Quietly, while many in the news media where mourning the Rocky and speculating about which paper would be next, Hearst's newspaper division has been making some of its own news. First was their threat to close the San Francisco Chronicle, which has been disastrously losing money at least since Hearst paid some $50 million to "sell" their flagship, the Examiner. Ironically, the paper that William Randolph Hearst's father supposedly won in a poker game is now owned by Philip Anschutz, who also funds the Foundation for a Better Life, which goes around trying to cheer us up with TV spots and billboards.)

It seems crazy that the Chronicle will close. One bad sign, a recent redesign, which while perfectly good as an exercise, moved the ball nowhere. It cuts off the paper from its salty, irreverent past ("Great City Forced to Drink Swill")—as well as its superb family of typefaces (designed by Jim Parkinson while he was actually on staff).

More likely they will make a deal with Dean Singleton, fresh from victory in Denver, to merge with his Contra Costa Times.

Whatever happens, Hearst is no longer sitting there hoping we're just in a cyclical downturn. Steve Swartz, a fine editor with a very sharp mind for business. (We worked together 15 years ago on the launch of Smart Money, alongside the volatile combination of John Mack Carter and Norm Pearlstine). In rapid order, Swartz let it be known that they might of the Seattle Post-Intelligencer but keep the web site; that they were thinking of charging for some online content; and that they're developing new technology for a digital news reader (not a robotic BBC anchorman, but something like a big Kindle with live content).

These ideas are surely linked. Will Hearst, grandson of the founder and perhaps the smartest media heir in the world (and certainly the funniest), explained a while back that 90 percent of their costs were manufacturing---printing, paper and distribution.

But even if you get out of the manufacturing business, newsrooms must be paid for. Three years ago we projected that advertising would cover the cost of news-gathering by 2010. But that curve had already turned downward before the meltdown.

And it is unlikely that we are going to reverse the expectation that on the web, news is free. (That expectation was really started by radio news, and its been reinforced for three generations.)

If we are going to charge for content, we're going to have to deliver it in a way that is much more convenient and much more compelling than the current web. Hearst is said to be leveraging its investment in E Ink (which is behind the display technology of the Kindle), to make a larger device that, I hope, has more fonts, better images, and a dynamic online state (including updates, topical navigation, comment threads). And if it is not in color, I can't believe it will compete with the web, video podcasts or . . . streaming video.

Of course it all gets back to the content. Danilo Black's work with Indigo and Flyp gives a great idea how such a reader could be exploited. If Hearst combines the richness of these offerings with the flexible format of the New York Times Reader, I bet they could charge for the news.

In the next few weeks, I'll outline what we're thinking in New York and Monterrey about the potential of a dynamic news reader with a dual revenue stream. We're far enough along, that I expect it can only help us to get more folks involved. Obviously a lot of people are thinking along similar lines.

And there is not much time. If we don't find the technical and business model soon, we won't be saving the narrative-based newsrooms. We'll be starting them from scratch.

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Jim Bellows, 86. One of the great newspaper editors died last week. Bellows had a run at Hearst, trying to save the L.A. Herald Examiner. It was too late, as it was for the New York Herald Tribune and the Washington Star. Forty years ago, the Trib was the first big city paper to hire a professional design consultant, Peter Palazzo, and the legacy was not just New York magazine, but the whole profession of newspaper design.

Later, the same Will Hearst, after moving from the Examiner to the VC colossus Kleiner Perkins, was talking about the firm's investment in the pre-Google search engine, Excite. Hearst was asked who could give them some editorial advice about news content, and the next thing he knew Jim Bellows was on staff, hiring a newsroom.

What's that about old dogs and new tricks?

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Related links
http://www.niemanlab.org/2009/03/hearsts-100-days-on-the-right-track-or-...
http://news.cnet.com/hearst-developing-e-reader-charging-for-e-news/