Related post: At Almost 400,000 Digital Subscribers, Inside the New York Times Pay Strategy, Year 2

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?

It’s an emerging issue of our time and place. They know too much about us, and we know too little about what they know. We do know that what they know about us is increasingly determining what they choose to give us to read. We wonder: What are we missing? And just who is making those decisions?

Today, in 2012, those questions are more pressing in our age of news deluge. We’re confronted at every turn, at every finger gesture, with more to read or view or listen to. It’s not just the web: It’s also the smartphone and especially the tablet, birthing new aggregator products — Google Currents and Yahoo Livestand have joined Flipboard, Pulse, Zite, and AOL Editions — every month. Compare for a moment the “top stories” you get on each side-by-side, and you’ll be amazed. How did they get there? Why are they so different?

Was it some checkbox I checked (or didn’t?!) at sign-in? Using Facebook to sign in seemed so easy, but how is that affecting what I get? Are all those Twitterees I followed determining my story selection? (Or maybe that’s why I’m getting so many Chinese and German stories?) Did I tell the Times to give the sports section such low priority? The questions are endless, a ball of twine we’ve spun in declaring some preferences in our profiles over the years, wound ever wider by the intended or (or un-) social curation of Facebook and Twitter, and multiplied by the unseen but all-knowing algorithms that think they know what we really want to read, more than we do. (What if they are right? Hold that thought.)

The “theys” here aren’t just the digital behemoths. Everyone in the media business — think Netflix and The New York Times as much as Pandora and People — wants to do this simple thing better: serve their customers more of what they are likely to consume so that they’ll consume more — perhaps buying digital subscriptions, services, or goods and providing very targetable eyes for advertisers. It’s not a bad goal in and of itself, but sometimes it feels like it is being done to us, rather than for us.

Our concern, and even paranoia, is growing. Take Eli Pariser’s well-viewed (500,000 times, just on YouTube) May 2011 TED presentation on “filter bubbles,” which preceded his June-published book of the same name. In the talk, Pariser talks about the fickle faces of Facebook and Google, making “invisible algorithmic editing of the web” an issue. He tells the story of how a good progressive like himself, a founder of MoveOn.org, likes to keep in touch with conservative voices and included a number in his early Facebook pages.

He then describes how Facebook, as it watched his actual reading patterns — he tended to read his progressive friends more than his conservative ones — began surfacing the conservative posts less and less over time, leaving his main choices (others, of course, are buried deeper down in his datastream, but not easily surfaced on that all-important first screen of his consciousness) those of like-minded people. Over time, he lost the diversity he’d sought.

Citing the 57 unseen filters Google uses to personalize its results for us, Pariser notes that it’s a personalization that doesn’t even seem personalized, or easily comparable: “You can’t see how different your search results are than your friends…We’re seeing a passing of the torch from human gatekeepers to algorithmic ones.”

Pariser’s worries have been echoed by a motley crew we can call algorithmic and social skeptics. Slowly, Fear of Facebook has joined vague grumbles about Google and ruminations about Amazon’s all-knowing recommendations. Ping, we’ve got a new digital problem on our bands. Big Data — now well-advertised in every airport and every business magazine as the new business problem of the digital age to pay someone to solve — has gotten very personal. We are more than the sum of our data, we shout. And why does everyone else know more more about me that I do?

The That’s My Datamine Era has arrived.

So we see Personal.com, a capitalist solution to the uber-capitalist usage of our data. I’ve been waiting for a Personal.com (and the similar Singly.com) to come along. What’s more American than having the marketplace harness the havoc that the marketplace hath wrought? So Personal comes along with the bold-but-simple notion that we should individually decide who should see our own data, own preferences, and our own clickstreams — and be paid for the privilege of granting access (with Personal taking 10 percent of whatever bounty we take in from licensing our stuff).

It’s a big, and sensible, idea in and of itself. Skeptics believe the horse has left the barn, saying that so much data about us is already freely available out there to ad marketers as to make such personal databanks obsolete before they are born. They may be forgetting the power of politics. While the FCC, FTC, and others have flailed at the supposed excesses of digital behemoths, they’ve never figured out how to rein in those excesses. Granting consumers some rights over their own data — a Consumer Data Bill of Rights — would be a populist political issue, for either Republicans or Democrats or both. But, I digress.

I think there’s a way for us to reclaim our reading choices, and I’ll call it the News Dial-o-Matic, achievable with today’s technology.

While Personal.com gives us 121 “gem” lockers — from “Address” to “Women’s Shoes”, with data lockers for golf scores, beer lists, books, house sitters, and lock combinations along the way, we want to focus on news. News, after all, is the currency of democracy. What we read, what she reads, what they read, what I read all matter. We know we have more choice than any generation in history. In this age of plenty, how do we harness it for our own good?

Let’s make it easy, and let’s use technology to solve the problem technology has created. Let’s think of three simple news reading controls that could right the balance of choice, the social whirl and technology. We can even imagine them as three dials, nicely circular ones, that we can adjust with a flick of the finger or of the mouse, changing them at our whim, or time of day.

The three dials control the three converging factors that we’d like to to determine our news diet.

Dial #1: My Sources

This is the traditional title-by-title source list, deciding which titles from global news media to local blogs I want in my news flow.

Dial #2: My Networks

Social curation is one of the coolest ideas to come along. Why should I have to rely only on myself to find what I like (within or in addition to My Sources) when lots of people like me are seeking similar content? My Facebook friends, though, will give me a very different take than those I follow on Twitter. My Gmail contact list would provide another view entirely. In fact, as Google Circles has philosophized, “You share different things with different people. But sharing the right stuff with the right people shouldn’t be a hassle.” The My Networks dial lets me tune my reading of different topics by different social groups. In addition, today’s announced NewsRight — the AP News Registry spin-off intended to market actionable intelligence about news reading in the U.S. — could even play a role here. (More on NewsRight: “Nine Questions for the Cusp of 2012“)

Dial #3: The Borg

The all-knowing, ever-smarter algorithm isn’t going away — and we don’t want it to. We just want to control it — dial it down sometimes. I like thinking of it in sci-fi terms, and The Borg from “Star Trek” well illustrates its potential maniacal drive. (I love the Wikipedia Borg definition: “The Borg manifest as cybernetically-enhanced humanoid drones of multiple species, organized as an interconnected collective, the decisions of which are made by a hive mind, linked by subspace radio frequencies. The Borg inhabit a vast region of space in the Delta Quadrant of the galaxy, possessing millions of vessels and having conquered thousands of systems. They operate solely toward the fulfilling of one purpose: to “add the biological and technological distinctiveness of other species to [their] own” in pursuit of their view of perfection“.) The Borg knows more about our habits than we’d like and we can use it well, but let’s have us be the ones doing the dialing up and down.

