Start with advertising. I wrote in my report on a local advertising sales roundtable we held at CUNY that sites should shift from selling media — their own inventory of banners and buttons — to selling services for merchants, helping them succeed through networks of local sites and also through Google, Yelp, Twitter, Facebook, email, mobile, and whatever comes next … helping them with their business. The merchant doesn’t give a rat’s ass about your limited supply of space and eyeballs; the merchant cares about sales and return on investment. As Max Kalehoff advised in a comment on that post, “Sell the outcome.”

At a Paley Center breakfast this week, Sirius CEO Mel Karmazin — a titan of ad sales in broadcast — was blunt about the current state of advertising in media: “There’s just too much supply,” he said, “and I don’t think that supply is going to go away. The leverage is on the part of the buyer as opposed to the seller.” When there’s limitless supply, pricing is not based on supply and demand. These are the new economics of media.

Thus the value is in results. That, of course, is what Google realized when it sold clicks instead of pixels, aligning its interests with those of the advertiser and sharing the risk, which motivated Google not to sell scarcity but to create abundance in the form of AdSense. This, for Google, produced a practically limitless supply, which in turn yielded ever-better relevance, effectiveness, and ROI.

Or as Karmazin famously told Google in Ken Auletta’s book: “You’re fucking with the secret sauce.” He recounted his reaction to Google’s strategy at the breakfast: “You want advertisers to know what will work and what doesn’t? That’s bizarre…. Oh, my God, I don’t want to be in that business.” In most media, Karmazin said, the lowest rates were paid by direct response: “The people who knew what worked were the ones who paid the lower rate.” That bubble is irreparably burst.

So what are you to do if you are media? First, you have to align your interest with marketers if you have any hope of still helping them, still adding and then recognizing value. Marketers will, as Bob Garfield so forcefully states in The Chaos Scenario, build their own, direct relationships around media, without advertising. Or as I’ve been obnoxiously stating it, advertising is failure — it’s what you do when you don’t have a valued relationship.

Relationships. That’s what the business of media must become. In our New Business Models for News, we began — just began — to project the value of the relationship a new media service can have in its community: creating events; educating; gathering and selling data; selling goods directly (as the Telegraph does, quite successfully); running networks to help others succeed; saving money by collaborating. This is why the notion of charging your best customers — cutting off your richest relationships with a toll booth — seems so dangerous to me.

Instead, we must also align our interests with those of the community, with the people formerly known as the audience, helping them do what they want to do, adding value and recognizing it that way. We need to make ourselves their platform.

Content is not a scarcity. You can no longer sell it as such. That’s one of the morals of the Demand Media and Wikipedia stories: Like it or not, for many different motives, there’s always someone out there who can create content that serves a similar purpose, that answers the same question, that is just good enough. Selling content as if it were a consumable — indeed, calling the people who use content consumers — is now outmoded.

Information is not a scarcity, or at least it isn’t scarce for long. Yes, when I don’t know something, then the answer is scarce. But now it’s much easier to get that answer; Google will have it in .3 seconds and if it doesn’t and if enough of us ask it, then someone at Demand Media will write it for me and the rest of the world for $20. When news is new, its value is scarce (as Thomson Reuters Tom Glocer says, his information has its highest value in its first 3 milliseconds); but then that value deflates.

The new media economy gets even more complicated because putting our content and information out there is how it gets distributed, how we find new people, how we build new relationships, how we realize new value.

You can no longer afford to make yourself scarce.

In education, we’re fooling ourselves if we think that we can maintain our scarcity-based economy: only so chairs to soak in the wisdom of that teacher. It’s a wildly inefficient system — especially in our industrial-age knowledge factories that try to turn out people who memorize the same answer instead of invent new ones.

Earlier, I’ve speculated about the idea of an educational ecosystem with star professors whose lectures are widely available (as is the case with MIT and Stanford) and who gain value (books, speaking gigs) through being broadly distributed. Then we have local tutors who give us the specialized instruction and consultation we need.

Thus we have performers and consultants. There is still value in unique performance. We will continue to buy tickets to concerts by stars (but we won’t pay for the Muzak covers of their songs on elevators). We will buy books. We will pay to sit in a movie theater with popcorn. The new competition in the case of media and performance isn’t that someone will make a good-enough version of what we do but that there is more call for the public’s attention.

Quality is a scarcity. But it is a real scarcity. You may think that your newspaper’s version of the Super Bowl is better than the next, but good luck trying to build a business on charging for it. No, you have to be recognized by enough people as being the best — so many that they spread the word for you — if you want to have a blockbuster. It’s still possible. But in an economy of abundance, it’s ever harder and thus riskier and more expensive to get that hit.

This is also why value shifts from creation to curation: in a world of overabundant content, it’s the filters we need.

If you’re not the star performer (or professor), if you’re the consultant (or tutor) who works much more locally, you do indeed have a scarcity: your own time. That scarcity works against you. So it’s in your interest to scale as best you can. That is why people like me blog. The more we share our ideas, the more attention we draw, the more business we can get, the more efficient we are. I’ve even tried to convince big consulting companies and headhunters and international organizations of this; didn’t get far.

The real story in nonphysical goods is one of deflation. Value in once-scarce — well, once-controlled — commodities like news, information, and advertising decline as the internet explodes creation and competition. The internet also destroys the ability of many to control distribution and thus value. But at the same time, the internet drastically increases efficiency thanks to platforms and open distribution and the ability — no, the need — to specialize and collaborate. The bottom line in many of these enterprises — as we tried to show in our New Business Models for News — is that they may be profitable, only smaller. Both sides of the ledger deflate.

This is why the old controllers of scarcity have such trouble rethinking and remaking themselves for the economy of abundance. Their reflex is to control more, when that only decreases value.

So stop selling scarcity. Scarcity has no value. Results and efficiency do.

Then again, people are spending big money — billions — for a virtual market with a virtual scarcity in virtual goods: pixels on a screen. It’s absurd, of course, that anyone can create a scarcity and market value for fictional food for fictional cows, but it’s making money. In this economy, I think we see both the dying gasp and a parody of scarcity.

* Most important, I think, is that we won’t be selling media to merchants — banners ‘n’ buttons — so much as we will be selling service: helping them with all their digital needs, including optimizing them in Google and Yelp and social media and mobile. I’ll write a post with more thoughts on this shortly.

