Whenever one writes about the future of newspapers and other news organizations, a voice in the back of his or her head says: “They’ve tried that already and it didn’t work.” Fifteen years into the digital revolution, that’s the dilemma confronting the news industry as it once again revisits possible solutions. Thankfully, no one is giving up.

Paywalls. Video. Search. Hyperlocal. Mobile. All these things are extensively discussed in “The Story So Far: What We Know About the Business of Digital Journalism,” a new Columbia Journalism School report from Bill Grueskin, Ava Seave and Lucas Graves. The news-centric report doesn’t deal very much with our favorite subject — the transformation of the local marketplace, and the newspapers’ potential role in it. But there is plenty on the plate here.

While there are no ready answers — if we knew the answers, we would have provided them a long time ago — there are strong overviews on each subject. The real focus here is reconnecting to the real “fans” and “regulars” who may engage with a news product 50 times more than the “occasionals” and “fly-bys” who make up the bulk of unique visitors. “When people talk about the size of an audience, that’s a sham,” the report quotes Scout Analytics’ Matt Shanahan.

One goal stressed in the report is building a direct relationship with fans to help push contextual advertising. “By producing relevant journalism, deploying data intelligently and relying on social media — not just search engines — to drive traffic, (publishers) can gather a more devoted and involved readership, one that advertisers will also prefer,” note the authors.

Examiner.com, for instance, does very well when it encourages writes to match their output to social media, search…and advertising. Pet writers did very well last year matching coverage of dog adoption and pet shelters, pushing CPMs from $3-$5 to $11 for P&G’s Iams pet food, a key Examiner sponsor.

In theory, other passion subjects do well too. High school sports especially stands out. The Dallas Morning News’ High School Game Time registers 14 pages a month compared with entertainment (2.5 pages), news (2.78 pages), weather (4.83 pages) and sports (7.71 pages). It also grosses $700,000 a year of new ad dollars, in partnership with local cable coverage. This year, it is launching a $1.99 iPhone app, which represents new circulation revenues, along with heavy user paywalls, such as the one recently enacted by The New York Times.

That’s important. Like others, I’ve actually come to conclusion that the news organizations that have the market power to erect such paywalls are the ones that ultimately survive. For The Times, which has boosted per copy costs to $2 a day, circulation dollars have inched up to $683.4 million a year, just behind display advertising, which has fallen from $1.27 billion to $780.4 million. Next year, it doesn’t seem out of the question that circulation will surpass display.

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“Content is king.” It’s one of the oldest, most frequently trumpeted maxims in media. Original work commands a premium, while aggregation and curation are merely commoditized collections for easy distribution…or so the thinking goes. Only, what happens if the script is flipped? That’s the question that Martin Nisenholtz, senior VP of digital operations at The New York Times, pondered in a recent keynote address at NAA mediaXchange in Dallas.

Nisenholtz believes that the news ecosystem is now inverted. Content reigned in the print and portal eras, but “platforms won in Web 2.0.” If there is any lingering doubt, take a quick look at the valuations and market caps of leading digital platforms (Google, Facebook) as compared with top publishers, and the “who won?” debate summarily ends.

Largely open platforms such as Google, Twitter and Facebook (though debatable) capitalized on a confluence of drivers to control Web 2.0: broadband acceleration, mobile growth, open-source tools (SaaS) and flexible standards for “re-mixing data” (i.e., RSS).

If Web 2.0 has been decided, is the game entirely over? Nisenholtz isn’t willing to concede the point just yet. In fact, The Times new digital subscription model (don’t call it a “paywall”) is one attempt to cultivate a “web of managed links” by finding a “new equilibrium between content and platforms.” Another is Ongo, a personalized news service that customizes the reading experience across multiple sources and categories. The Times, Gannett and The Washington Post each have a financial stake in the platform.

Nisenholtz insists that these are platform-agnostic efforts to control and moderate content flow, not lock it down. Where the “lock down” is occurring is with audience data because, as Facebook, Twitter and Groupon valuations have shown, he who controls the audience data controls the money. As an example, The Times no longer participates with any ad networks.