Three simple round dials. They could harness the power of our minds, our relationships, and our technologies. They could utilize the smarts of human gatekeepers and of algorithmic ones. And they would return power to where it belongs, to us.

Where are the dials? Who powers them? Facebook, the new home page of our time, would love to, but so would Google, Amazon, and Apple, among a legion of others. Personal.com would love to be that center, as it would any major news site (The New York Times, Zite-powered CNN, Yahoo News). We’ll leave that question to the marketplace.

Lastly, what are the newsonomics of the News Dial-o-Matic? As we perfect what we want to read, the data capturing it becomes even more valuable to anyone wanting to sell us stuff. Whether that gets monetized by us directly (through the emerging Personals of the world), or a mix of publishers, aggregators, or ad networks would be a next battleground. And then: What about the fourth wheel, as we dial up and down what we’re in the marketplace to buy right now? Wouldn’t that be worth a tidy sum?

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

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

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

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

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

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

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

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

There’s an algorithm out there, we can be sure. It’s got all the components of business success for news-creating companies, each value carefully computed and relational to the others. Yet, approaching 2012, the algorithm hasn’t been found. We have but shreds of numbers, beacons of numerals that portend models, but can’t prove them out.

2011 has been a remarkable year. We can point to three major phenomena that profoundly changed the news landscape this year. Each offers up its own half-formed metrics for that magic formula in process, and each has dramatically changed the possibilities of news, each largely positive:

• The transcendant transformative age of the tablet: The first real replacement device for print swept aside doubters, netbooks, and much conventional wisdom before its second birthday. More than one in 10 American adults owns one, with that number likely to more than double in the next two years. Those owners are readers, spending lots of time with news, single brands, and longer stories.  (“The Newsonomics of the Missing Link“)
• The dawn of digital circulation: Forget “paid content.” Forget “paywalls.” It’s the back-to-the future age of circulation: paying for news and magazines that we depend on, no matter how they are delivered to us. All-Access reinforces our relationship with news and magazine brands we like; ubiquitous access (print, online, tablet, smartphone, soon connected TV) allows us to justify paying for convenience as much as the content itself. Publishers are still experimenting with how to get the paid proposition right, but those that do now have a potent second digital revenue source — and that’s a business advantage digital-only competitors lack.
• Social curation joins editorial curation: We knew that Facebook, in particular, and “social” more generally — including Twitter, LinkedIn, most-emailed lists and our own individual sharings — were changing how we all decided what to read. Now, though, social curation is being built into the best publishing models. Why should each of our own personal quests be a virgin start-from-scratch idea when many consumers/searchers/researchers/shoppers (some of them people like us) have tread there before? So social intelligence, gleaned from mountains of data, is becoming a required part of the companies’ product development and consumer experience. Facebook is in the catbird’s seat as that world develops.

Those three game-changing phenomena offer major drivers of change — but not models. For publishers, the near-term is just getting harder and harder; witness Media General’s major cuts of this week in Tampa (16 percent workforce reduction) and elsewhere. Major cuts are happening this month and into January, as publishers gird for another 5-12 percent decline in ad revenues. Continuing profitability can only be achieved by cutting.

Publishers, publicly or not, are embracing the Digital First mantra of John Paton and Clark Gilbert, the industry’s dynamic duo, who put on another show at BIA/Kelsey this week. Everyone’s into the deconstruction/reconstruction of their companies; some are faster, more adroit, and more public about it.

As that reconstruction moves forward, the new magic formula may seem simple: reconfigure costs and revenues. Yet, working the in-between — most publishers still depend on print for 80 percent of their revenues — is hardly formulaic. Building the new cost structure and the new revenue structure, in tandem, with changing audiences and advertising spending habits, is the fixing-the-moving-car-at-65 MPH scenario publishers face.

With that speeding car in mind, let’s look at some of the numbers that will go into that magic formula, when it’s finally perfected. Mix, match, blend, and extrapolate:

5-15 percent: That’s the percentage of many news sites monthly unique visitors that drive half or more of their pageviews. That’s a jaw-dropping number, and one that news companies are just beginning to acknowledge — privately. Why be quiet about it? Look at the annual reports and quarterly financial disclosures of the public companies; they trumpet uniques and pageviews. Yet in the age of news ubiquity, we’ve reached near-infinity in pageviews and of ad inventory. Is there much meaning left to one random web visitor hitting one random web page, courtesy of Google or Facebook, some time in any given month? Not much. Yet, that’s what most people still point to publicly. Privately, the question is the 5-15 percent. These are your customers. How much will they pay for access? How much more valuable are they to targeting advertisers, given you know much more about their reading and shopping habits? The metric needed: How much does a core customer yield annually, and in a lifetime? Then: How do I most efficiently find and convert more of them?

35 percent: That’s the percentage of print readers who will transition to tablet-only by 2014, believes one prominent news company, which is using that forecast in its business planning. High? Low? What’s your number?

$544 a year: That’s a Newspaper Association of America number (from 2009) for the revenue value per unit of Sunday circulation. What will a tablet customer be worth, combining subscriber and ad value? Get that answer right and you can try to accelerate, or slow down, your readers’ embrace of the tablet.

10-20 percent: That’s how much of national news company traffic now comes from mobile; Facebook already says that 35 percent of its use comes from mobile. Yet, in the U.S., only three percent of digital revenue comes from mobile. That’s a huge gap — the audience is way ahead of the money — and it will be closed over the next several years. In fact, in the age of expected anywhere access, “mobile” will disappear as a category. Big issues for publishers: dividing what kinds of revenues can be wrung from tablet (now lumped into “mobile”) and from the brain extensions in our pockets and pocketbooks, the smartphone.

One billion: That’s one estimate of how many smartphones will be shipped worldwide in 2016. It’s a continuing curve upward from the almost half-billion shipped this year. U.S. smartphone penetration is about a third of cellphone owners; so there is lots of headroom for growth. (Singapore’s the first to cross the 50 percent threshold.) Big challenge for news and magazine companies: coming to terms with how to make money on that little screen: advertising, sponsorship, All-Access subs, and more.

63 million: That’s the number of smart TVs that will be shipped in 2011, up from 43.6 million in 2010. 2016 forecast: 153 million. Smart TV is just the next screen, joining the tablet and the smartphone, providing us ubiquity. When WSJ Live (“The Newsonomics of WSJ Live“) — the company’s model-breaking tablet product launched this fall — it included launch partners Samsung and Vizio, leading smart TV makers. This is the beginning of the next wave.

$2.75: That’s the average ad CPM, or cost-per-thousand rate gotten, at one top 15 news sites. Average rates have been going down and are likely to continue doing so. High-targeted and high-branded (combine the two, and you’ve got the best of both worlds) audiences continue to outpace average sites and average inventory. It’s less and less good to be average.