* Voice matters. Local bloggers said they are must-reads because of their voice in the community (the human voice of the neighbor over the cold voice of the institution) and that — along with a constant flow of posts and news and the audience and conversation that attracts — makes them must-buys for advertisers. One blogger made the newspapers visibly jealous reporting that advertisers are coming to the blog asking to advertise because they had to be there. Another way to look at this: The service must be part of the community. One of the bloggers covers new businesses in town because that’s news; ads may follow but even if they don’t, the site will cover commerce in the community.

* There is interest in network sales. One newspaper exec in the room said she’s jealous of the new advertisers smaller bloggers get and would be interesting in having those bloggers sell into her site. The blogger is also interested in getting revenue from larger advertisers via the newspaper’s sales. That networked approach is key to the optimization of value we projected in our new business models for the local news ecosystem: the advertiser can be better served by appearing in more services with easier purchase; the large site can get new customers it could not otherwise afford to sell; the small site can get large advertisers it could not otherwise attract; all ships rise on this tide. (However, we must find a new word instead of “network,” as it has low-value cooties associated with it. Alliance? Ecosystem? Suggestions?)

* We at CUNY are going to be investigating the possibilities for citizen sales — new sales forces and new sales businesses that can sprout up alongside and help support the new news businesses. The group saw potential here but also saw the need for training and quality control.

* It’s clear that local merchants still need education. In the early days of the web, we had to sell advertisers not just on the value of our sites but on the value of the internet itself. That effort continues with smaller advertisers. That means that there’s a greater cost of sales. It also means that this is a means of sales — come to our internet seminar (a technique that is working for various of the participants). And I see a role here for organizations such as universities (not to mention chambers of commerce) to help local merchants understand the value of the internet.

* Local ad agencies also need education still.

* There was some debate about the sophistication of local advertisers and their need for data, but it’s clear that in many cases, media have to collect, analyze, and present data on performance and return on investment. One of the more established companies said all that matters to small advertisers is ROI (return on investment: feet to the door and ringing cash registers). One of the newer companies said more data is needed to prove performance and value. In some cases, we will measure will be attention, in others leads produced, in others sales, and in others more intangible measurements about community and relationships. At our conference on new business models for news in the fall, Gannett talked about research it did with Ideo that found that very local merchants need discovery (read: search) but in many cases, their customers already now they’re there; so what they seek is better relationships with their communities; how do we deliver and measure that?

* The simpler the better. Local merchants are not buying CPM-based advertising. They’re buying timed sponsorships. They want to see the ad they bought on the site.

* Google is playing a bigger and bigger role in local (via the web and now mobile). Some local merchants don’t bother having a site; their ads link to their Google place page.

* One old law of sales is still true: get one butcher advertising and that helps force the next one to join in.

* Self-serve platforms for buying advertising are not the answer. Sales is still needed. I’ve heard that in more than one horror story about low revenue from build-it-and-they-will-come efforts. Once an advertiser is sold, I’ve also heard of success in enabling them to update their ads (e.g., providing them with advertiser blogs).

* Replicating print ads online doesn’t work for advertisers or readers. No surprise there; the only surprise is that publications and merchants still try.

* There are other products besides advertising to sell: email, events, coupons (which work well for many local sites). There was some debate in the group about the value of video as a vehicle for advertising and as a form of advertising itself. More experimentation is needed.

At CUNY, our next step will be performing research with local advertisers/merchants. Then we’ll work on R&D on new ad forms. Then we’ll try to train citizen sales forces. This is the next step in our work on new business models and sustainability for news. Stay tuned.

: LATER: In the comments, Dave Chase of SunValleyOnline adds great notes:

Great observations and consistent with what I have heard/seen from working with lots of local advertisers at SunValleyOnline which is one of the sites talked about in the CUNY “census” you guys did that has managed to build a reasonable (and profitable business). I generally agree with what you’ve laid out but will amplify or differ with a few items.

1. Education: Hands down the biggest need I’ve seen. Sales people need it. Merchants need it. Local agencies/marketing consultants need it. Citizen ad sales will really need it. It’s the reason I collaborated with a former colleague to create a how-to resource for local merchants on marketing in the digital age that I’m making available to the ventures I’m involved with. I believe there’s scalable ways for local sites to tap into this without having to do all the training themselves that can also serve as lead generation.

2. Tools for advertisers to manage their own ads: Despite having two tools (Impact Engine and Mixpo) that have very easy interfaces and through much encouragement, virtually no advertiser is taking advantage of it. They simply want us to take care of it. The advertisers I’ve worked with aren’t sophisticated at all from a marketing perspective.

3. VideoAds: This is primarily a function of the size of advertiser you are going after and where they’ve advertised. Generally, it’s the bigger advertiser who has run TV ads before that will be candidates to move $$. Turns out one of the categories where $$ are finally starting to move is political ads. The recent Supreme Court decision will accelerate that. Dynamically built videoads is a particularly promising area and is something that took place in the recent Massachusetts Senate race (on the winning side). There’s some powerful tools that allow A-B testing, message optimization, etc. that are accessible even to the smallest advertiser.

: And Max Kalehoff says it well in the comments: “Sell the outcome.”

Another Sir Tim video from a session on social media. The first half of this 3:44 is him talking about the need for authority signals i social networks. In the middle, he takes pains to correct people who say that he invented the internet or created the web (no, he invented the web). The last half is his intriguing call for academic study of the web:

And, yes, it was a thrill to meet the man. I was wonderful seeing people come across him, spy his name tag, and gasp with glee and gratitude.

Last year when I arrived at Davos, I wondered whether we were among the problem or the solution. This year, I wondered whether we were among the future or the past. Well, actually, I don’t wonder.

We were among the disrupted. The only distinction among them is that some know it, some don’t. At Davos, I fear, most don’t.

I ran a session with international organizations about transparency and new ways they can govern themselves. I didn’t get far. “Oh, yes, we understand Twitter and all that,’ they said. “We have people who do that for us.” Don’t you want to read what your constituents and the world are saying about you? “We don’t have time.” Oy. I invited a young disrupter into the room who talked about his ability to organize efforts to help people quickly — not so much breaking rules but discovering new ones — but he didn’t get far either.

I sat in a session about the future of journalism that was set in the past. No fault of the moderator, the panel pretty much issued the same old saws: The internet is filled with trivia, sniffed one: “The stuff that goes on the web is just suffocating.” The free market will not support a free press, declared another. (How do we know that already?) Thus their conclusion: The only hope for journalism is state and foundation support, said a few. Oy again.

