Newsonomics of….

Hearst’s strategy here is one to watch. There are good reasons (more on that below) why daily newspapers have opted to go for door number one and get more money from long-time subscribers while making new subs a largely second priority. But they know that’s a two- to three-year strategy. As 10,000 baby boomers turn 65 every single day through 2031, the older-reader market inevitably winnows and must be refreshed with new, paying customers. For daily newspapers, getting younger (yes, younger means under 55) readers to pay is mostly phase two.

So let’s see what Hearst learning, as it leads both newspaper companies in that quest and its fellow magazine chains as well.

There’s a lot to like about the demographics of the digital audience. According to the company’s data, the readers are 10-20 percent more affluent, 10 years younger, and more educated. Wilkes acknowledges that those good demographics may be skewed by early tablet demographics themselves, but they are directionally vital.

Critics can say what they want about the diminishment about the L.A. Times. Its news presence and ability to set agendas, through its reporting and opinion pages, is certainly reduced, but it’s still got the only megaphone of its kind in town. As Gabriel Kahn, a University of Southern California journalism professor and WSJ alum pointed out to me this week, even newsletters that aggregate local news — from such sources as the L.A. Business Journal and KPCC’s Maven’s Morning Coffee, rely heavily on the Times for their citations. Consider that an indication that the next generation of rip ‘n read — dailies’ long-standing complain against local radio news stations — uses the same raw resource as the first one, the daily newspaper’s vast newsroom.

What lesson we’re seeing reinforced: No matter how much anyone may pre-bury the legacy daily, some people understand the huge and remaining value of media today. So maybe a different question needs to be asked. Not the almost trite one — “When will dailies disappear?” — but a new one: “Who will own and steer these old titles into the heart of the 21st Century?”

The new board’s mandate, of course, is to maximize its take on the sale. Tribune newspaper profits run at the roughly $200 million level, maybe a third of which comes out of L.A. So, take the market multiple of 3 or 4 times that number as a price — or $600 million-plus — for the eight papers, even though underfunded newspaper pensions put a drag on that number. Then, if the inflamed passions, stoked by the Koch bid, produce a higher selling price, so much the better.

The board clearly is aiming for a single deal. One deal reduces transaction costs and deal risk, and speeds closing. So who’s likeliest to play in a single auction for the eight Tribune papers, which also include two non-metros in Newport News, Va., and Allentown, Penn.?

The likeliest four: the Brothers Koch, Rupert Murdoch, the B group from L.A. (Eli Broad, Ron Burkle, and Austin Beutner, a well-connected trio of moneyed liberal lineage), and Aaron Kushner’s 2100 Trust.

For the Kochs, the purchase would be a seem to be an extension of their political wars by other means. Of course they protest that notion, and the only track record we have to go on is their profound influence on conservative activist American politics over the last several years.

Murdoch’s L.A. TV licenses come up in 2014, so the cross-ownership issue is immediate and real, and with the FCC in appointment limbo, he’ll not get the waiver relief his lobbyists had hoped to win by now. Flip a coin and I say Rupert goes with his gut and bids.

If he indeed goes for the Times (and other titles, if necessary), consider that Murdoch couldn’t ask for a better competitor than the Koch Brothers. No one’s out in the streets protesting a Murdoch takeover of the L.A. Times or Chicago Tribune. Even Koch opponents whisper that Murdoch would be better — the gray, if not white, knight, to the black hats of the Kochs. It’s a new parsing in the post-Sam Zell era: How do you judge potential ownership these days, except on a relative basis?

Digital advertising is all about technology in 2013, and you’ll see lots of talk of the ad-tech stack, and who owns it. Google, of course, owns much of it, through its successive AdWords/Doubleclick/AdMob and more creations, acquisitions and integrations. Its stack is so efficient that many publishers feel compelled to use it, though they are wary of getting their businesses tied ever more directly to Google — or the Google “Death Star,” as some critics call it.

For most publishers, Google is the classic frenemy. They work with it when they think the advantages outweigh the hazards, even as top publishers build their own programs. In fact, expect to soon see U.S. news publishers transition their Newspaper Consortium partnership with Yahoo into something intended to be broader, something that allows publishers to opt into and out of the ad programs of multiple portals — not just Yahoo — harnessing the ad tech of the day.

Six-month-old Smart Match is one of the FT’s latest innovations to stay “premium.” In brief, the content of an advertisement is matched, dynamically, to that of an article. The technology: semantic targeting of both article content and the FT’s current “ad library” for the best matches on the fly, as compared to standard keyword targeting.

Welcome to the emerging world of value exchange. It’s not a new idea; value exchange has been used in the gaming world for a long time. As the Zyngas have figured out, only a small percentage of people will pay to play games. So they’ve long used interactive ads, quizzes, surveys, and more as ways to wring some revenue out of those non-payers.

It’s a variation on the an old saw that says much of life boils down to two things: money and time. It also brings to mind the classic Jack Benny radio routine, “Your Money or Your Life.” If people won’t pay for media with currency, many are willing to trade their time.