22 percent: That’s the third-quarter increase in U.S. digital ad revenue. Digital ad growth accelerates as print declines more rapidly; in the U.S., it is now surpassing newspapers to become second only to TV. Worldwide, expect the industry to hit $80 billion this year. Within that ad spend, publishers have access to less than half: Paid search continues to be about half the market, with publishers getting only a tiny slice of it. Display/banner ads — publishers’ strongest suit — account for 23 percent of the total. Video is growing 42 percent a year. Performance-based business models (as opposed to selling impressions) now command 64 percent of the market. (Most data from IAB.) So, in all the areas of growth, news and magazine publishers are weakest. Despite uneven digital ad results reported by newspaper and magazine companies, it’s not that the money isn’t there — they just haven’t transitioned their businesses enough to compete for it.

$13 billion: That’s the amount of retail ad revenue the newspaper industry in the U.S. took in for all of 2010, and it’s down this year. Retail makes up roughly half of all newspaper companies’ ad revenue. In a new, circle-the-wagons attempt to hold on to it, ShopCo, a consortium of eight of the large newspaper companies, is building out a new local shopping portal. FindnSave, tested first by McClatchy, should be up in 250 larger markets by the middle of next year. Will it be good enough and big enough, to satisfy both consumers and merchants? (“The Newsonomics of Google’s retail push“)

25 percent: So if a reader drops print and embraces the tablet, and digital access overall, how much savings can a news company achieve? It no longer has to print and deliver a paper, but it still has the costs of maintaining a staff, maintaining distribution, and maintaining a plant. So maybe it costs 25 percent less to fulfill that customer’s access? In this long interim with hybrid digital and print reading, how much of their production costs can companies cut out? The long-term question: At what point can the news industry make a major shift, as most reading becomes digital and a minority of it in print?

56.7 percent: That’s the percentage of downloaders of the Guardian’s new Facebook app who are under 24, with 16.7 percent 17 or younger. For a news industry decrying the lack of young readers and focused on aging baby boomers as the core audience, the Guardian’s early experience is phenomenal. It’s well and good to sell All-Access to long-time print readers; it’s essential to bring in new ones, and Facebook looks like a great bet.

7: Daily means seven days a week for newspapers, right? MediaNews is dropping Monday printing at some Northern California papers. Michigan remains the epicenter of the non-daily daily. Following the 2009 cuts in metro Detroit, Advance is now going digital-first with smaller papers there, with several becoming three- and four-day print “dailies.” The idea: keep 85 percent of print ad money and radically reduce print costs. Publishers take a very deep breath and hope they aren’t cutting the print cord too soon. Expect to see more of such day cuts in 2012 and beyond. It’s a hybrid strategy, and as we see its impacts — on print ad revenue and on digital reader and ad transition — we’ll have new numbers to plug into the model.

> 1 percent: Google now makes 54 percent of its revenue outside the U.S., as does Apple. Such international orientation is a major differentiator in the economy of the day, and not in the publishing and digital industries. Even The New York Times, with impressive global reach, gets only a percent or two of its revenue internationally. In the last year, we’ve seen The Independent (through Press+) selling U.S. access, PBS launching a British channel, and the Guardian relaunching an American foray. Digital media knows no national bounds, but monetizing outside home countries has been difficult. Breaking through this barrier could create significant upside for top publishers.

Membership ain’t what it used to be.

Two years ago, I signed up for Amazon’s Prime program. $79 a year for unlimited two-day shipping. It was a tailor-made program for someone like me who bought everything from printer paper to lawnmowers online. (Really — a nifty all-electric model, delivered to within three feet of my door, requiring just two bolts to be attached before it was ready to roll.)

Some financial analysts decried the program, limiting themselves, as they often do, to the math. And the math said Prime could be a losing proposition, with customers costing Amazon more in shipping costs than the $79 they paid. It was short-sighted. Amazon CEO Jeff Bezos was, and is, all about building market share.

As a consumer and a media analyst, I understood immediately what Bezos was up to: make it easy for me to buy, save me some money on shipping, deliver my stuff quickly (whether I needed quickly or not) — and I’d buy more stuff from Amazon. It’s worked.

As Amazon expands Prime, and rolls out Kindle Fire, it’s time we looked at the Prime moves as a quasi-subscription product, something news and magazine companies know a lot about it. Let’s take a quick look at the relative newsonomics of what Amazon is up to, and how it compares to the business publishers know well.

For Amazon, giving me “free” shipping for a capped annual price is certainly about volume of sales. Estimates are that Prime members — about 10 million in total — up about 40 percent of Amazon’s U.S. sales, each member buying around $1,500 worth of stuff a year.

These are core customers, the same sort of core customers that is driving digital subscription sales for newspapers and magazines. We were either already core when we saw the Prime offer or became core because of it. Simply, Prime is all about relationship. In fact, “free two-day shipping” turned out to be — was it Bezos’ plan from the beginning, or a happy stumble? — a backdoor to relationship building.

Bezos took a retail business without much loyalty and is turning it into a loyalty business.

Then, in February, Amazon extended Prime benefits to free instant streaming of videos, as its on-demand service (13,000 movies so far) got off the ground. Then, two weeks ago, it announced a “free” book lending service (5,000 books so far) for Prime members. These are just fledgling steps in turning Prime customers into media-swilling Amazon members. It’s an old-fashioned, co-op-like membership meme, offered from one of the world’s great progenitors of digital age capitalism. (Here’s a good Prime primer by Brad Tuttle at Time’s Moneyland, and here’s a good rundown on the business end from the Journal’s Stu Woo.)

Consider these numbers offered up by Piper Jaffray analyst Gene Munster in the Journal story:

• Amazon currently incurs about $90 a year in cost for each Prime customer, losing $11 annually per subscriber, off its $79 single price point. (The more you buy, the more you save!)
• Of the $90, $55 is due to shipping costs and $35 is driven by acquiring digital video content. Now, related book-lending services costs will be added, driving up the loss for this leader.

So investors were a tad concerned recently when this trajectory of cost reduced Amazon’s overall operating margin shrank to 0.7 percent in the third quarter from 3.5 percent a year earlier.

Munster smartly juxtaposes the increased loyalty and sales volume against that loss — or against that investment.

Now let’s turn the news and magazine industry, and ask a few questions:

• What’s the difference between a shipping fee and a subscription? They seem quite different historically, but Amazon is building a bridge between the two.
• What’s the difference between a buyer and a reader? Shopping and reading always coexisted in newspapers and magazines; Amazon just offers a new twist here, starting with buying and then moving to reading.
• What’s the difference between a newspaper subscription and a membership that gets you “free” media? Amazon pushes us back into the mindset that soft goods — digital books, digital music, digital movies — are worth less than hard stuff that it ships us, the office supplies and lawnmowers. That’s a bit depressing. Wouldn’t it be a wonderful world in which the soft stuff that provides enjoyment, entertainment and learning were more the real value, and garden and office tools the freebies?