At the end of the week, I sat in on a session trying to brainstorm under WEF’s theme of the three re’s. They said the point of the exercise was to get soundbites (as they used to be known; tweets as they are now known) and that’s what they got: PowerPoint (actually, Tumblr) platitudes. There were good points: We need to change what we measure, said one table, for now we get what we measure (true from media to economies). But there was also insipidness: “We are what we allow to happen.” And: “Ecology means caring. Equity means sharing.” Put that on your T-shirt and wash it.

Then a 17-year-old from Iraq scolded the entire room, telling them that these were just sayings. Where’s the action, he asked? Where are the specifics? That moment gave me hope: another disrupter, this one from the future.

The World Economic Forum actually does an admirable job trying to push its members into that future. I got involved — and got my ticket into Davos — because I helped them venture into blogging to show institutions by example how to benefit from social media; that effort continues in video (YouTube is there) and Twitter (so is Ev Williams)

But one must wonder whether they can go fast enough — given this crowd’s resistance to change — and thus whether they are helping the right people. That’s why I didn’t blog during this meeting (my fourth): I simply didn’t hear much new. WEF does try to bring in new voices: its young global leaders and tech pioneers, but they are viewed by the entrenched powers as curiosities — sideshows — when they should be seen as the new bosses.

After one SOS (same old…) session, I told a WEF person that I dreamed of a new organization and event, a stepchild: the World Entrepreneurs Forum. Let’s bring together only the disrupters, only the people building the future rather than trying (desperately) to protect the past. Just as the old WEF forces its members to at least ask questions about their impact — on environment, values, trust, foresight — so should this new WEF push its participants to make sure they use their power of change responsibly, strategically, openly.

I have said of journalism that its future is entrepreneurial (not institutional). At this Davos, I come to sese the same is true of much of our world. The shift from the industrial economy to whatever follows is well underway, only the leaders of the old order are largely blind to it and in that willful ignorance, there is great risk.

Entire industries are in various stages of disruption and destruction: news, media, entertainment, advertising, automotive, manufacturing, retail, real estate, telecommunications, transportation, health care…. The same will come to institutions, including government, nongovernmental and international organizations, and the academy. One university president fretted at Davos: “Just think what the world would be like if we left what universities to the free market.” Well, yes, many companies are doing more than thinking about just that; they are building, a new and needed future for education.

The disruption is everywhere. What makes technology a model is that it is in a state of constant disruption; it disrupts and deflates and rethinks and rebuilds itself constantly. But that 1000-r.p.m. Great Mandala is now buzz-sawing through the rest of society. Only the rest of society isn’t built for change. Neither is WEF — though it tries — because the change is too profound and too fast.

There’s a clear dividing line here: Do you fear and resist this change (WEF I) or do you create and enable it (WEF II… and note that I didn’t use “2.0″!)? That’s why I think there’s a need for a new WEF. I wouldn’t suggest transforming the first into the second. I’ve learned from a decade and a half of trying — naively, I now see — to do that with newspapers that it’s rarely if ever going to succeed and for understandable reasons (the cost — in money, pain, and culture — is just too great). It is easier to build up than tear down.

We are seeing parallel worlds emerge: the disrupted and the disrupters and they are not meant to share a fondue pot. So let’s pull together the disrupters and challenge them — as WEF has its institutions — to more fully understand the impact of their work, to use their power of change to solve problems, to collaborate (as is their reflex already). Let’s encourage them to look forward, not back, and let’s support their needs (in education, governance, infrastructure). Let’s rethink our priorities around those needs (in media, for example, let’s stop defaulting to government subsidies of dying institutions and instead encourage government to provide ubiquitous broadband to enable a new future; let’s start with the market).

Is WEF the organization to bring this together? Is there a need for an organization at all? When I pulled together a conference (call) of people planning to teach entrepreneurial journalism from around the world, one participant suggested creating a body but Sree Sreenivasan of Columbia protested: “We have enough organizations.” Right. So what structure would support the disrupters? If it’s a meeting, don’t hold it in the high mountains of Switzerland or the low valley of Silicon. Hold it in a place awaiting progress. Or just hold it online. Make it open. As Dave Winer says, the people who should be there are there.

I see the value in Davos: smart people with the power to get things done (well, once upon a time) able to mix and meet and sometimes learn and even act. I see similar benefit for the people are indeed are rethinking, redesigning, and rebuilding by replacing.

Next year in India or Africa or Brazil or at an IP address to be named…

At a private meeting with a dozen and a half media people at Davos with CEO Eric Schmidt, President of sales Nikesh Arora, search boss Marissa Mayer, YouTube founder Chad Hurley, and counsel/”chief diplomat” (Schmidt’s joke) David Drummond in a Davos apartment dolled up with lava lamps, the execs discussed China, the company’s push into display, critics from France to News Corp., Android and its phone strategy, and news.

AdSense: At the DLD conference in Munich Monday, Burda CEO Paul-Bernhard Kallen, on a panel with Drummond, said publishers wanted transparency and their “fair share.” I asked him, a fair share of what — AdSense? Kallen said yes. And that put a fence around this debate. Drummond went on to emphasize that publishers do not deserve a share of a search for a camera that doesn’t involve their content. He also said transparency could be discussed.

At today’s briefing, Arora said that the company was considering more transparency. I confirmed with Google’s people that this was new. I suspect that they’re not going to promise the possibility and not deliver something.

I’m happy about this because, with China, this seems to strike off my two biggest complaints — both in What Would Google Do? — about Google: its prior lack of support of free speech in China and its hypocrisy on transparency and ad rates.

China: “We made a decision that was consistent with our values,” Schmidt said. “We’re not going to operate differently in China as opposed to the rest of the world,” said Drummond.

When is Gooogle going to do something? “It should happen soon,” Drummond said.

Was Google’s original stance on China — making it an exception to its own rules — a mistake? “We said consistently we would evaluate the position,” said Schmidt, “and people didn’t believe us.”

On the attacks, Schmidt said the company had a moral need to “make sure our systems are safe from attack anywhere.”

They wouldn’t discuss any details about any discussions with China. One editor asked whether Google was upset that other companies — especially those that also suffered attacks — have not come forward to openly support Google. I went farther and said that Microsoft had thrown Google under the bus and backed up over it. Schmidt repeatedly said that he manages Google, not other companies. “We speak for ourselves.”