Now the idea is arriving at publishers’ doorsteps. It is being tested mainly, but not exclusively, as a paywall alternative. Yet, as we’ll see it, there may be many other innovative uses of time-based payment.

Renamed NewsRight, it was an industry consortium, and here a truism applies: It’s tougher for a consortium — as much aimed at defense than offense — to innovate and adjust quickly. Or, to put it in vaudevillian terms: Dying is easy — making decisions among 29 newspaper companies can be torture.

It formally launched just more than a year ago, in January 2012 (“NewsRight’s potential: New content packages, niche audiences, and revenue”), and the issues surfaced immediately. Let’s count the top three:

1) Its strategy was muddled. Was it primarily a content-protection play, bent on challenging piracy and misuse? Or was it a way to license one of the largest collections of categorized news content? Which way did it want to go? Instead of deciding between the two, it straddled both.
2) In May 2011, seven months before the launch, the board had picked TV veteran David Westin as its first CEO. Formerly head of ABC News, he seemed an odd fit from the beginning. A TV guy in a text world. An analog guy in a digital world.
3) Publishers’ own interests were too tough to balance with the common good.

Among these four newer products, we can see the emerging new rules of publishing creation. Among them:

Critical mass enables growth. Niche product creation that builds on existing company infrastructure, knowledge and marketplace learnings is the cost-effective way to go. Each of these companies adapted what they learned to these new launches. Politico’s seven Pro products illustrate this most clearly; Atlantic Media’s cousin-by-cousin launches put a parallel spin on the notion. (Intriguing side note: Politico owner Robert Allbritton put his once-core TV station holdings on the market last week, saying he wanted to further invest in and around Politico. The “around” could include replicating the Politico business model in a new coverage niche.) This is a new power of incumbency. It’s not the ownership of a printing press, as it was for newspaper publishers in the old days.
Analytics leads the way; in-person follow-up seal the deal. You may have an intuition about a new market, but checking it out — doubly — is essential.
Help your audience deal with future and present shock. Covering a sector is one thing; covering in a way that embraces — and tries bring a bit of order to — the multiple change issues of any audience is another. That’s an aspirational and competitive editorial positioning, but we can see ongoing examples of it in the work that Mint, Quartz, and Politico already produce.
Events are emerging as both a vital new revenue source and an almost counterintuitive high-touch part of the mostly digital business mix. HuffPost Live, Google Hangouts, and assorted other ways to assemble online community are great experiments and promising tools, but old-fashioned in-person events are gaining strength as we all go more digital. That’s an important learning about the value of relationship, and how to reinforce it, even in the age of MOOCs.
It’s not print or digital. It’s digital and print, suited to audience reading habits — which of course are a moving target. Influentials, like all of us, toggle between the two.

Design is an important part of these acquisitive moves. One reason these companies have value on the market is that they stand out. It must be said: For the most part, news companies have once again missed a chance to innovate, to make something new of a new platform. Flipboard, Pulse, and Zite each saw the potential of tablet news and magazine feature reading early and set to work to present it harnessing the glowing touchscreen. Now Flipboard 2.0 (build your own magazine) and Zite 2.0 are moving to a next generation. The best newspaper sites have mastered the utilitarian basics, but they hardly break new presentation ground. They also emphasize a single brand, where plainly many readers relish cross-title variety and a bit of serendipity. Innovation on tablet news design has been minimal, and it’s outsiders who largely deserve the credit for it.

One noteworthy exception: AP Mobile. While it lacks the finesse of Flipboard, it delivers a national and local experience, bringing in hundreds of local news feeds into its tablet and smartphone products, and is one of the top news apps downloaded in Apple’s App Store. AP Mobile is a rare case of newspaper cooperation, building a single customer experience; now it’s up to AP to deliver the next-generation mobile experiences.

How did we get here? How did we get to a place where a half dozen of the top newspaper nameplates in America could fall into overtly political hands? What does it tell us about the reshaping of the U.S. daily landscape? How might the Koch brothers’ ownership fare, a lesson applied here that may both confirm worst fears and offer counterintuitive lessons about the nature of local press power in 2013? Finally, what are the newsonomics of the Tribune sale, as its new board ponders its options?

Let’s look then at the newsonomics of Pulitzers, paywalls, and investing in newsrooms, and think about whether our intuition has any basis in provable fact. If even 20 percent of expense devoted to newsroom seems like a low number, consider that the industry average is about 12.7 percent for the largest dailies. That’s the average newsroom expense, of total expenses, for papers above 100,000 circulation, according to Inland Press Association, the industry’s acknowledged leader in much benchmarking work. Interestingly, those with smaller circulations spend a bit more, and we know their business results over the last 10 years — less decline in ad revenue and in circulation — have been better. We can also see in the data that newspapers overall are spending a smaller percentage of their overall expenses on their newsrooms than they were 10 years ago. (The comparisons are 2011 to 2001; 2012 data will be out soon.