In the world as it is, though, news and entertainment media are countering with the All-Access value model. Take all our content — and be excited about all the ways we now bring it to you. Netflix, Comcast, HBO, The New York Times, and the Wall Street Journal are selling convenience, immediate gratification, and mobility — all great if often short-sighted American virtues. “Sell the sizzle, not the steak” is as good a Mad Men tenet of faith as any.

“Smart is the new sexy,” the Newspaper Association of America’s most recent effort to reassert the value of news media, probably misses the sizzle we’re seeing offered by others. Everyone knows it’s easier to buy a smart pair of eyeglasses to achieve the sexy look than read a paper (or site) every day.

A few more things for news and magazine media to think about here:

• Newspapers have been rightly concerned about losing a direct customer relationship as digital subscribers become Apple or Amazon customers rather their own. The Prime move sheds new light on this question: If the world’s premier online seller becomes a media hub, the question of who owns the customer gets even bigger. It’s a growing Goliath vs. a shrinking David here; Amazon just will continue to add more and more media (and other goods and services) to its Prime membership base.
• Amazon’s 10 million Prime members compares well against individual media. Among U.S. newspapers, the Wall Street Journal leads with about million sales. AARP puts its magazine number at 22 million — a number boosted by a model framed around membership — while Meredith’s Better Home and Gardens comes in at 7 million. Maybe more apt “media” comparisons may be Netflix at 22 million or ATT Wireless’ more than 100 million. The key questions here: What is membership, what is subscription and what is media?
• This is about much more than a $79 offer; it’s about deep and building customer knowledge. Amazon’s “Recommendations” have long been talked about, but its mastery of customer analytics is the big story here. That’s what any competitor to Amazon must contend with. It’s noteworthy that companies as small as The Day in Connecticut  (“The Newsonomics of 100% Reach“) and as global as the Financial Times (“The Newsonomics of the FT as an Internet Retailer“) ) are taking similar analytics-driven approaches to their businesses. If you are in the media business and behind on the analytics curve, Prime is a new caution in how your franchise could crumble in the age of Big, Actionable Data.
• So what are news and magazine companies’ propositions here? Is All-Access to the news or magazine titles just a foundation? If Amazon, a former hard book seller, can reinvent itself as a media company, which media might become wider media centers, essentially re-selling the movies, music and books streamed by others (including Amazon)? If this is about customer relationship, it’s probably either an upward or downward spiral. Keep the customers you have by offering them more, or risk losing those primary relationships to others (Kindle Newsstand, Apple Newsstand, plus, plus, plus). That’s a sobering, but likely, scenario.

And on the seventh day, they didn’t rest; they sped up.

Next Tuesday, look for The New York Times to announce its first Sunday print circulation gain…since 2006. That will be a home delivery Sunday gain. Let those three words soak in: Print. Circulation. Gain. Those are wonderful words to anyone in the newspaper business and a small encouraging sign of our turbulent times, right?

In a word: Yes. But…

I’ve been following the Sunday print/daily digital trend since the Times went public with its pay system in January. In an elementary, sleight-of-marketing hand, it priced its Sunday + digital offer cheaper than its digital-only offer, which has apparently worked with its many smart readers who can do basic math. Why not get the Sunday paper in print and smartphone/tablet/online access, especially if it’s cheaper? For readers, it makes common sense. For publishers — almost all of whom applaud the Times’ ploy — it’s a way to bolster their highest-profit day of the week, a day that brings in a third or more of their ad revenue and is home to that precious keep-it-to-the-bitter-end preprint business.

That simple pricing twist has apparently turned a five-year-old negative line into a more positive one at the Times, though overall Sunday print circ, including single-copy, will be down. Importantly, circulation revenue is up — not a lot at 1 percent, but up — at the Times in the last quarter, so the overall move to get readers to pay more of the freight of the news business is moving in the right direction.

What’s been dismaying this week, as I talk with many publishers at the dozens of other dailies now charging for digital access, is that it’s hard to find the Times model moving similar Sunday-plus trends elsewhere. Publishers don’t want to disclose actual numbers, but the apparent consensus among those who have charged for six months or more (which covers the reporting period we’ll see when the Audit Bureau of Circulation FAS-FAX numbers releases its half-yearly numbers Tuesday) is that print/digital reader bundling hasn’t had much effect on the decline in circulation numbers.

Why? It may well be that it’s too early, with pay psychologies just kicking in. Or it may be that propping up the print business won’t be a route to the future. Or maybe too few papers have aligned all the things a publisher needs to do to make the Sunday + digital equation work; maybe they haven’t aligned the stars well enough yet, though we do have one just out-of-the-box experiment, in Memphis, that displays early alignment.

It’s important to note: Even if the print decline is not significantly affected, charging for digital access remains a prime strategy going forward. What we’re looking at, entering 2012, is paid content 2.0 for many publishers, a new rev that will push the faster-adopting among them to a fuller alignment of business model, product, and analytics.

By way of background, let’s remember that the circulation decline (tracked well with a series of charts, midway down the page at State of the News Media) is simply breathtaking, from a height of 62.5 million copies in 1993 to about 43 million now.

It looks like the Tuesday report will follow recent trends. In other words, still down — but as the p.r. spin has it, with “moderating declines.” Translation: We’re off the floor of devastating high-single-digit declines experienced in the depth of recession, and getting closer to the lower-single-digit declines of 2006-2007. Even those publishers who expect to be up a tad don’t attribute it to their new print/digital bundling/pricing strategy.

That’s a conundrum. Reducing print loss (or churn) is one of the top-rated reasons for putting up a paywall, and a number of paywall publishers have adopted the Sunday preference for digital pricing as well. Why isn’t it doing that effectively?

Let’s call it the revised newsonomics of Sunday print and daily digital (first edition:  ”The Newsonomics of Sunday Print/Tablet Subscriptions“)  subscriptions. Why aren’t paywalls helping print circulation much?

Let’s start with the uncertainty principle. Newspapers have chosen from this menu of options to improve circulation:

• Increase sales pressure, effectively buying new subscribers through increased marketing, coming out of the recession.
• Improve customer service, to improve retention and new-sign-up rate.
• Market their Sunday print coupons to a Groupon-crazed, deals-desiring audience, resulting in more single-copy Sunday sales.
• Bundle digital access with Sunday-only print subs.

So even in cases where circulation has improved, publishers don’t know exactly what to attribute it to. Their guesses, though: the first three factors are more important than digital bundling. So here we see, exposed, one Achilles’ heel of a legacy business: Data collection and analytics can’t tell them specifically enough how well their strategies are (or aren’t) working.

Beyond uncertainty, let’s look at the model. The Times’ — and the Journal’s — model is All-Access. That means you pay for access across the board, whether using paper, a computer, a tablet or phone. Yet most of the Press+ papers seems still to be offering free smartphone access, even as they restrict iPad access. Mobile access is already providing 10-20 percent of news company page views, and growing rapidly. Why not drop a print subscription if you find most of your reading is done on the phone? Semi-access is a tough selling point, or incentive to keep print.

