Today's initiative has been variously billed as "iTunes for Magazines" (correct philosophically, but wildly overstated) and "Hulu for Magazines" (incorrect, since Hulu is free). Basically you can now go to this digital storefront and buy all your favorite Conde Nast, Meredith, Hearst, Time Inc., and News Corp publications, to read on your "portable digital device" of choice. Your crappy mobile phone, or iPhone, or upcoming Apple tablet, or, hey, Time Inc. is making its very own tablet, & ad infinitum.

And, of course, this is not the only "digital storefront" thing—Hearst, a partner in this venture, is also going forward with its own personal digital storefront called Skiff , and there are similar services already operating, although, hey, there's not dominant iTunes-type player yet, so you never know.

This could be a successful venture. Then again, it could fade into irrelevance in months. Somebody will make the dominant digital storefront for content like this, just like someone will make the dominant digital reader. Magazine publishing companies, one would think, are likely to get smoked by someone like Apple in this particular sector. But they think it's worth the gamble, after watching what happened to the music industry.

But it'll take a few years. How much would you pay to read Sports Illustrated on your E-reader right now? You don't have an E-reader. And you can read Deadspin for free. So, you'd pay nothing. Changing that dynamic is what media companies need to worry about.

And here's Time Inc's announcement to employees, just because we have it:

December 8, 2009
To: Time Inc. Employees
From: Ann Moore
Re: New Digital Venture

Today, five leading publishers including Time Inc., Conde Nast, Meredith, Hearst and News Corporation announced the formation of a new venture to develop a digital storefront and a common reading application that will allow consumers to enjoy their favorite magazine and newspaper content on any platform they choose.

We already know that the next generation of mobile devices will be loaded with color touchscreens, flexible displays, video capabilities and other features that will make them ideal for consuming rich content and an appealing environment for advertisers. These devices will allow us to combine the best of what consumers love about magazines – quality, curated journalism, engaging content and beautiful photography – with the speed, convenience and portability of the latest technology.

While Time Inc. is pursuing a number of initiatives that will help us expand our current digital businesses and develop new products and revenue streams, our participation in this venture is an important part of our efforts. You'll be hearing more about it in the coming weeks and months.

In the meantime, for a look at some of the work Time Inc. is doing around portable devices, check out the demo Sports Illustrated developed, which will give you an idea of how our digital content might be enjoyed in the near future.

www.si.com/tablet

A.M.

Oh, sad newspaper industry. Does anyone believe in you anymore?

Private equity billionaire Warren Hellman was to be the savior of the San Francisco Chronicle, Hearst's cash-bleeding newspaper, which has laid off scores of journalists as recently as last week. But talks with the newspaper and the union weren't as interesting to Hellman, ultimately, as a sexy new idea: Become a sort of Arianna Huffington of the San Francisco-area news market.

So Hellman is now setting up an online (primarily) news operation for the region, according to reports in the San Francisco Business Times and New York Times. Like Huffington's Huffington Post, the venture's staff will include a hefty dose of amateur reporters, including students rom the University of California, Berkeley's graduate journalism school and possibly, according to some of the initial discussions we heard about, local volunteers. Unlike HuffPo, however, it would be a nonprofit, and will work with the local public radio station KQED.

It's a smart move: Even as they greedily snap up iPhones and Macbooks, the Bay Area's tech savvy readers have been abandoning the print edition of the Chronicle, whose circulation fell more than 20 percent over five years to 370,000. The paper lost around $4 million per month last year. Hellman's gambit is also commendable. By pumping $5 million of his foundation's cash into the venture, Hellman seeds a money stream that should help at least some laid off local journalists

But, in an interview with the New York Times, Hellman was cruelly blunt about the loser in all of this: papers like the Chronicle. Asked about whether he was ushering them to an early grave, Hellman said:

I think that demise might be inevitable, anyway. This might put journalism, broadly defined, on a much more stable foundation.

Wow. Perhaps the Times should ask its own executives that same question: The paper confirmed in its own news columns it has been in lengthy talks with Hellman's group "about the possibility of supplying [the group's] reporting to a San Francisco edition that the [Times] plans to start."

Newspapers: Even other newspapers relish feasting on their corpses. Strictly in the interest of the "civic good," of couse.

(Pic: Hellman, by AP.)

When the Chronicle's website this morning yanked a column lambasting the mayor, charges of political cowardice quickly followed. The paper was scared, but not of the mayor: Frightened for its business, the paper is now charging for some Web content.