Drummond said the problem of censorship is not in China alone. Hurley said YouTube is blocked in China, Turkey, and Iran “because of freedom of speech.”

“I believe this is an evergreen story for Google and other online companies,” Schmidt said. “As the world goes online, every country is going to have a discussion about what’s appropriate and what’s not. And a lot of these organizations [that is, governments] have not really thought through what they’re doing. We have a strong view about transparency.” [It's about to get a little stronger, it seems.]

Though Schmidt joked about Drummond as Google’s diplomat and apolgized for mixing metaphors, he emphasized that Google is not a country, does not set laws, and does not have a police force — or diplomats This is a government-to-government issue, he said.

Google’s reputation: I asked whether it was lonely at the top, getting grief from France to Germany to News Corp to China. Is it because Google is so big? Is it because it is putting itself on the ledge? Is it a PR problem? Schmidt said no.

“Google is fundamentally disruptive because of our innovation,” Schmidt said. “Google, because of our architecture, does things at a larger scale than others can. We are in the information space, which everyone has an opinion on. … You asked me how does it feel from a Google perspective? It feels as if we’re in the right place.” These aren’t crises, Schmidt said. He treated them as a factor in doing business. “It’s constnat. It’s because it’s information that maters.”

Innovation: Schmidt later talked about the difficulty we all know companies such as this can have: growing big and killing innovation. He talked about the canonical Silicon Valley story: a company starts, it innovates, it grows to middle age, it grows bored, it is sold to another company. Schmidt et al are clearly aware of that threat. Apple, he said, has “proven the model of innovation at scale.”

Phones: Will they have a tablet? “You might want to tell me what the difference is between a large phone and a tablet,” Schmidt said.

How will they make money on phones? “Not to worry,” Schmidt said. “We do not charge for Android because we can make money in other contexts.”

The strategy, he said, is to establish volume for application development to follow. “The phone is defined by the apps,” he said.

Schmidt took my Nexus One and demonstrated Google Sky. Mayer said the guy in charge of mobile uses Google Goggles to take pictures of wine labels and search on them so he can sound smart: “It tastes of apricot blossoms.” Mayer told Schmidt about Layar (a very neat agumented reality program I wrote about here earlier); he didn’t even know about it yet.

The economy: “The recession is very much behind us,” Schmidt said. “We see growth and successful businesses I think pretty much everywhere in the world.”"

Display ads: Schmidt said the company is “trying to apply the science of Google to the display space. Display is likely to be our next really big business globally.”

Arora said that today marketers buy sites when they want to buy audiences. He said Google will “bring measurability to the process of display” and it is “trying to find a way for the industry to bring the entire inventory together.” That is, “most agencies and buyers don’t have the tools to aggregate across publishers.” Schmidt added: “Before the google question was applied to this, you couldn’t have scale.”

Isn’t this just an ad network? Arora said it would be a collection of networks, an exchange that would “allow you to separate the best owners of inventory from the best sellers of inventory.” I don’t understand what that means and will ask.

Aren’t publishers going to see Google as again disintermediating them and hurting their brands? I asked. Google said the platform will bring greater transparency, more inventory, faster, with scale and speed and that publishers who participate will gain more revenue from the inventory they have (and don’t sell). Indeed, I was talking with one newspaper editor before the meeting as he lamented the small size of the percentage that is sold.

Relations with newspapers: “We depend on high-quality content,” Schmidt said.

Mayer said Google will help publishers make more money. It will create better advertising products for them, improving display. It will provide ads that are more relevant. It will support pay efforts.

She also said Google is working on making news as compelling as possible. “The issue is one of engagement online: if they spent more time online it would be much easier to make money with it,” she said and then added that publsihers must “bring the news to users’ digital doorsteps.” Amen. I’ve written often here about the challenges of engagement and the need to think distributed. Those are ripe areas for Google to help news.

YouTube: Schmidt said he was very pleased with YouTube and that it was making money but he and Hurley wouldn’t get in the slightest bit specific about the definition of making money (profit? cash flow?) let alone numbers. “In the last year, Chad managed to figure out a way to make money using partners and their video content on YouTube,” Schmidt said. Hurley said it took longer than expected to get their because of delays in bringing in Doubleclick. He said they have a sales force selling video in 20 countries. They also recently made a deal with channels 4 and 5 in the UK to distribute content and they’re going to live-stream cricket.

Pay: Will Lewis of the Telegraph asked “what’s it like being so brutally attacked by News Corp. What side of genius to you think their pay wall idea is?” Of course, Google’s execs didn’t take the bait.

They talked about hybrid business models and said they’d support them and pretty much left it at that.

Globalization: Schmidt said a majority of Google users are outside the U.S. and he expects that soon most revenue will come from outside the U.S.

: The Guardian’s Alan Rusbridger on the briefing: Google as a country.

I have nothing against charging for content, if you can. After all, I’m selling a book. But I believe building pay walls around online news is a bad business decision.

The discussion about charging for content rises from a sense of entitlement—“we deserve to be paid,” which is an emotional argument—rather than from rational economics.

Charging is an attempt to replicate an old business model in a profoundly changed media economy that is no longer built on scarcity—on publishers’ control—now that everyone can publish. The new link economy rewards openness and collaboration.

Charging is also a distraction from the real goal: profitability and sustainability. We must rethink the entire ledger of the business of news, starting with costs, which must and can be reduced through collaboration, working in networks, and through the efficiency that comes with the specialization the internet demands.

More important, charging brings many costs:

• It creates the expense of marketing (when, online, your audience will market you for free, if you deserve it).

• It reduces audience.

• It reduces advertising revenue.

• It reduces links and clicks, which reduces Googlejuice, which reduces discovery, which limits growth.

But more than any of this, pay walls curtail a news organization’s relationship with its public, with its customers. On the internet, it’s in those relationships where value lies.

The New York Times plans to charge its best customers—its most frequent readers—while enabling what Rupert Murdoch calls the worst customers—those who stop by once from a search engine or an aggregator—to get what they want for free. That might make sense if you are selling a scarce resource: those who drink the most wine pay the most. But online, content and news are not scarce. They are the magnets that draw readers to you so you can build a valuable relationship.