Another key part of the model is how many free article views a month a site allows visitors. Many started with 20, the Times’ number, but found few visitors bumped into the wall. So visitors found that they didn’t need subscriber access to the local site because they didn’t use it enough — which provides one fewer reason to keep paying for the paper. Many Press+ sites have lately been getting more restrictive (including MediaNews, largely moving its 20+ sites to a five-free-view model in August).

Even among papers with a harder paywall with little sampling allowed (another key to growing newer customers, but that’s another story), circulation loss hasn’t been stemmed — but it certainly makes us wonder the declining value of the print product unto itself.

Beyond the model, let’s look at the products. First off, a local newspaper is not The New York Times. While once first cousins, the Times is now in a distant relative: global, national, truly multimedia — and with a strong, differentiated-from-daily, stand-on-its-own Sunday product. That’s just the nature of our world. The Times is a peer of CNN, MSNBC, BBC, NPR, ABC, the Journal, the Guardian, and a few more, while local papers are still that — with varying digital add-ons.

Those digital add-ons, I believe strongly, are one of the key reasons the print/digital bundling isn’t as effective as publishers want it to be.

Many of the paywall papers still rely on e-edition or e-edition+ replicas for their tablet products. A relative few offer useful mobile apps. Let’s recall the NYT product/pricing strategy: build strong mobile products and then lead with thosewhen you are moving to paid access. (Look at the consistent sub offer, fronted by mobile products.)

Local publishers, largely, haven’t delivered the suite of mobile products that makes the new offers sufficiently appealing. One way we can measure this is to see what percentage of print subscribers find restricted digital access sufficiently compelling to sign up for. In August 2010, when The New York Times first started tracking home delivery customers, it found that 50 percent had a linked account. As of Oct. 24, 73 percent of all home delivery customers had linked. For many local papers climbing the paywall, they’ve found starting “linked” totals to be in low single digits. This linked number is one vital new metric in determining how well these companies — and models — are becoming truly hybrid ones.

Overall, my sense is that for too many publishers’ digital circulation pushes simply aren’t aligned enough. Let’s take one quite recent launch that does seem aligned. The Commercial Appeal in Memphis launched its All-Access pay system about a month ago. The top two aims, publisher Joe Pepe tells me: protect print circulation and keep the preprints business stable, the two goals are, of course, quite connected by a Sunday paper focus. So Pepe has priced Sunday paper + All-Access digital just a buck a month ($11 compared to $9.99) higher than complete digital access. The paper is up a net of 500 Sunday subs in a month; that’s a great start.

What we may see in the Memphis plan is the kind of alignment The New York Times is working. A true all-access business model, including mobile access. Real mobile products, not just e-editions. Integrated authentication across print and digital. A sampling program (five pages a month) to give potential buyers some access. A Sunday pricing scheme that makes intuitive consumer sense. It’s an alignment that both invites consumers with a good offer, and makes it harder for them to find a way around the system.

“They no longer have a loophole they can crawl through,” says Pepe.

Is Memphis the paid content 2.0 model the industry is looking for? Too early to tell, but many eyes will be following the Commercial Appeal’s experiment.

Okay, it’s 11 p.m., and you are in bed.

What do you reach for? There’s no wrong answer here, but if you are in the news/information mode, you may reach for your Android smartphone or scoop up your iPad. So many choices, at this oddly news-consuming time of day. We know that evening is when tablet usage peaks, and, yes, such companies as Zite tell me that 11 is a top hour. An Ericsson study shows that usage is heaviest in the early and late evenings, when over 60 percent of users are active, with 40 percent using their smartphones before going to bed.

As Ipsos OTX President Bruce Friend recently put it: iPhones and Androids are, yes, our lovers. “It’s almost always turned on. It never leaves you. You have an intimate relationship with it.” Yet love is so short-term these days: “The tablet is rapidly becoming a companion or even a competitor to the smartphone. Tablets reduce smartphone as entertainment devices. The tablet will take the place of that.”

We’ve got so many emerging studies of our fast-changing habits that comparing them can leave you dazed and confused. What they all add up to, though, is a simple learning: Digital disruption is now increasing. Audiences are even more up for grabs than they were a couple of years ago. Advertising and sponsorship dollars, pounds and euros, are also being more greatly swayed by these disruptive winds than they were in 2009.

Let’s look at some of this emerging data, and begin to make sense of what it means and where revenue is likely to flow into the next several years, in the Newsonomics of disruption.

Consider local news disruption. In a report this week pointedly and smartly entitled “How People Learn About Their Local Community,” Pew Research Center’s Project for Excellence in Journalism and its Internet & American Life Project gave us a picture of reader disruption, if not downright confusion.

Among Pew’s conclusions:

Most Americans (69%) say that if their local newspaper no longer existed, it would not have a major impact on their ability to keep up with information and news about their community. Yet the data show that newspapers play a much bigger role in people’s lives than many may realize. Newspapers (both the print and online versions, though primarily print) rank first or tie for first as the source people rely on most for 11 of the 16 different kinds of local information asked about—more topics than any other media source.

The worth-a-read-report analysis points out that Americans aged 40+ are those most interested in civic issues (many of those 11 info types above). Non-newspaper sites, though, snare more of the younger people, and therein lies the further local disruption to come:

Web-only outlets are now primary source of information on key subjects like education, local business and restaurants. And greater disruption seems to lie ahead. For the 79% of Americans who are online, in addition to Americans ages 18-39, the Internet ranks as a top source of information for most of the local subjects studied in the survey.

Yes, in the digital din, we don’t know what we’re getting from what — or its relative importance.

Consider tablet disruption of smartphones. Remember, in late 2009, when tablet naysayers said, “It’s just a big smartphone, and do you want to hold that big thing up to your ear?” Well, they were at least half-right. The tablet is, in part, a big smartphone — but, oh, what a difference several inches make. Inevitably, minutes eat into minutes, and we’re just learning which devices we prefer to use for which activities.

Consider emerging tablet news disruption. For 18 months, the tablet and smartphone news environment has been single-brand-oriented. Early top-drawer brand winners include: The New York Times, the Wall Street Journal, the Guardian, the Daily Mail, the Telegraph, the BBC, NPR, the Financial Times, and CNN.

Three start-up news aggregators have popped up their heads. Zite, a product that has pushed the concept of “fair use” taut, has been scooped up by CNN.Flipboard, with a revamped publisher relations strategy in place, and backed by$60 million in venture capital, would like to be the tablet news aggregator, as would Pulse.

We’ve wondered where the big guys are — those winners in the online web derby. We won’t have to wonder much longer. Google Propeller and Yahoo Livestand will soon join AOL Editions, as Facebook, Amazon, and Microsoft all up their various tablet aggregation plays, as well.

