The US newspaper business is in dire straits. Recent death rattles have included Sam Zell’s Tribune group filing for bankruptcy protection and its LA Times title whoring itself ever more shamelessly to advertisers; the Boston Globe, who is owned by the same company that own the New York Times, is scraping together its existence – its unions have just approved cost-cutting measures, like pay cuts and the scrapping of lifetime job guarantees to try and make enough savings to warrant the paper’s ongoing existence.

Now the WSJ is poised to try and fill the gaps in content created by these cost-cutting papers: “We’re going to move in on each of the big cities”, said managing editor Robert Thomson. The paper currently allows free access to certain articles, but has a subscription plan for its premium financial content as well as a fair chunk of its other stories. Now it’s looking to make that more sophisticated, and allow, for instance, a reader interested in today’s Clearnet bid to buy just that story without having to fork out for a whole subscription. They’re also going to create premium subscriptions for their truly niche, high-quality business content, in areas like “energy, commodities, wealth management”.

It comes as the New York Times Co.’s chairman Arthur Sulzberger Jr. hinted a couple of week ago that the NYT might install a micropayment model: ”We continue to take a fresh, hard and deep look at various subscription, purchase and micropayment models”. Ariana Huffington is a fan too – in an interview with German paper Die Welt, she said the following:

“The idea that you can go back to a pre-Internet world where you can create walled gardens around content, and charge for admission, is simply futile. Those who try that are going to fail. Today we live in the linked economy, not a walled-off content economy. The challenge is to find different ways to monetize links among media through advertising or micropayment or whatever, not subscription for exclusive content.”

Well, it’s going to be a bit more sophisticated than that. Micropayments make sense for the WSJ, given their specialised content for specialised readers – you can maximise the profitability of a niche through micropayment, when a businessperson finds they absolutely need its individual bits of information. But a more casual reader will find the barrier of individual payment pretty offputting – a subscription model makes more sense for them, because after one payment they can go back to the browsing style they’re used to.

Micropayment probably needs to be not at the truly micro level of individual stories, but payment for a week’s worth of, say, green tech stories. Bundling a story from elsewhere on the site for free along with the paid package could work well too, both as an incentive to purchase and a means of drawing readers to other parts of the site. The beauty of online means that there is this freedom to offer these different payment structures at once – Huffington et al should be thinking of all of the possible ways to monetise their product.

The Newspaper Association of American is convening in San Diego this week to sort it out, and apparently the hot topic is working out a way to charge for content online that works. Alan D. Mutter, writer of variously doom and ideas-laden blog Newsosaur, is saying that a number of “under-the-rader discussions” are going to go on between CEOs of media groups, away from the vanilla shop talk of the actual convention. As well as the talk about paying for content, there’s also going to be debate on how to get back the classified advertising market that was, pre-Craigslist, once so lucrative; how to tap some of the revenue from searches; and whether to start charging aggregators for content. Maybe it’s a good time for the HuffPost to be getting out of the aggregation business and funding investigative journalism, as long as they’re not just pouring their venture capital into it.

The head of Associated Press, Tom Curley, told the American Journalism Review: “The readers and viewers are going to have to pay more. Advertising is not there. Advertising will likely be contracting. So there has to be a shift.” Last month the Hearst group said it would start charging for at least some of its content, along with employing/exploiting citizen journalists, or “prominent citizens in our communities”, to provide content. And Rupert Murdoch, whose Wall Street Journal already charges for access to its juiciest content, said over the weekend at a cable TV conference: ”People reading news for free on the Web, that’s got to change”.

On a side note, Hearst and Murdoch are also both working on newspaper-sized e-readers to send their content to, which might just be overestimating massively the value placed by readers on large cumbersome formats.

Murdoch also waded into the aggregation debate, asking: “Should we be allowing Google to steal all our copyright… not steal, but take”; Google recently started posting ads on its Google News service. The debate is whether the amount of traffic generated by Google searches is worth having it eat into your advertising yields – Gawker emphatically thinks so, the Guardian Media Group is less convinced, bringing up the issue to Lord Carter last week. As Floridian journalism professor Neil Reisner puts it, newspapers are now kicking themselves for “being sluts who’d put out for any old Google that came their way” – but surely to shun Google now would be condemning themselves to irrelevance.

But getting back to direct charging for content, and Bill Grueskin, former managing editor of WSJ.com, says: “slapping a subscription fee on an existing free news site is going nowhere”, arguing that purely online content that can’t be replicated in print is what needs to get paid for. And Martin Langeveld, of Harvard’s Nieman Journalism Lab, suggests that the maths just doesn’t add up – charging for content will drive viewing figures, and therefore advertising revenue, down to the point where the subscription fees won’t be enough to make up the shortfall; Nancy Wang at Media Cafe comes to a similar conclusion.

Not that the Boston Globe is going to be able to mull over these arguments at leisure – it’s got to find $20m in cuts, and fast. They’ll come from wage cuts, pension cuts, and the end of lifetime job guarantees. The existence of the latter of these is frankly laughable in an industry that has to stay young and lean, and I can’t see the unions having a strong case to make for them.