Online also brings new opportunities to find value there. Hubert Burda said at DLD that Focus Online is profitable not because of advertising but because of ecommerce. The Telegraph in London brought in a quarter of its profit a year ago from direct sales of everything from clothes hangers to wine. So media companies are becoming in part, retailers. Does it make sense to put a toll booth at the door to your store to keep people out?

Once you have a lasting relationship, there are more ways to serve customers and make money. Some newspapers are holding events. Some are charging for education. Some are even selling real estate. But to do this, you need to invite, not drive away more readers.

There is one more cost to building a wall, a cost to journalism. Alan Rusbridger, the innovative editor of the Guardian in London, just delivered a monumental speech arguing that charging “removes you from the way people the world over now connect with each other. You cannot control distribution or create scarcity without becoming isolated from this new networked world.”

Rusbridger also warns that there are competitors lying in wait to step in when news organizations build walls. “Let’s not leave the field.” Rusbridger said, “so that the digital un-bundlers can come in, dismantle and loot what we have built up, including our audiences and readers.”

Charging could be dangerous business indeed.

Charging, Rusbridger says, “removes you from the way people the world over now connect with each other. You cannot control distribution or create scarcity without becoming isolated from this new networked world.”

In an industry in which we get used to every trend line pointing to the floor, the growth of newspapers’ digital audience should be a beacon of hope. During the last three months of 2009 the Guardian was being read by 40 per cent more people than during the same period in 2008. That’s right, a mainstream media company – you know, the ones that should admit the game’s up because they are so irrelevant and don’t know what they are doing in this new media landscape – has grown its audience by 40 per cent in a year. More Americans are now reading the Guardian than read the Los Angeles Times. This readership has found us, rather than the other way round. Our total marketing spend in America in the past 10 years has been $34,000. . . .

This is the opposite of newspaper decline-ism, the doctrine which compels us to keep telling the world the editorial proposition and tradition we represent are in desperate trouble. When I think of the Guardian’s journey and its path of growth and reach and influence my instincts at the moment – at this stage of the revolution – are to celebrate this trend and seek to accelerate it rather than cut it off. The more we can spread the Guardian, embed it in the way the world talks to each other, the better.

Rusbridger warns The NY Times that if it shrinks behind its wall, The Guardian could become the biggest newspaper brand online. He imagines start-ups that “begin each day with a prayer session for all national newspapers to follow Rupert Murdoch behind a pay wall. That’s their business model.” His warning continues: “Let’s not leave the field so that the digital un-bundlers can come in, dismantle and loot what we have built up, including our audiences and readers.

Rusbridger argues, as do I, that this is about more than a revenue line:

There is an irreversible trend in society today which rather wonderfully continues what we as an industry started – here, in newspapers, in the UK . It’s not a “digital trend” – that’s just shorthand. It’s a trend about how people are expressing themselves, about how societies will choose to organise themselves, about a new democracy of ideas and information, about changing notions of authority, about the releasing of individual creativity, about an ability to hear previously unheard voices; about respecting, including and harnessing the views of others. About resisting the people who want to close down free speech.

As {legendary Gaurdian editor C.P.] Scott said 90 years ago : “What a chance for the newspaper!” If we turn our back on all this and at the same time conclude that there is nothing to learn from it because what ‘they’ do is different – ‘we are journalists, they aren’t: we do journalism; they don’t’ – then, never mind business models, we will be sleep walking into oblivion.

Linking is more than merely a function and feature of the internet. Linking is a right. The link enables fair comment. It powers the link economy that will sustain media. It is a tool for accountability. It is the keystone to free speech online.

But News Corporation has made good on its threat to fight the link, preventing the UK aggregator NewsNow from linking to several of its newspaper sites.

It’s true that internet protocols make it easy to block crawlers from search engines or aggregators; one simply adds a line to the robots.txt file on the web server. And News Corp’s rationale regarding NewsNow seems on the face of it to make sense: the argument is that NewsNow charges for its service, separating it from free aggregators such as Google News and Daylife (in which – disclosure – I am a partner).

But NewsNow has fought back, launching a campaign in support of the link at right2link.org. “Linking is not some kind of digital theft,” the NewsNow founder Struan Bartlett says in a video. Linking via headlines, he adds, “is not substantial reproduction of a newspaper’s intellectual property, so it’s perfectly legitimate fair use”.

Right. Linking is not a privilege that the recipient of the link should control – any more than politicians should decide who may or may not quote them. The test is not whether the creator of the link charges (Murdoch’s newspapers will charge and they link). The test is whether the thing we are linking to is public. If it is public for one it should be public for all.

We in the media tend to view the internet in our own image. But the internet is not a medium. Instead, as Cluetrain Manifesto author Doc Searls argues, it is a place. Think of it as a public park. You may not be selectively kept out because of your association with a race, religion … or aggregator. “Linking,” says Bartlett, “is a common public amenity.”

I fear that what is really in danger here is the doctrine of openness* on which journalism and an informed society depend. Pertinent are the arguments around Google’s Streetview, which takes pictures of buildings and the people who happen to be in front of them. Some object that these photos violate their privacy. But they are in public. What they do there is public.

I understand that people caught on Streetview might not want us to see them strolling into a drug den or brothel. But if we give anyone the right to restrict our use of that image or information, then we also give the mayor the right to gag us when we want to publish a picture of him skulking into that opium parlour.

What’s public is public – that is, we, the public, have a right to observe, point to, share, and comment on it. And the internet is public.

Mind you, neither NewsNow nor I are arguing that being in public gives anyone the right to copy and steal content. We both agree that copyright and intellectual property must be respected. But linking is not stealing.

Indeed, in the link economy I’ve written about here, linking is distribution; it is a benefit. That’s why I argue News Corp is a fool not to welcome, encourage and exploit links to its content. Links do not stop people from reading it; links bring readers to it.

As Google’s chief executive, Eric Schmidt, argued in a Wall Street Journal op-ed response to Rupert Murdoch on the value of search and aggregation, it’s up to the recipient of the link to take advantage of the relationship it creates – and Google creates 4bn such opportunities for publishers a year.

By trying to cut off links, News Corp is also endangering journalism. As an economic matter, the link is how our work will gain audience.

As a journalistic matter, we reporters depend on the ability to read and analyse public statements and documents – from government, corporations or newsmakers – and it should make no difference whether that reading is done by a person or their agent, an algorithm. We depend on the right to quote from what we find – and online, the link is our means of doing so. In fact, linking to source material – footnoting our work and the provenance of our information – is fast being seen as an ethical necessity in digital journalism.