But an elephant-in-the-room question persists: Ongo is a paid platform ($6.99 per month). Facebook, Twitter, The Huffington Post Flipboard, Instapaper, Pulse, Zite and numerous others are not. If The Times’ publishing contemporaries don’t move in lockstep to similarly control their content, then profuse free options will continue to exist. And if that’s the case, why would anyone pay? This is one of many reasons why Ongo launches with few guarantees. And a reason why fellow media execs may be reticent to join.

It’s all part of the tangled “web of managed links” that Nisenholtz is trying to weave.

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Michael Zimbalist, who runs R&D at The New York Times Co., told Inman Real Estate Connect attendees in San Francisco yesterday that the rise of social networks has spearheaded a very real shift from “the paradigm of publishing to the paradigm of communicating.”

“The consumer is squarely at the center,” said Zimbalist, noting that there are now more global users of social networks than even e-mail. “Time spent using e-mail has completely flattened out.”

The new paradigm has led to a change in overall behavior, with users now active creators of content. “Every minute, 20 hours of video is uploaded to YouTube,” he said. Mobile is also integrated into everything.

The implications for the publishing and software industries are that they have to plan for multipurpose devices and services and incredibly rapid innovation. “We are seeing a Cambrian explosion of evolution,” said Zimbalist. Many things are coming up, and some don’t make it.

Features that have been seized upon include search with voice, location, image recognition, multi-touch, augmented reality and “gestural navigation” such as Wii game devices. To stay abreast, it is critical that publishers and software producers work to sync everything at all times.

Regarding the iPad, Zimbalist took note of an audience member’s disappointment with The New York Times’ initial iPad app, which is just a “best of” product (I like it, actually). A new premium version will come out soon. Addressing rumors that it will be priced as much as $360 a year, Zimbalist only joked that users will “definitely pay more” than they do for The Wall Street Journal’s iPad app.

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Digital media is more cannibalistic than complementary and is seriously eating into the demand for traditional news sources such as newspapers, TV and news magazines, according to the third annual survey of news users done by Outsell Inc.

The survey findings are based on almost 3,000 consumers and are fully detailed in Outsell’s “News Users 2009” report, written by former Knight Ridder executive Ken Doctor. It essentially pours water on hopes that online traffic from Google and other news aggregators represents new growth opportunities for traditional publishers that ultimately outweigh any cannibalism. In fact, 44 percent said news headlines on aggregator products such as Google News suffice in themselves.

Indeed, such aggregator products are increasingly competing with traditional news products as primary “morning” news sources. They’re tied with newspapers and catching up with TV, which leads with a 30 percent share, a drop-off from 36 percent three years ago.

Long-term trends may be worse than the broad numbers suggest, as a segmentation analysis by Outsell found that “Power Users,” who represent slightly less than half of the market, are increasingly relying more on digital products. These users have “omnivorous” appetites for news, simultaneously serving as core newspaper subscribers while relying more heavily on news aggregator products.

Outsell, however, found they are spending less time with print publications. Moreover, they are increasingly inclined to drop their newspaper subscriptions.

“It’s worth watching the trends set by power news users — they tend to foreshadow where all news usage is moving,” notes Outsell. “The daily newspaper and news magazine habit is quickly ebbing.”

The survey also suggests that paid content may not be a panacea — something that The New York Times is betting on, as it implements plans to move to paid online models in early 2011.  Analysts (like me) would argue that The Times exists in a class of its own as a news source and may prove the exception. Another industry hope –shared by Apple, Amazon, HP and others — is that large computer tablets might entice people to pay for a la carte or subscription content.

Without thinking about the exceptionalism of The Times, or the future of tablets, 75 percent of news users told Outsell that they would get their local news from a different source if a pay wall was put up. Only a small minority said they would be willing to pay for some type of paid content (i.e., online access included with print subscription, online-only access or some other type of “press pass.”).

When the time comes, however, many users will surely reconsider. Just look at the evolution of pay per call, and more recently, paid iPhone apps. None of this, however, undermines the challenges that traditional media face with/and against Google and other digital sources.

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