Newspapers in survival mode

WASHINGTON — When Arthur Sulzberger Jr. refused to talk to his reporter about the financial condition of The New York Times Co., it was the latest sign of an industry in deep trouble.

After all, The New York Times is the nation's top-selling metropolitan daily and has the top newspaper Web site, averaging 19.5 million unique visitors each month.

Its struggles have sparked a passionate debate about how to wring more cash from the online world where the Times, like most newspapers, gives away its wares for free.

Sulzberger, company chairman, last week declined to comment for an article that described the Times Co. borrowing $250 million at 14 percent interest from Mexican billionaire Carlos Slim Helú — described by the paper two years ago as having a "robber-baron reputation" — while trying to arrange a sale-leaseback of its Manhattan headquarters and unload its stake in the Boston Red Sox.

The newspaper, which has barely cut its 1,300-person newsroom, the largest in the business, remains in better shape than many newspapers. The debate over its future is a snapshot of the argument over how to save newspapers from turning into tomorrow's Detroit automakers.

Online ad sales modest

Thriving newspaper Web sites may be popular, but they slowly are strangling print circulation. Online ad revenue remains far too modest to support the sizable reporting staffs that make newspapers worth reading and enable them to do real digging.

"We have to find some method to allow people to pay for content and make it easy, just one click," said Walter Isaacson, Time magazine's former managing editor.

"The main problem isn't that people won't pay 15 or 25 cents for today's Washington Post. It's the rigmarole of putting in credit-card numbers and e-mail addresses. We need to allow impulse purchases of content."

A wave of shutdowns seems likely this year as revenue continues to plummet. Tribune Co. and the Minneapolis Star Tribune have filed for bankruptcy protection. The Seattle Post-Intelligencer and Rocky Mountain News are for sale and probably will close if buyers cannot be found. Layoffs, buyouts and cutbacks are endemic. Even among the bigger papers, including The Seattle Times, sections have been eliminated and/or condensed.

It was arguably a mistake for newspapers and magazines to hand out their goodies to anyone with a computer screen, but the culture of the Internet was, and is, that everything should be free. The question is whether that mind-set can be changed.

Isaacson argued in his old magazine that newspapers should adopt an iTunes model of charging for bits and pieces of content: "Steve Jobs got music consumers comfortable with the concept of paying 99 cents for a tune instead of Napsterizing an entire industry."

But that struck a discordant note. People keep songs for a lifetime; news stories are ephemeral. And why would readers pay anything for, say, a Los Angeles Times piece on Hollywood when they can read Tinseltown news on Yahoo, Google, AOL, Huffington Post, Drudge and a thousand other Web sites? Yes, most of these sites recycle and pontificate on the original reporting done by newspapers, but that distinction is lost on many folks.

The New York Times abandoned an annual $50 fee for access to its columnists, which slashed their readership and walled them off from the thriving online conversation that is part of the Web's strength.

Frank Blethen, publisher of The Seattle Times, is more than skeptical about the possibility of making money from the Web. Readers haven't even been willing to register on Web sites, let alone pay for content, Blethen said.

"Who will pay is the educationally and financially elite," he said. "But you can't just blow off the mass audience. Getting information to the mass audience is critical to democracy."

The Wall Street Journal

Only The Wall Street Journal has succeeded in billing its affluent audience; many of its 7.2 million monthly visitors can charge the fee to corporate accounts.

Isaacson, now president of the nonprofit Aspen Institute, said music might not be the perfect analogy but newspapers can make "real money" even if, say, only 20 percent of their online readers kick in.

Others, including The New Yorker's Steve Coll, a former Washington Post managing editor, said an endowment should be raised to support high-quality journalism: a $2 billion fund that, he said, could underwrite The Post's news operation by spending 5 percent a year.

But that treats newspapers as a charity case and raises ethical concerns: Who would manage the fund, who would contribute and how could the newsroom be protected from donors' political influence?

Editor & Publisher blogger Steve Outing touts a startup venture, Kachingle, which would collect a voluntary fee for access to online news and blogs — say, $5 a month — and readers could direct money to their favorites by clicking on Kachingle buttons on those sites.

Voluntary donations may sound fanciful, but readers often say they happily would pay a modest fee to support the Post's Web site if there were a mechanism for doing so.

Yet another idea is a San Francisco site, Spot.Us, underwritten by the Knight Foundation. Would-be journalists — news outlets can play, too — post story pitches and try to collect enough online donations to pay for the reporting.

Others, perhaps emulating such bailed-out banking giants as Citigroup, prefer a government rescue. The owner of The Philadelphia Inquirer recently sought state economic-development funds from Pennsylvania Gov. Ed Rendell.

But if the request had been granted, who would believe the paper would investigate the Democrat's administration quite as aggressively?

Digging for stories

The disappearance of some newspapers would not mean the end of independent reporting. Some Web operations, such as Talking Points Memo, have broken valuable stories. Voice of San Diego, a Web site that receives 30 percent of its funding from a local businessman, has exposed several municipal scandals.

But even in their shrunken state, local papers provide the bulk of watchdog reporting at city halls and statehouses.

After decades in which newspapers grew fat and happy as a near-monopoly, the business model is busted. Perhaps it is too late to persuade consumers to cough up the monthly equivalent of buying a Frappuccino, although it was once conventional wisdom that no one would fork over money to watch television. If so, that's a shame.

You get what you pay for. And if there's not enough public appetite for the kind of journalism that holds politicians and public figures accountable, such efforts will wither on the digital vine.

Seattle Times staff reporter Lynda V. Mapes contributed to this report.