In the end, this fight is over control. News Corp is desperately trying to maintain its control over access to and packaging and pricing of information that now flows freely from many sources. Thanks to the internet, it is losing it – in more than one sense.

* Note that in my draft, I wrote “publicness.” It’s not a word in the dictionary and so it was edited, changed to “openness.” I should have perhaps phrased it, “the public.”

The ability to refer to a document (or a person or any thing else) is in general a fundamental right of free speech to the same extent that speech is free. Making the reference with a hypertext link is more efficient but changes nothing else. . . . We cannot regard anyone as having the “right not to be referred to” without completely pulling the rug out from under free speech. . . .It is difficult to emphasize how important these issues are for society. The first amendment to the Constitution of the United States, for example, addresses the right to speak. The right to make reference to something is inherent in that right. On the web, to make reference without making a link is possible but ineffective – like speaking but with a paper bag over your head.

That’s according to the math of News Corp., which argues that readers who come via links from search and aggregators and bloggers and such are worthless because they’re not local and they don’t stay; they’re one-click-wonders. The readers who come back again and again, the ones you know more about and can rely on and target better and build relationships with, goes this logic, are worth more. And News Corp. is also threatening to charge them.

So why charge your best customers? Why single them out? Why risk driving them away?

The logic eludes me. So do the economics.

I know, the argument is that these readers use the content more so they should be charged more. But that is based on the assumption that content is a consumable, a scarcity that drains the more it is read. Of course, it isn’t. Content is, instead, a magnet that can create relationships of value; whether that happens is up to the creator of the content and the quality of service and relevance is gives. That, dare I repeat it, is the basis of the link economy.

But note the verb that started off the paragraph above: should. Readers who read more should pay more. This is the product of journalism’s sense of entitlement.

So why would The Times charge? There are a few possible reasons:

* It has failed at advertising, as I said of News Corp. recently.

* Its costs are too high — and rather than cutting them into a rational business, it desperately seeks some other revenue.

* It is falling prey to PR, to the pressure of outsiders who keep nattering on about charging.

* It has forgotten its own lessons with TimesSelect sees amnesia as a strategy.

I think the risks are great and grave. The Times could have fought to become the preeminent news brand on earth, fighting it out with the BBC for that title. Instead, I fear, it will duck into its shell as the Washington Post has.

I already pay for The Times at home. I hope they would not charge me again. If they do, I will cancel the paper. If they charge me for using the paper more, I will use it less.** I will find other very good substitutes for much of what I get from it — indeed, this will push me to discover and curate new sources. I will read what matters most to me from The Times and discover just how much that is — a calculation the paper should not want to force me to make, not when there is so much new and good competition out there.

Clay Shirky has ridiculed micropayments, saying that we don’t like being nickel-and-dimed. I’ll ridicule metering, reminding those who contemplate it to remember what we think of meter maids. We curse them.

There is only one thing that can happen should The TImes put a meter on us. It will shrink.

** I should expand on this point. I would not use The Times less because I like it less, because I want to punish it. I love The Times. I read it every day. What I’m saying is that by metering, The Times will have me make a new economic decision every time I want to read a story: Is this unique content I will get only here (there is a good deal of that) or is this commodity information I can get elsewhere (BBC, Reuters, Washington Post, Politico, TechCrunch…). The Times then restricts our relationship and it is in that relationship that it has to find value.

What this says, of course, is that the internet is the New World and Google is its biggest colonizer: the sun never sets on Google.

It also says that on the internet, new states form across interests, ignoring borders. Those interests can be business — and we’ve seen what look like business-states before — but also causes, principles, and dangers (e.g., Al Qaeda). Interest-states will gain more power and that power will come from nations.

Just as what we’re seeing in the economy is more than a mere crisis — it is the shift from the industrial economy to what follows — similarly, in political structure, we are beginning to witness the emergence of new and competitive interest-states. In What Would Google Do?, I said this:

Whatever causes they take up, Generation G will be able to organize without organizations, as Shirky wrote in Here Comes Everybody. That ability to coalesce will have a profound destabilizing impact on institutions. We can organize bypassing governments, borders, political parties, companies, academic institutions, religious groups, and ethnic groups, inevitably reducing their power and hold on our lives. In an essay in Foreign Affairs in 2008, Richard Haass argued that the world structure is moving from bi- and unipolarity (i.e., the Cold War and its aftermath) to nonpolarity (i.e., no one’s in charge). We now operate in an open marketplace of influence. Google makes it possible to broadcast our interests and find, organize, and act in concert with others. One need no longer control institutions to control agendas. Haass chronicles the dilution of governments. Bloggers Umair Haque and Fred Wilson have written about the fall of the firm, and earlier I examined the idea that networks are becoming more efficient than corporations. In my blog, I follow the crumbling of the fourth estate, the press. One could debate the stature and power of the first estate, the church. What’s left? The internet is fueling the rise of the third estate—the rise of the people. That might bode anarchy except that the internet also brings the power to organize.

Our organization is ad hoc. We can find and take action with people of like interest, need, opinion, taste, background, and worldview anywhere in the world. I hope this could lead to a new growth in individual leadership: Online, you can accomplish what you want alone and you can gather a group to collaborate. Being out of power need not be an excuse or a bar from seeking power. That may encourage more involvement in communities and nations—witness the youth armies that gathered in Facebook around Barack Obama, a powerful lesson for a generation to have learned.

: MORE: Siva Vaidhyanathan responds (as part of a conversation between us in both this post and the one below):

My book plays this in a slightly different way: The Internet has enough diverse interests and players that it demands governance. No traditional state is in the position or willing to assume that role. So Google governs the Internet.

One could read this showdown (as I do) as a classic international power conflict between a major traditional state and a new, virtual state: the Googlenet.

Google is taking a risky stand to defend the Internet generally. This is what a weaker, threatened state would do.

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

I know some will say that Google wasn’t doing that well in China anyway (it controls 31% of the market); they’ll ascribe cynical motives. But I say: Name one other company that finally said “enough!” and put ethic, morals, and company standards over its lust for the Chinese market. Not Yahoo. Not Cisco. Not Nokia. Not Siemens. Not The New York Times Company. Google has.