Vlae Kershner, News Director for the site, writes that the column in question, by former Chronicle editor Phil Bronstein (pictured), was never supposed to be online in the first place. "It's subscriber-only content that was posted by mistake," he told us.

Following months of discussions about doing this sort of thing, the paper has decided to inaugurate its first premium section, containing Bronstein's column (see the email Chronicle editor Ward Bushee sent us, below). It's a small experiment, but an extraordinary step: SFGate has historically been perhaps the most open newspaper website in the country; unlike other big-city papers, it never even tried to charge for access to its extensive archives.

It's odd that the Chronicle would choose opinion content for its first premium content experiment, given the experience of the The New York Times. The Times abandoned its effort to charge for opinion content, TimesSelect, after discovering that a paywall diminished the paper's voice and reduced its advertising revenue. Plus the market for political and cultural opinion is oversaturated; Bronstein's opinion pieces will likewise be a tough sell. The market pays no attention to newsroom hierarchies that put columnists and former editors up on pedestals.

More salable would be the Chronicle's least glamorous work, local news reporting, and any other beat it truly owns, like restaurant reviews. In politics and food alike, though, the paper faces competition from a growing corps of bloggers who could permanently steal way readers. For its own stake, the Chronicle should make sure it will be able to abandon any future experiments more readily than it launched the current one.

Chronicle editor Bushee's email:

Here's the deal. Phil's column was created from the start to be a print-only column in the Monday Chronicle. When we first started talking about the column, Phil and I agreed to try this as a low-stakes experiment. The experiment is not indicative of any larger plan by the Chronicle, SFGate or Hearst. It is not the start of a premium content imitative or a pay wall. But it was designed to test how different content models can serve different audiences. Each week Phil reaches a significant online audience with his blog, which is not available in print. By introducing a column by Phil that is different in its content and mission from his blog, we can see if it adds value to the printed paper by giving readers unique content that they could not get free online. As with any experiment, it will be evaluated at some point to see if we stick with it or change it.



Unfortunately, the brief appearance of the column on SFGate this week made some people think we were pulling it off because of the content. As you surmised in your note, that was not the case. The column was posted for a short time on SFGate through a misunderstanding and then pulled down when it was discovered.

(Pic" Bronstein, via the Chronicle)

Did we say "kindled"? Amazon's Kindle, the e-book reader, has indeed sparked fever dreams among the ailing lords of print. The New York Times has paused from chronicling its own doom to contemplate its salvation — a large-format Kindle, better suited to displaying newspaper-like pages. Hearst, News Corp., and other print-media concerns are pushing their own devices, loath to grant Amazon so much power over their future — but they are fumbling, while Amazon may introduce its newspaper-friendly device as soon as Wednesday.

What a petty concern to worry about, rather than asking if that future even exists!

The argument for e-readers goes like this: Newspapers and magazines will once again be able to charge for subscriptions to support the cost of production, while shedding the expense of printing presses. Readers will pay for the convenience of getting the news delivered to a device.

That prediction fundamentally misunderstands the lessons of the Kindle, which made books available in a convenient digital format, on an appealing device, for the first time. Downloading five books for the beach is vastly more appealing than packing them.

What are the publishers really proposing? Taking a product available for free on the Web, dumbing it down, and then charging for it. News without links, comments, or video, in black and white, updated once a day? In an age when print media ought to be learning to do more with less, they are instead fixated on getting customers to pay more for less.

There is one prospective market for this: The old, who may be so attached to printed media that they will accept an electronic substitute. Hearst digital chieftain Phil Bronstein, the former San Francisco Chronicle editor, told Maureen Dowd that the industry's best hope was that people would live longer, so those trained to read newspapers will stick to the habit.

The obvious converse of Bronstein's feeble hope: The young will never learn to read newspapers and magazines again, having grown up reading online. Why would they switch to a product like the Kindle?

Like the libertarian wingnuts who would rather flee to science-fiction cities on the sea, escape to outer space, or cosset themselves in an online fantasy world rather than live in reality, the addled lords of print like Bronstein would rather dream of a technological rescue than face the hard work of survival.

What newspapers and magazines need to do is obvious: Build appealing websites, and sell them better. But that would require changing.

The editorial workers would invest some of their own money, a Guild representative told the Appeal. But they could hardly acquire the Chronicle on their own, even assuming a heavy markdown from Hearst's 2000 price of $660 million.