2011 may well be remembered as a short time of innocence in the tablet news landscape.

Consider tablet disruption of laptops. Several forecasters have said tablets will surpass laptop sales within a year.

Consider tablet disruption of tablet. Kindle Fire has unexpectedly sped through the “less than $200 tablet price point” barrier, one pointed to way back in 2010 by analysts as a key to the tablet becoming a mass product. So Kindle Fire, with its deepening bench of Amazonian media products, will update the American promise: Two tablets in every house, and a shiny new hybrid in every garage (as soon as the recession lifts). As if Apple, forecast to sell 100 million iPads worldwide by the end of next year, hadn’t already done the unthinkable.

So how will these developments affect the two hopes of the news industry: digital ad and digital circulation revenue?

Consider digital circulation plans. “Paid content” strategies were well underway before the iPad hit the market, but the iPad made them swerve. Now publishers are seeing longer-term print replacements more rapidly making the digital jump.

For newspaper execs, now increasingly placing all-access circulation strategies at the center of their 2012 budgets, the thrill and chill of tablets replacing print (“The Newsonomics of the Missing Link“) is only accelerating. Further, Amazon’s instant emergence as a #2 player in the field offers new partnership/store potentials for the news industry, even as it races to the agnostic technology of HTML5.

The faster the disruption of print by tablet happens, the faster newspaper owners can jettison print expenses and get closer to sustainable (but not yet proven) mainly-digital business models.

Consider how ad revenue trends are moving. Now, mobile audience patterns are way ahead of advertising revenue splits. That’s often the case: Audience precedes slower-moving (standards, technologies, due diligence) spending moves.

Many publishers privately report that mobile news access now accounts for 10 to 20 percent of overall digital usage.

Yet only 3 percent of digital advertising spend — about $1 billion in the U.S. and $264 million in Europe — will be spent on mobile this year. If usage matched spend, we might see a quadrupling of that mobile spend sooner than later.

So in the mobile ad spending disruption, where will the spending come from? Will it come from other digital — or print, or broadcast — and in what proportion?

Indeed, in this device-eat-device race, we have to wonder the extent to which tablets will supplant smartphones, which are now headed toward a 60-percent penetration of U.S. and European cell phone users by some time in 2012.

(I’ve noticed at the body inspection pit also known as airport security an increasing trend: business travelers placing MacBook Airs, iPhones, and iPads into the gray trays. That’s a $3,000 business play, but it may be a leading edge.)

Five digital native companies now control almost two-thirds of U.S. online ad spending, now drawing 63 percent of digital ad dollars. Within that trendline, though, we’re now seeing an increasing divergence of winners and losers. Yahoo and AOL continue to lose market share, while Google, Microsoft, and Facebook are all gaining. The disruption within those top five is eye-opening, looking at net ad revenue growth after companies have paid their partners for obtaining traffic, according to eMarketer:

For 2011, here’s the scorecard:

Facebook, to be up 80.9 percent

Microsoft, to be up 29 percent

Google, to be up 27.3 percent

Yahoo, to be down .4 percent (following declines of 5.2 percent in 2010 and 12.5 percent in 2009)

AOL, to be down 2.4 percent (following declines of 11.5 percent in 2010 and 12.4 percent in 2009)

Facebook’s disruptive impact will only be augmented by the multiple-front, market-invading forces of f8. Remember Microsoft’s decade-old bid to become the hub of our entertainment lives, as evidenced by its futuristic Consumer Electronics Show displays? Facebook has taken that metaphor, socialized it, and updated it for years to come.

2011 may well be remembered as a short time of innocence in the tablet news landscape.

Look at it this way: Facebook, with about $2 billion in digital ad revenues this year, will be two-thirds of the way to equaling the total digital ad revenue — about $3 billion — of the entire U.S. newspaper industry. (And the print newspaper total of maybe $20 billion this year is less than two-thirds of Google’s total revenue of maybe $34 billion in 2011.)

Digital advertising? It’s an infant. Check out PaidContent Staci Kramer’s interview with Neil Mohan, Google’s VP of product management. Mohan talks about the $200 billion digital display industry to come, almost 10 times what it is today. (Of course, Google potentially has lots to lose in a mobile disruption if that disruption continues to play havoc with its revenue engine, search.)

Finally, in disruptive revenue, let’s look at app revenue — which, of course, didn’t exist five years ago. According to Forrester Research, smartphones and tablets will reach $38 billion, globally, by 2015. (As a yardstick, $38 billion is about half of what we’d consider the worldwide newspaper industry to take in four years from now.)

This disruption to come seems Rubik’s Cubean. There’s the mobile disruption, and the mobile-on-mobile disruption, with twists of generational difference, tectonic ad spend changes, and lots of confused citizens. While it seems late in the game for some, it’s early for others. We may not yet be into a new “the first one now will later be last” era, but be careful placing your bets too early.

It’s news. It’s video. It’s a streaming tablet product that’s this week’s #1 free news app in Apple’s App Store.

And it’s The Wall Street Journal — founded in 1889.

WSJ Live, launched last week, is a milestone product. It’s not Fox News. It’s not CNN. It’s not New York Times news video. WSJ Live is its own thing, and a model for the news industry. Newspaper companies can talk the talk of becoming multimedia companies, but most are still text-bound. WSJ Live is a news video product that does a great job of leveraging the new technologies of the day and converging them to create an easy-on-the-eyes, easy-to-use new consumer product.

Notice, first, that WSJ Live is a tablet product — or more precisely a “lean-back” product, available not only on your iPad or your Galaxy Tab but aiming to get in early on “connected TV” platforms. If you want WSJ news video, you can access it on WSJ.com and on your smartphone. WSJ Live, though, understands that the tablet is today’s go-to platform for this kind of news experience.

It leverages the tablet-sized screen well. It mixes on-the-hour scheduled programming with on-demand access. It balances the talking heads of its global reporting workforce, via Skype, with anchor-hosted programs (News Hub), photo stills, and graphics. It is faster-paced than most news video, with some of the print-reporter geekiness at least acceptable and often enjoyable compared to the slick, no-surprise, Wolf Blitzer-me-to-sleep monotony of cable news. Within the business news world, it sits somewhere between the casualness of American Public Media’s Marketplace and CNBC’s button-down coverage.

Much of the action is set in the combined Journal/Fox/News Corp. building on the Avenue of the Americas in Midtown. The merging print/video setups there are found in few other newsrooms in the world, one of which would have to be El Tiempo, a largely unheralded multimedia leader in Bogota. WSJ Live is touchable in navigation, using the increasingly familiar ribbon (NPR, Pulse, HuffPo Glider) for navigation.