Here’s what I said in What Would Google Do? about China:

Google has censored search results in China, arguing that it is better to bring a hampered internet there than no internet at all. I don’t agree and believe that Google has more power than it knows to pressure countries around the world to respect openness and free speech. Google, like Yahoo, has handed over information to governments—Google in India, Yahoo in China—that led to users being arrested simply for what they said. As an American and a First Amendment absolutist, I’d call that evil.

Here’s what I said in a talk at Google’s offices in Washington. (Thanks to commenters, the time code for the start of the topic is 23:38.)

Note that even Google’s cofounder, Sergey Brin, has waffled if not agonized over the company’s China policy.

I can well be accused of being a Google fanboy; I wrote the book. But I have been consistent in my criticism of Google’s actions in China. And so now I have not choice but to become even more of a fanboy. I applaud Google for finally standing up to the Chinese dictatorship and for free speech.

Will the Chinese people revolt at losing Google? We can only hope. Will other companies now have to hesitate before doing the dictators’ bidding? We can only hope. Will Google be punished by Wall Street? It probably will. But as I’ve argued, we should hope that Google’s pledge, Don’t be evil, will one day be chiseled over the doors of Wall Street.

Google has thrown the gauntlet down in favor of freedom. What Should Google Do? This is what it should do.

: MORE: Said Jonathan Zittrain of Harvard’s Berkman Center: “In a world in which we are so used to public relations massaging of messages, this stands out as a direct declaration. It’s amazing.”

: Says Reuters: “The world’s dominant search firm may be hoping other search and e-mail leaders, both global and domestic, will rally around it in calling for China to lighten a heavy-handed approach to the Internet that includes frequent censorship and allegations of government-backed hacking.”

: YET MORE: Zeit Online calls Google a quasi-state that is willing to stand up to China where the U.S. and Germany are not. But it also warns that Google’s interests are not what they seem. (In German.)

: A view of the PR strategy:

Google has taken the China corporate communications playbook, wrapped it in oily rags, doused it in gasoline and dropped a lit match on it. In China, foreign companies tend to be deferential to the authorities to the point of obsequiousness, in a way that you would almost certainly never encounter in the United States or Europe. . . . In this situation Google has undertaken a bet-the-farm confrontational communications approach in China. They will not have made this decision lightly. Dressed up in the polite language above is what is essentially an ultimatum: Allow us to present uncensored search results to our Chinese users or we’ll walk.

: Rebecca MacKinnon, who knows whereof she speaks on matters China and internet, says Google is doing the right thing.

: James Fallows, who also knows, says this:

And if a major U.S. company — indeed, Google has been ranked the #1 brand in the world — has concluded that, in effect, it must break diplomatic relations with China because its policies are too repressive and intrusive to make peace with, that is a significant judgment. . . . But its government is on a path at the moment that courts resistance around the world. To me, that is what Google’s decision signifies.

: Siva Vaidhyanathan responds to me here. There’s a chicken v. egg debate about what’s leading this: the attacks or the censorship. I agree that the censorship is a tool in this power struggle; it clearly was not the catalyst or it could have been four years ago. But I think it’s also evident –see Sergey Brin four years ago — that Google, despite its public pronouncements about a crippled internet being better than no internet, struggled internally with its China policy. Slapping China over censorship is now a way to bring make the fight about attacks about China. Pick your sin — attacks, censorship (or the death penalty or repression of dissent or dangerous and fatal products) — somebody — Google — finally had the balls to make China the issue. I’ve sat in WEF meeting where some have shushed me and others for daring to criticize China: it’s a Chinese thing; you wouldn’t understand. Well, bullshit, it’s a human thing; it’s about rights (pick yours).

: See my post above on the rise of the interest-state.

Paton has executed a strategic vision at impreMedia, turning it into company that truly puts digital first, hiving off functions that don’t add value and cutting costs to make the company sustainable (that’s the half of the budget that gets too little attention these days), and beginning to build a new relationship — including a commercial relationship — with the emerging ecosystem of news.

Klingensmith, on the other hand, is a big-media executive. I was disappointed that the Star Tribune did not take the opportunity of bankruptcy — or of this hire — to redefine itself. That’s painfully evident in Minnesota Public Radio’s interview with Klingensmith, in which he talks about print and portals. (Sherman: Stop messing with the wayback machine; it’s not 1999 anymore.)

Paton’s work is largely unsung because the product is in Spanish. That, I think, is why his announcement didn’t get as much attention. So I decided to interview Paton via email about his plans for Journal Register. (Disclosure: In our discussions about the future of news, Paton has become a friend and an advisor for the CUNY J-school and my entrepreneurial class.)

JARVIS: What did you do at Impremedia to make it a sustainable news company in the Hispanic market?

PATON: The first thing we did was to decide that in our company, a print company, when it came to products we would be digital and brands first and print last. It was our radical way of focusing everyone on the future. By recognizing our competitors and our future were digital everything we built and did had to follow that decision.

More than two-thirds of any newspaper company’s expenses are in support of the core business of content, marketing and sales. Our digital competitors don’t have that two-thirds cost structure, so we attacked. it. We outsourced all printing, distribution and pre-press ad make up and page make up. We plowed a big part of the savings into expanding our digital resources – web, online video, mobile platform and widgets. We standardized I.T. We then outsourced the back end of all our digital support. Then we started cross-training journalists into one-person multi-media journalists – an ongoing process.

The second decsion was we would let the outside world in. We would share our content for free and we would play with anyone who wanted to play with us – mainstream media or bloggers. That led to our relationships with ESPN, AOL, MySpace, etc. And our launching of the Community E-Journalism Labs in Los Angeles and New York where we said we want to work with entrepreneurial journalists and help them make a living. We have opened up discussions with companies like SeeClickFix and Outside.In to augment our resources and let us re-allocate ours.

The third decision was that we would put in place a very strict protocol that follows the new news ecology of news creation and consumption. Every story of merit is first sent out as a mobile alert, then it goes to the web. After that our publications, editors and journalists use social media to push audience to the web. This process is repeated and enhanced all day with the addition of video and audio. The last step is the printed product. We are currently working to change that product to be a very different product which has to reflect how much of that story has developed and been consumed.

The result was in less than two years we went from 9 products on two platforms (print and crappy publications sites full of shovelware) to nearly 100 products on 7 platforms – with about 45% less costs.

JARVIS: What are your plans for Journal Register? What will a paper there look like in 1-5 years? Will it look like a paper?

PATON: JRC needs to enter the modern news age in a much more focused and vibrant way. That means the re-allocation of resources to a digital first and print last focus.