Possible buyers fall into a few broad categories:

Old San Francisco money: There's been chatter among Chronicle journalists for years about the possibility of a local investor like private-equity billionaire Warren Hellman or Gap founder Don Fisher buying the paper. It's hard to imagine either of those red-blooded capitalists giving up on the idea of a profitable local newspaper, but then one never puts money into a cash-hemorrhaging hometown paper for purely rational reasons.

New dot-com money: If it's hard to imagine local elders funding a (purposely!) non-profit Chronicle, it's even harder to picture Silicon Valley's many Google million- and billion-aires doing likewise. Newspaper philanthropy would hardly be a hot topic of conversation among young founders on the Web 2.0 cocktail circuit.

Craig Newmark: The San Francisco-based Craigslist founder likes to think of himself as being in a different, entirely more altruistic class of startup founder. In the case of newspapers, he does stand apart, and not just because of his instrumental role in ushering along the decline of print journalism: Newmark has a peculiar (for the tech world) obsession with journalism and politics, leading to investments in content aggregator Daylife and citizen journalism initiative NewAssignment.net and advisory roles at the Center for Citizen Media and Sunlight Foundation.

But even assuming he wanted to buy the Chronicle, it would seem a stretch for Newmark to do so on his own. Craigslist throws off maybe $100 million or $130 million in annual profits, which Newmark must split with other shareholders. The Chronicle is losing $50 million a year just operating, to say nothing of the purchase price.

With enough cash from employees, a fire-sale price from Hearst and maybe one or two more rich investors, it's possible to imagine Newmark picking up the paper, should some sort of expensive guilt complex compel him to do so.

The Chronicle would then be the largest nonprofit paper in the country, ahead of the Poynter Institute's St. Petersburg Times.

More likely, though, would-be newspaper philanthropists will come to the same conclusion as would-be newspaper investors: It makes little sense to invest in fixing the old problems of a dying industry when you can net much more glory or profit starting from scratch.

Northern California's dominant daily loses $50 million per year, give or take a few million, and owner Hearst is threatening to shut it down. So it should come as little surprise that management's demands pretty much mirror the tentative "agreement" reached late Monday.

Chronicle bosses sought in contract renegotiation the right to fire people without regard for seniority and to slash "vacation, sick time, and maternity/paternity leave" and to "outsource some jobs to nonunionized employees."

What did they get? The "ability to lay off employees without regard to seniority... reductions in vacation time, sick leave and maternity/paternity leave... and the right for the company to subcontract any work," according to the Guild.

The silver lining, for employees: two weeks of severance for every year of service.

Even assuming the deal is approved by union members, it only clears the way for more questions about the paper. How many layoffs? Will management be able to win similar concessions from its Teamsters local? Will it eventually demand still more concessions from a union that (we're told) at one point in recent negotiations offered to replace vacation with unpaid leave and cut paychecks?

Increasingly, though, the finer points of contract clauses and benefits are obscured by the bigger question of whether the most internet-addled bunch of readers in the country can support a large metro daily at all. Chronicle staffers won't be the only ones intensely curious about the answer.

Television has been distracting people from the written word long before the Internet came along. And while the Internet has been good for reading, it's mostly encourage the consumption of short-form writing.

Print is a much better way to read long chunks of text — fewer distractions, easier on the eyes, portable from room to room, etc. — and to the extent the Kindle replicates these technological advantages, it is basically a crippled laptop.

But Granger imagines an e-reader that advances beyond the "crude" Kindle. He thinks better technology will do the trick:

... as electronic readers improve, as they add graphics and design and, eventually, color, even more people will opt for the more sustained, contemplative experiences more often. And all will be well with the world.

What he forgets: The Kindle has a built-in Web browser, though few people use it because the Web is not particularly attractive in black-and-white. If it adds color, won't people inevitably use it to read websites, and thus fewer books, just like they do on PCs? There goes Granger's theory out the window.

We suspect he has another reason for touting the Kindle, though. Hearst, the owner of Esquire is working on its own e-reader. By paying the Kindle such a backhanded compliment — right idea, wrong device — Granger is carrying water for his publisher's business interests. And not for the first time.

Hearst has invested in E Ink, a Cambridge startup whose low-power screen technology is used in both the Kindle and Hearst's planned reader. E Ink appeared on a splashy, Granger-praised Esquire cover last year. Perhaps this E Ink-stained wretch has even handled the product he envisions killing the Kindle? If so, it's too bad Granger won't tell his readers how much he loves that, too.

