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 Google/AP hoo-ha is over whether Google effectively steal from newspapers in using their content for free – Robert Thomson, the editor of the Wall Street Journal, stated colourfully that Google were “tapeworms in the intestines of the internet”. The row started earlier this month, at the Newspaper Association of America, where Eric Schmidt told newspapers they had dropped the ball in letting Google distribute content. Schmidt opened his NAA keynote address with the words: “Try to figure out what your consumer wants. If you piss off enough of them, you will not have any of them.” The AP responded with upturned noses and an “industry initiative to protect news content from misappropriation online”. By which they mean a demand for a share of the revenue Google picks up from their content.

AP president Dean Singleton bawled, a la Network’s Howard Beale: “We’re as mad as hell and we’re not going to take it anymore!”, as the AP threatened Google (plus other search engines and aggregators) with legal action for using the work of news organisations without any “fair” revenue share. The claim is that Google are making money from news organisations: they summarise the content, index it, then use it to attract people to their site and therefore sell ads. The news organisations however, commission the work, pay for it, then get no return.

Earlier this week, Eric Scmidt was quoted as calmly advising the shrieking industry: “The best way to get out of this is to invent a new product. That’s the way Google thinks. Incumbents very seldom invent the future….The whole secret here is the ads are worth more if they’re more targeted, more personal, more precise.” As much as innovation is key, the ad model is proving to be a problem. Jeff Jarvis pointed out that newspapers have had 10 years to adjust; to think and develop accordingly, and they haven’t been radical enough. “When papers die,” he says, “there will be silence, confusion and chaos and a few bad guys will escape the watchful eye of journalism. The good news is this: into this crying need, this vacuum, entrepreneurs will rush.” It’s a bleak prospect this journo-pocalypse, but as another newspaper falters almost every week, it seems the reality is rushing ever forward.

What the AP resistance serves to highlight is Google’s unquestioned lordship over the internet - email, RSS feeds, maps, images, news. And Google is the best at these things; challenging Google is a bit like David and Goliath, only David hasn’t got any little rocks to chuck in Goliath’s eyes this time. The underlying question is whether Google can do without news organisations, or visa versa. In the unlikely event, Google could probably take a hit that big and survive, but I think it’s fair to say that in this climate, news organisations cannot do without Google, as Google brings hits, and hits brings ads, and ads are one of two largely unsuccessful revenue models currently clutched at by the industry, the second being charging for content.

Advertising is now bringing insufficient revenue for newspapers. It’s also harder to target and specialise ads with news content, and a report out this week shows that even MySpace and Facebook users are hacked off with endless adverts and app requests asking if they’d like to receive another tastefully designed ‘council estate gift’ or BFF digital charm necklace. And as we saw recently, the maths of charging for content, unless you’re the WSJ or FT and have unique content that you’ve been charging for since day one, simply doesn’t add up.

The Guardian appears to be the only UK newspaper innovating effectively with the development of its Open Platform API service, which Bad Idea reported on back in March, and Arianna Huffington at the Huffington Post, talks of seizing the oppurtunities that “disruptive innovation” provides, pointing to their traineeships for investigative journalists, among other things.

Apart from this there’s not much innovating going on in the industry, just a lot of griping about the state of things and fiddling about within the framework of two existing models. As for Google’s position in all this, Tim Luckhurst on the Guardian’s Comment is Free, says that “Google doesn’t understand journalism”. Of course they don’t, they understand the internet and making money from it, and equally, journalism doesn’t understand the internet and making money from it. The industry is being stubborn, and Google are being ruthless.