It acts on two of three parts of what I’ve called the Tablet Trifecta — mobile, video, and social. Those three phenomenon, each too often considered separately as audience or revenue categories by news business people, are what makes the tablet a truly phenomenal product. We watch video wherever we are, comfortably, and then with a touch share video with friends and associates. The tablet is a product that is natively viral.

WSJ Live, of course, is a video product on the mobile tablet. For now, it lacks simple social sharing, the little arrow we’ve come to see as standard issue on mobile products. The Journal’s Alan Murray tells me the arrow will soon make its appearance, socializing the product.

As good as it is out of the box, WSJ Live is clearly an evolutionary product. It evolved from the Journal’s fledgling efforts. Consider this: Two years ago, the Journal did not offer any regular live webcasting. “A year ago, we did an hour a day,” says Murray, executive editor for online. Today, the full-time video staff of “fewer than 20,” supports a minimum of 3.5 hours of five-day-a-week programming, comprised of seven 30-minute shows and then chunked into discrete segments.

Today, it is a major business line, with more than seven million video streams served per month (pre-WSJ Live), according to Murray.

That’s a steep ramp, and one still meeting the challenge (the biggest in Murray’s assessment) of “getting the reporting staff trained and comfortable presenting to a camera.” Journalists go through a one-week training course; one’s underway this week.

When we look at the newsonomics of WSJ Live, we see these key factors:

• The product enables the Journal to be a magnet for top branded video ads.The Journal’s built a good new revenue stream on news video advertising — with effective cost-per-thousand rates of $50 plus, often well priced over text-adjacent ads. “[It's] our most valuable inventory and is heavily sold through across all our platforms,” Alisa Bowen, general manager of the Wall Street Journal Digital Network, told me. “So generating more video inventory is a priority. eMarketer forecasts a more than tripling of U.S. digital video revenue between this year and 2015, from $2.16 billion to $7.15 billion; it’s by far the fastest-growing digital ad segment. Those who create top-drawer products will get a lot of that stream. The main ads are the usual 15-second pre-rolls, but display ads also punctuate the ribbons that provide navigation; tastefully small but effective Fidelity and Aetna ads were populating the site earlier this week. The video ads aren’t optional. They are more TV — meaning intrusive — in nature. They appear suddenly and you have to watch them to get to the content. At this point, there aren’t that many, but the change in ad approach marks a new era.
• WSJ Live acts on an aggregation principle. In the Journal’s case, it leverages internal aggregation, mainly from the wider Dow Jones, Marketwatch, and AllThingsD staffs. That’s a big benefit. Its platform could allow it to bring in other third-party video. Producing three and a half hours a day of news video seems like a lot now, but I think we’ll all find it amusing five years from now to recall that the 2011 product proudly touted “see all 33 business videos.” (Can you imagine: “527 stories included in today’s edition!”). It’s worth noting two other, quite-different-from-one-another news video aggregators. Reuters Insider, which debuted a year ago as a business-to-business product aimed at the financial services industry, created a great news video aggregation model. Newsy, with its unorthodox, but model-making general news aggregation, product, is making headway, especially as tablets thunder off the assembly line.
• It’s a (big) niche product. The Journal, extensions to national/world news notwithstanding, is a business news product. Promise me I can find out about what is ticking in the business world, instantly and with first-hour analysis, and I know I can rely on a single place for business news. In fact, since it’s audio and video, I can leave it on in the background, multi-tasking away. And I can stop and start it, much easier than TV.
• It’s aimed at the future, not the past. In addition to tablet availability, WSJ Live is available via “Boxee, Etisalat, Panasonic’s VIERA Connect-enabled HDTVs, Samsung 2011 Smart TVs, Sony Internet TV, VIZIO Internet Apps HDTVs, and the Yahoo! Connected TV platform.” More distribution outlets will be added soon.
• It’s a free product. The ad money is so good that Journal has made WSJ Live free. That’s part of its longstanding freemium approach to paid content, allowing a porous wall, since adapted by its arch-competitor, the New York Times. Both Bowen and Murray note that paid video models may later develop.

Maybe it’s that freeness that decided the Journal on providing only three text links to its “front page” news stories, and none directly from its videos. Which, if you think about it, is odd. It’s WSJ Live, but in video, with print reporters talkingabout stories they’ve written or will write — but with few links to the stories. (Rather, anchors often say: “Go to WSJ.com for more.”) If the Journal provided those links, how would it charge for access — paid access that currently generates more than $100 million in digital circulation revenue? That’s TBD.

There are lots of kinks to work out and think through. For instance:

• Brand: WSJ as the overall brand is a good decision. The Journal stands for business and subsuming Marketwatch and AllThingsD video under it makes sense. There’s WSJ Live itself and then there’s “News Hub,” “Digits,” and “The Big Interview,” among others, a learning lexicon curve for customers. Time may itself lead consumers to that understanding, or WSJ may decide to simplify, or nest, the brands differently.
• That social thing. WSJ will connect up this product with the social web, building on concepts we see in this week’s WSJ Social launch. (See “With WSJ Social, the Wall Street Journal is rethinking distribution of its content on Facebook.”)
• That saving thing. WSJ needs to give viewers tools to save videos. The NPR tablet playlist is a great model here.
• That search thing. Hard to find at this point.

If you run a newspaper company, or a newsroom, WSJ Live should interrupt your reverie that replica tablet products are “enough,” right now. Hell — smarter presentations of text on tablet products, with good still photos, aren’t enough. But WSJ Live says that far better than 10 analyst columns.

If you run a broadcast company, WSJ Live should send a chill down your spine.How did these print guys do moving pictures better than us? Most local broadcast companies are still stuck in the broadcast thinking mode.

While CNN moved early and impressively to real multimedia, its tablet news video experience isn’t near as fluid. NBC’s Nightly News app is good and has Brian Williams to give it personality, but, too, doesn’t compare well. MSNBC is not yet seen on the tablet, other than Rachel Maddow’s show. The uber multi-platform Bloomberg, exploding in reach and in hiring talent, is undoubtedly studying WSJ Live and planning to play catchup.

WSJ Live becomes the sixth WSJ iPad-specific apps, with one additional Barrons and two Marketwatch (one paid, its data app) products. What began not long ago as an experiment in tablet products is becoming serious business.

Ah, the joys of print — and real world — serendipity.

Arriving in Berlin to speak at the annual Medienwoche, part of the IFA 2011 content-meets-tech conference, I took a post-flight stroll around my hotel. I picked up a Wired U.K. at a local newsstand (newsstands chock-full of magazines and newspapers seem ubiquitous in Germany, their big-city absence in America made more noticeable). It’s a good issue, exploring the top digital entrepreneurial hotspots across Europe, from a U.K. perspective.

Across from p. 82, my eye caught a house ad. It was selling all things Wired U.K., but selling them in a customer-centric way I hadn’t before seen. Reproduced below, you see how it focused on how customers may variously access Wired. It speaks “multi-platform,” “multimedia” and “news anywhere” much better than those compounded nouns (which, when you think of it, are starting to sound like multisyllabic German constructions).