Hearst's e-reader will be larger than the Kindle — more like an 8.5 x 11 sheet of paper. And it will use technology from E Ink, a Cambridge, Mass. startup Hearst backed more than a decade ago. Hearst hopes to distribute electronic versions of its magazines and newspapers on the device, which a Hearst executive told Fortune will be out later this year.

It's like a terminal cancer patient putting faith in some herbalist's shark-bone treatment.

"The question now is, will readers give up their newspapers and magazines for these new readers?" asks Fortune. Uh, no. The question is whether people will give up their iPhones and netbooks for these new readers. Cheap laptops and smartphones are an irreversible trend. Factories in Japan, China, and Korea thunder out the mass-produced parts for these devices, which make their economics compelling. And a PC has the virtue of not being designed by a publisher more interested in protecting an old way of doing a business than serving readers.

Hearst has exercised its E Ink fetish before, when Esquire used it for an expensive, pointless cover. But the fact that Hearst owns a stake in E Ink is the silliest possible reason to champion the technology. Economists would call that a sunk cost: It's money already spent.

Newspaper and magazine publishers seem desperate to find some new trick to preserve the scarcity on which they used to profit. In a world overflowing with media, that is impossible. And editors and publishers are not clever technological tricksters. The E Ink reader will start out black-and-white. Wait, aren't the glossy photos and gorgeous layouts why we pick up magazine sin the first place?

What they ought to be doing is fixing their websites: Adding comments everywhere, publicly displaying the comments and pageviews stories garner, and — crucially — adjusting the story mix in light of that information. It's unlikely to happen. The makers of magazines are so used to dreaming up story ideas in their skyscraper aeries. It will never occur to them that their readers might actually be smarter than they are.

Smart enough, at any rate, not to buy a gadget designed by a magazine guy.

(Image via Gizmodo)

The absence of a strong newspaper, a contender with the New York Times, Washington Post, or even Los Angeles Times, has long frustrated the intelligentsia of the Bay Area. Instead, we have a sorry ink-on-dead-trees product that even some employees call the San Francisco Comical.

The joke is that the Chronicle isn't really Hearst's paper. The chain bought it in 2000 after publishing the San Francisco Examiner, the one-time "Monarch of the Dailies," for more than a century, and overseeing its slow decline. (Time wrote about the Examiner's troubles almost a half-century ago.)

In the 2000 deal, Hearst merged the staffs of the Examiner and the Chronicle into a single Chronicle newsroom, all but guaranteeing losses. And indeed, in its overstaffed state, the paper has not made a profit since 2001, and lost $50 million in 2008. (The Examiner, meanwhile, has passed through various owners and is now a sporadically distributed free tabloid owned by railroad billionaire Philip Anschutz.)

So Hearst is stuck with a title to which it has no sentimental attachment, which shows no signs of making money, in a tough market (the region has 21 daily newspapers spread around 11 counties). The publisher has already threatened to shutter the Seattle Post-Intelligencer. The trend towards reading news online is better established in the technophiliac Bay Area than elsewhere. It no longer seems so unfathomable that the Chronicle might close. The shame is that not many people might mourn its passing.

Update: SFist has a memo from Chronicle publisher Frank Vega.

In 1983, Knight Ridder and AT&T joined to launch videotext service Viewtron. Anybody with a dedicated terminal, phone line, and $12 a month could access news from the Miami Herald and the New York Times, online shopping, banking and food delivery, via a 300-baud modem. Norman Morrison, one of the subsidiary's VPs, said: "We're at the beginning of home information technology. We are dancing naked on the stage of history." Knight Ridder recorded a loss of $16 million on the project in 1984. Viewtron claimed as many as 3,100 subscribers before Knight Ridder folded the service in 1986. An impressive number considering all that equipment cost between $600 and $900. Bet it would've been more popular if it'd had porn.

In 1995, Knight-Ridder, Tribune, Times Mirror, Advance Publications, Cox Enterprises, Gannett, Hearst, Washington Post, and the New York Times each contributed $1 million to create New Century Networks in 1995. None of them actually wanted any part of it. The opening paragraphs of BusinessWeek's 1998 article on the fiasco best captures the mood.

It was created with a name most of its owners disliked, with a logo one partner ''hated,'' in a city everybody rejected, with a mission nobody understood. So it was fitting that when New Century Network was kicked off last April by nine media giants teaming up to conquer electronic competition, even the launch party bombed. In a ballroom at the Newspaper Association of America convention in Chicago, a thousand bottles of champagne emblazoned with ''New Century Network: The Collective Intelligence of America's Newspapers'' awaited the hordes expected to come to toast the watershed new-media joint venture. When fewer than 100 people showed up, Chief Executive Lee de Boer made an abbreviated speech before retreating.

