablity. Importantly, he’s been credited with allocating sufficient resources, even in cash-negative startup times to create journalistic products that attract audiences.

As Phil Balboni sees it, Allbritton’s move, especially in this economic climate, is “a gutsy statement.” In 2010, especially, no guts, no glory.

That’s the percentage WashingtonPost.com – no shrinking violet in the new battle of D.C. — is up in unique visitors, June, 2010 over June, 2009, according to Nielsen. That positive number is a small feat. Nielsen’s Current News category was down 2.74% overall for the same period.