The paper is rolling out the schmaltz in a bid for create an upswing of sentimentality towards ink – this piece profiles the Bostonians lamenting the possible loss of their paper. “In Woburn every morning, retired maintenance man Ollie Gonsalves rises, gels back his hair, and heads to the Moore & Parker newsstand to buy his daily Globe”, write the staff in brushstrokes Norman Rockwell would have rejected as too sweet. “Fifth-grader Connor Locke piped up…’When Papi hit the 52 home runs, I framed that and I have it hanging on my wall’. His mother beamed. ‘Can’t frame the computer screen,’ she said.”

For those millions of us who use newspapers as a source of information and not as nostalgic decoration, the advent of the internet, and a variety of devices enabling it, is the future of news; and it’s looking unlikely that a tactic as prosaic as straight charging of the subscriber is going to ensure that future.

In a seminal piece in this month’s Atlantic Monthly

A little context: like most American newspaper companies, the New York Times Company, which is owned by the Ochs-Sulzberger family, is getting creamed right now by the worst recession since the Wall Street Crash, declining print circulations, and the slow growth of online advertising revenue at a time when print advertising revenues are falling through the floor. Much of the money from these ad budgets has migrated into the maw of ’search’, which is dominated by Google, and unlikely to come back anytime soon.

Ok, so the climate isn’t great for newspapers right now, but surely a title that has existed for over 150 years should be able to weather the storm? Hirschorn says no, as earnings reports released in October show that the New York Times Company will default on US $400 million of debt in May unless they perform a massive reconstructive surgery on their finances. The company is already carrying US $1 billion of debt, and only had $46 million cash reserves as of October.

“At some point soon – sooner than most of us think – the print edition, and with it The Times as we know it, will no longer exist,” says Hirschorn. “And it will likely have plenty of company. In December, the Fitch Ratings service, which monitors the health of media companies, predicted a widespread newspaper die-off: ‘Fitch believes more newspapers and news – paper groups will default, be shut down and be liquidated in 2009 and several cities could go without a daily print newspaper by 2010.’”

(As we reported recently, American mogul Sam Zell’s recent travails with the Tribune company further illustrate this apocalyptic trend in the American newspaper industry.)

Options for the Ochs-Sulzbergers are to sell some of their other assets – such as the Boston Globe and the Boston Redsox baseball team – to raise cash, or they could sell their headquarters, expensively built for $600 million, in a diving property market and buy themselves some time to turn things around. Another option is to sell the company altogether, and hope that a liberal billionaire like Carlos Slim or Michael Bloomberg will take it on as a trophy asset. Failing that, they could sell out to Murdoch (assuming he’s interested), or even a company like Google or Microsoft, who might “strip it for parts, and turn it into a content mill to goose its own page views,” as Hirschorn has it.

In any case, he sees the future of the New York Times as being web-only, and not very far away, with up to 80% of the company’s journalists being laid off and the rest focusing on domestic reporting, while tapping into other journalistic networks to outsource foreign coverage.

Hirschorn’s overall outlook is optimistic though: that the newspaper will get back to the kind of hard reporting it’s good at, and ditch the fluff lifestyle features that previously underwrote the Pulitzers.

“In this scenario, nytimes.com would begin to resemble a bigger, better, and less partisan version of the Huffington Post, which, until someone smarter or more deep-pocketed comes along, is the prototype for the future of journalism: a healthy dose of aggregation, a wide range of contributors, and a growing offering of original reporting.”

Ah, yes – the Huffington Post, who of course raised multiple millions from American venture capitalists last month by pushing themselves as ‘The Internet Newspaper’. However, in the Observer yesterday, grizzled commentator Peter Preston poured scorn on the HuffPost’s projections as new media hype, pointing out that despite a supposed $100 million evaluation, the company only took $302,000 in advertising revenue between January and August last year according to a TNS Media Intelligence analysis published in Advertising Age;

“Maybe $2m would be a better guess… Take a closer look at where the lifeblood news on which they comment comes from. Huffington Post provides a long source list, including an impressive roll call of bloggers, but the basic facts and developments arrive far more conventionally: from 40-plus newspapers and broadcasting station newsrooms catalogued as providers (including the Guardian, Times and Indy over here). Dig a little deeper among individual strands, moreover, and you wonder how on earth either Huff or Beast could get by without the Associated Press and New York Times.”

And therein lies the crux of the problem, a conundrum that will likely come back to bite Internet news aggregators: the HuffPost currently pays it’s contributors nothing but will surely be forced to amend this business model in the face of its massive injection of capital. If that happens, and their online advertising revenues don’t increase markedly in accord, this will cease to be a laughing matter and their investors could even pull out. Meanwhile, unless someone conceives a genius new business model to save print dinosaurs like the New York Times, the prospects for most newspapers in the US, and also Britain, look dire.