The papers sunk $25 million more into New Century Networks before it folded in 1998, laying off 40. Perhaps it was for the best, says a disgruntled vet: "Even had New Century worked, it still would have been something like Google News and that's not exactly the best business ever." Which is funny because Google claims Google News indirectly generates $100 million a year for the company and doesn't crow about it much. These guys? It would've been more naked dancing on stages and things.

After participating in New Century Networks, the now defunct newspaper publisher Knight-Ridder launched Real Cities in September 1999, intending it to be a network of local portals featuring "news, email, search services, e-commerce, and site-building tools," according to PC World. In an article titled "Knight Ridder and New Media: If You Can't Beat 'Em...," Richard Siklos, then at BusinessWeek, wrote

Analysts applaud Knight Ridder's strategy, but some wonder if its network of local sites will ever gel, and they figure Real Cities will someday have to be merged into a bigger entity.

Knight Ridder ignored the pessimists and committed to investing $25 million in its new online business. "I live in terror that some big thing's going to happen that I don't see coming," Knight Ridder New Media President Bob Ingle told BusinessWeek. What Ingle didn't envision: nothing happening. Users didn't flock to Knight Ridder's localized portals. They start their Internets on AOL or Yahoo in Des Moines and by clicking into the Google search box everywhere else. Knight Ridder was eventually sold to McClatchy for $4.5 billion in 2006. Last week, McClatchy sold Real Cities to Centro, a local-media buying agency, for an undisclosed — read: embarrassingly low — amount. Maybe just enough to cover this year's wages?

Before there was Yahoo Answers, where users post questions for other users, there was a similar service from the New York Times called Abuzz, which the Gray Lady acquired in 1999 for a modest-by-bubble-standards $30 million. In January 2001, the Times shuttered the service and laid off 70 staffers, citing an "unexpected slackening of advertising revenue." That was the service's only failure, says a person familiar with the project:

They shut it down after the bubble burst, even though they could have kept growing it, for just the cost of the servers. The Times was always nervous about quality. It was user-generated content, not high-quality editorial and this was before they got down in the dirt with About.com. If they had just left it alone, it would have been ENORMOUS by now

Even when you can't sell adds on ENORMOUS, it's still good. Google News doesn't serve ads. Maybe Abuzz could have referred traffic to NYTimes.com like Google News does to Google. Google calls that trick $100 million. You know what the newspaper's call revenue gimmicks like that? They can't remember.

Founded in 1997 and still operating today, Classified Ventures operates Cars.com, Homescape, Apartments.com, RentalHomesPlus, and HomeGain. It's owned by McClatchy, Belo, Gannett, Tribune and the Washington Post, and is probably the newspaper industry's most successful online venture. That's not saying much. On December 30, 2007, part-owner McClatchy told the SEC its 25.6 percent stake in Classified Ventures was worth $99.3 million. In a filing last week, McClatchy said its stake was now worth $86.5 million — a 13 percent drop in half a year. Craigslist, eBay's Kijiji, and even Facebook allow their users to list cars, apartments, and other goods for sale for free, threatening the paid-classifieds business online and in print.

Oh, and Yahoo's Newspaper Consortium? Don't get us started. Or do.

(Photo by DRB62)

Publisher and CEO Frank Vega, originally brought on by parent company Hearst for his union-busting expertise and lovingly nicknamed "Darth Vega." Under his watch, operating losses at the company have actually mounted even as he's reduced the workforce. And while the 15-year, $155 million deal for a new press operations center in Fremont will serve to potentially gut the activist press workers' union, it also makes the paper especially unattractive as an acquisition. Meanwhile, executives are rumored to be spending anywhere from $500,000 to $2 million a month on management consultants. Cut them out, and the Chronicle's deficit will instantly shrink.

But the Yahoo deal's momentum has already slowed, and despite Yahoo's stated desire to woo newspapers, it has done little to advance the program's underlying technology. The newspapers are obviously looking out for their own interests — and may well serve themselves better.

Then again, the newspapers have tried to cooperate online before and failed. The New Century Network, a similar effort, quickly collapsed in the heyday of the first bubble because of infighting. The future may not bode well for Yahoo's newspaper consortium, but the history of newspaper networks is not encouraging, either. Of course, both alliances could fail if newspaper readership continues to erode.