It’s masterful in telling the reader simply, and with a bit of fun, what the Wired U.K. brand stands for, how you can pick your timeliness (now to annual), mode of ingestion (reading, listening, or attending conferences) and more.

In a second bit of terrestrial serendipity, it turned out that Wired U.K. Editor David Rowan was speaking at IFA two hours after my talk. He and his art director, Andrew Diprose, had already supplied a digital copy of the house ad. I told him how well I thought the ad captured a business model in the making, with a clear customer-centric approach. He thanked me for the comment, and added, “It’s just something we tossed together when we had an extra page.” Well, it may have been, but it shows how this Wired crew is thinking of their business, eating some of the digital dog food it dishes out in each issue.

The ad had particular resonance this week as I’ve been thinking about the question on everyone’s minds in the newspaper and magazine businesses: What’s the new business model — that hybrid print/digital or digital/print — going to look like? It’s clear to everyone at this point that while print has a significant role for as far forward as we can see, it’s receding in importance, and revenue, and that digital is the growth engine on which to focus.

It’s one thing to say that and quite another to say what the new business model will look like. How much revenue will come from what, when, and who?

Now approaching 2012, we see that 2011 has provided a few clues to that new business model. No one, though, even the world’s digital revenue news leader, Oslo-based Schibsted (with 30 percent of overall revenues driven by digital) will tell you that even the industry’s leader has not yet found a big, sustainable model able to support a large newsroom.

Let me propose a model I’m testing out, as we watch the rollicking developments in the industry. As paid digital-access plans roll out weekly, as Digital First becomes not just a catchphrase but a company, as tablet development moves to the front burner and as the TV business continues to outpace both newspapers and magazines, what are the common threads we can see?

It’s purposely a simplified, bare-bones structure. I call it the newsonomics of 1, 2, 3, 4 and welcome flesh to be added to the skeleton — and/or chiropractic adjustment as well.

It’s 1, 2, 3, 4, as in:

• 1 brand
• 2 major sources of revenue, advertiser and reader
• 3 products: print, computer, and mobile
• 4G, as in the coming of faster connectivity

Let’s look at each one, briefly:

1 brand

The first decade-plus of the web was all about collecting, bringing things together. That meant major wins (63 percent of U.S. digital ad revenue in 2011 is going to Google, Yahoo, AOL, Microsoft — and Facebook) for those who aggregated. The act of collecting (curating if you prefer) was rewarded at the expense of those being aggregated. Now, as we approach 2012, we’re seeing a major re-assertion of brand, and its primacy.

Steve Jobs’ tablet-launching assertion that search is so yesterday was part sales pitch, part prophecy. The app is nothing if not the re-ascendance of brand, encapsulated in a few pixels. These tiny apps — from ESPN, The Atlantic, Time, the Guardian, and Berliner Morgenpost to The Boston Globe, The New York Times and the Wall Street Journal — all convey new promise. That promise has found a business model — all-access — to accompany. After years of wandering in the wilderness of customer confusion and self-doubt, news companies are saying: “You know us, you know our brand; you value us. Pay us once and we’ll get you our stuff wherever, whenever, however you want it”. Call it “entertainment everywhere” or “news anywhere,” or “TV Everywhere,” major media are now re-training their core audiences to expect — and pay for — ubiquity.

News companies are following the lead of Netflix, HBO, and Comcast (Xfinity), all now basing their hybrid old world (TV/cable/post office) and new world (smartphone, tablet, computer, and connected TV) on the same simple idea. In the first digital decade, news and entertainment was atomized by aggregators, dis-branded, as readers and viewers often flipped through Google, YouTube, or Yahoo without knowing who actually produced news or entertainment.

Now, we see brand re-emerging to signal top-of-mind awareness — and to earn those one-click credit card payments. These are friendlier brands, attempting to leverage and master the new social curation of news and entertainment.

2 major sources of revenue, advertiser and reader

For that first decade plus of the web, news publishers relied on one revenue source — digital advertising. That’s been like wheeling into the future on a unicycle, lots of careening and too little forward progress. As publishers have taken a long-term view of the business, the conclusion from Arthur Sulzberger and Rupert Murdoch to Dallas’ Jim Moroney and Morris’ Michael Romaner has been the same: We have little hope of creating a successful digital business without robust digital reader revenue. Reader revenue doesn’t have to be mean only digital subscriptions. Schibsted and Australia’s Fairfax are pioneering “services,” with Schibsted’s story-aided weight-loss programs prototypical. Newbies Texas Tribune and MinnPost are showing how reader-attended eventsare moneymakers. The tablet will spawn lots of new one-off paid reader products.

And advertising doesn’t mean just selling space. Most major news chains, from Advance to Gannett to Hearst, are becoming regional ad agencies, selling and re-selling everything from deals to Yahoo (or in Advance’s case, Microsoft) to search engine marketing to Facebook and Google to local merchants large and small. The New York Times pulled Lincoln “ad” money into digital circulation push. Sponsorships are coming back in a big way for mobile.

So, two revenues, tried, true, but twisting new. Will they be 50/50 supports of new models? Too early to say, but they provide us the rivers and tributaries to build new revenue stream models.

3 products: print, computer, and mobile

“Online,” of course, was first re-purposed print. Too much of mobile is, again, re-purposed online. Yet, the smarter all-access players, mostly national, are looking at their audience data and seeing how different usage is by device or platform. There are new products — MediaNews’ TapIn is emblematic — that are made for the tablet, with even smartphone utility in question and desktop a distant third. We’ll see three distinct ways of thinking about product: print, lean-forward desktop/laptop and lean-back tablet/on-the-move smartphone. Newspaper print becomes just another platform. This triad becomes more than a smart way to think about product development — it becomes a way of measuring costs, revenues, and metrics like ARPU.

4G, as in the coming of faster connectivity

Only in the last couple of years have we passed 50 percent broadband access in the U.S., which currently ranks ninth worldwide at 63 percent of households. We’ve forgotten the days when pressing on the play button on a website’s video player was a crapshoot. Between buffering and bumbling of all sorts, video only sometimes worked. Now, take a look at the just-launched WSJ Live on the iPad, and you see how far we’ve come. 4G is now on the mainstream horizon, and with it comes the higher valuing of news video. That’s a challenge for text-based newspaper companies, most of whom have taken only first steps to becoming truly multimedia companies. You can see the 4G glow in the eyes of John Paton’s new Digital First Media company. I’m told his New Haven Register nowoutproduces the local TV stations in digital video news creation; few newspaper peers can yet say the same. With ad rates for news video are still markedly higher than for text stories, any successful model must put video at the center of new products.

So, it’s 1, 2, 3 and 4, good tests of evaluating new company strategies — from the inside or out.