By Roger M. Pang

Newspapers across the country are reporting double digit losses from last year and layoffs, with advertising continuing to decline, who knows when the bleeding will stop.

Last week, Gannet, Tribune, The New York Times and Hearst Corporation announced a joint venture to sell advertising on their respective sites. It’s called quadrantOne and it will sell online ads for nearly 200 websites, including The Los Angeles Times, The Des Moines Register, The Houston Chronicle and The Boston Globe. According to the announcement, usatoday.com and newyorktimes.com will not be sold by this new company because each of those respective papers has a team in place to sell for those specific sites.

QuadrantOne is a financially smart step for these businesses. For a media buyer, executing a multi online-media buy is a nightmare. (It’s even worse if you are doing a buy for the printed newspaper because they have different sizes, deadlines and costs. And don’t even think about asking to add color to that ad!)

Years ago, companies like Newspapers First and Metro Newspaper Advertising Services were formed to help advertising agencies buy newspaper space. Now, as we approach the end of the first decade of the 21^st century (and 20 years after the Internet was opened to commercial interests), those companies are shifting their emphasis to online buying strategies.

These news companies will save on commissions since they won’t have to pay newspaper brokerage agencies. What does this mean for companies like Centro, which specialize in buying ads on local websites? The next few months will be telling. The new joint venture will likely make their buying easier, but it might also cut down on their commission.

ON PARTNERSHIPS

What can newspapers do to increase revenue quickly and stop the hemorrhaging and layoffs? Here’s an idea: stop selling other companies products and start creating from within. There are so many partnerships within a newspaper, that their overall margins shrink and they lose their brand. Companies such as Monster, Yahoo! Hotjobs, Careerbuilder, Cars.com, Apartments.com have all partnered up with various newspapers. So, instead of a newspaper getting a 30-to-40% margin, they are more likely getting half of that, if not less.

Take Yahoo! partnerships for example. More than 250 newspapers are currently locked into a contract with Yahoo! Hotjobs. That means the papers cannot create new online initiatives on their own. Ergo, they are prohibited from starting their own low-cost job board or online real estate solution.

The contract with Yahoo is a great deal for newspapers that had a weak online solution, but for those who had strong online identities and solutions before the partnership, it stymies their business and any potential for growth. There is a clause in the contract indicating if a newspaper wants to create new online revenue channels (specific to its own website), it has to be cleared by Yahoo.

THE DEMAND FOR LOCAL, LOCAL

The demand from readers is local, local, local. They can get national news from television news and websites like cnn.com, wsj.com and nytimes.com. Readers want to know what is going on in their neighborhood without having to click through several tabs to find out what is going on within a 5 –to-10 mile radius of their house.

To fill the void of ultra-local news, newspapers need to create micro-sites for neighborhoods and niche categories complete with blogs, neighborhood events and even (dare I write it?) gossip. They need to embed reporters in the neighborhoods, instead of writing from the periphery.

Here are some other examples of filling the void - TechCrunch, Mashable and Venturebeat; although these are not local news sites, they are technology heavy sites and they are pretty successful. It probably didn’t take much money to start these sites. But they do use talented writers and business people. Newspapers need to do this now before more of their writers flee to new media. Just look at Dean Takahashi, one of the better technology and gaming writers (until recently of the Mercury News). He’s joining Venturebeat, which just happens to have been started by another (former) Mercury News writer, Matt Marshall.

SOME SOLUTIONS

Here are a couple of thoughts on how to make newspapers get back on track. First, the papers need to create new sites, but they need to take their names OFF of them. Right now newspapers to advertisers have bad connotations.

Readers don’t want just the online version of the paper (which they already view as dated and not-so-timely), so give them something new, hip, relevant, ear and eye-catching. Second, papers need to stop sharing information with all other media outlets (think AP wires, Reuters. Readers use SEM so there is no need to repackage content); this is a great arrangement for national and international news, but for local stories, have local reporters/people write about their own neighborhoods and neighbors. If you have information that is on your site ONLY, then people must go to your site to read it. There is no other option. That’s one way to drive traffic to your site. And newspapers need to act quickly; not toss an idea out and hope that 20 managers throw their support behind it eventually. I’m talking right now, make decisions and then execute them. Don’t just sit and discuss it ad nauseam and wait and wait for everybody’s approval.

A couple of years ago I worked on a business plan at The Mercury News for a technology magazine to target technology workers and early adopters. We even had a meeting with Wired Magazine co-founder, Industry Standard founder and now chairman of Federated Media - John Battelle for his feedback. I believe every one at the table wanted to pursue it but it came down to money to start it up. Now, just take a look where John (and his business) is, and where the Mercury News is. It’s a major case of “Would’ve, Could’ve, Should’ve.”

Comments: rpang@techklix.com