In my opinion, JRC is too much like most of the newspaper industry – closed to their communities and input from the outside world. They need to understand the papers and their online counterparts are just a part of the news ecological system.

One of the first steps will be to establish community E-Journalism labs in our communities where we have dailies. There is no way to be hyperlocal without harnessing the power of entrepreneurial journalists and the labs help do that by making content and more importantly sales arrangements with those entrepreneurial journalists.

Second step will be to initiate and, in some cases, expand relationships with companies like Daylife, Outside.In, SeeClickFix, GrowthSpur – any company that lets JRC expand its resources in content, audience and sales while allowing it to re-allocate and focus on its core business. I am very excited about ideas like explainthis.org and others that look at community crowd-sourcing for assignments.

The third step is to tackle the two-thirds infrastructure cost bucket.

Down the road print will change. I suspect the physical size will change and the print content will be much less “he said yesterday” journalism. The focus will become very local with national and international news procured from the very best sources. With so much of the breaking news on the digital platforms, print will become longer-form journalism complimented with vibrant opinion pieces to spark and facilitate debate of issues of importance to the communities. The online forums will expand and continue that debate.

Print will also become a much more malleable term expanded to mean the tablet versions of the actual print product.

JARVIS: I’ve argued that the future of news is entrepreneurial. Here you are, trying to update an institution. GIven the cost structure and culture of traditional news companies — and their failure, all in all, to reimagine and remake themselves for the digital age — what makes you think that it’s better to spend your time reforming an old company than starting a new one?

PATON: That is a very valid question.

Essentially, I believe that despite the traditional cost structure, the legacy companies do have a running head start with deep relationships with readers and advertisers and their communities. They have solid, if challenged, revenue streams and they are profitable. There are no technological or web content developments closed to them and they can harness that profit to change.

At impreMedia we proved legacy media can be changed.

Finally, while now only one part of the news ecological system, legacy media is an important part. Continuing the core mission of local journalism going forward on multiplatforms, profitably, I beleive. is an important mission for this country.

JARVIS: OK, now focus on one ecosystem — say, New Haven’s. Besides JRC’s paper and site, the Register, the town has The New Haven Independent doing good and pioneering journalistic work online. There are independent bloggers. There are students covering the university. There’s an alternative paper. There are new sources of information, such as data from government. There’s Spanish-language media, a market you’re familiar with. There’s broadcast. So once you focus the Register and its resources on its greatest value, what is that value? What should your news organization add to the ecosystem? Is it more than reporting? Curation? Community organizing? Education? What else? And what does this mean for skills a Register journalist should have?

PATON: The New Haven Register has a long and deep commitment to journalism in New Haven. It can trace its history through predecessor companies and founders to the Connecticut Gazette co-founded in 1755 by Benjamin Franklin. Some of the first newspapers in the country were founded in and around New Haven. They have always changed to survive and can continue to do so. But now only as one part of of the news ecosystem.

The Register can bring something most new competitors cannot to the party – resources. It has more advertiser relationships, more revenue, more staff and more profit than any of its competitors. It can harness those resources to make the kind of business relationships with entrepreneurial journalists and companies that are doing fantastic work in that community. By doing so it expands that work and will let the Register focus its resources on other initiatives.

This approach lets the paper, as a news organization, engage again in investigative journalism and in-depth reporting of issues of importance to the community. It lets the company’s journalists spend time data mining important government information and developments that may not necessarily be highlighted.

Re-allocating the Register’s resources to create compelling original content is one benefit but the ability to curate content and add resources to put that info in context is also very exciting. Those efforts will stimulate debate in the community and the paper will become a much bigger forum for that because of those efforts.

Importantly, this approach will let the paper re-connect or perhaps connect for the first time with constituencies that either don’t engage with the paper or perhaps feel disenfranchised by the paper’s current coverage and platforms.

JARVIS: Now please answer the same question from the business perspective: What will the the Register’s commercial relationship be with the ecosystem and economy of New Haven? There are all those entities above plus craigslist and local merchants’ own sites. You’ve already talked about making sales arrangements with entrepreneurial journalists (I say: bravo). Will the Register still compete with those other enterprises? Can it be a platform for their success — and how? At impreMedia, you’ve told me, you hived off distribution, enabling former employees to set up new companies that now serve not only impreMedia’s properties but also Impremedia’s (former) competitors. Do you see something similar happening with local papers? What will the heart of the Register’s own business be? What’s not core?

PATON: No legacy media news company can move forward and become hyperlocal, as it must, unless it harnesses the power of entrepreneurial journalism. And the only way to harness the power of entrepreneurial journalists is to make them your partner and help them make a living. The E-Community Journalism labs will strike content and sales relationships with community members. We will faciliate cross-publishing with some, ditto sales. Sales training will be important. The motto will be that if they win we win too. The Register, as can any community daily, afford to lead the way in these developments. No business deal works if it is too one-sided.

I believe it is important we use the power of our traffic to strike ad relationships with local merchants. By creating vibrant search directories we help drive traffic to the merchants’ sites and stores. Hitching those directories to the power of Google is a win-win for everyone. There are so many ways we can help ensure a vibrant future for the communities we serve.

It is still too early for me to know what outsourcing initiatives will be undertaken but I can say that in my past experience this has resulted in employees being set up in independent, vibrant and profitable businesses and working with our competitors to lower costs and drive profits.

The newspaper industry has been scelortic in its ability to change. It now must find the willingness to do so and become much more flexible than it has ever been.

Jeff, I should add to my comments I just sent you that I am still stupified at the amount of fear in the newspaper industry. I believe that fear has got to the point that it cripples critical thinking and action. More of the same with less is just prolonging a sure death. Thinking about change and implementing it ensures survival as news organizations….

One more, one more thing: Newspapers need to become fearless again about making their mistakes in public. We used to be good at that. We lost that along the way. The web and is ever self-correcting actions make for a fearless place of ideas.The industry has to find the strength to execute, fail and execute again, again and again. And we have to stop talking and start doing. We should remember our Ben Franklin: “Well done is better than well said.”

No shit.

We need a study to determine this? Well, maybe we do. I think it is worthwhile to have a baseline to compare where news goes in years to come. When I argued the need for an audit of news today with a Google News creator, he wondered why today’s news should be the starting point. My response: Only because that is where the conversation is, as in: “What are we going to lose?” So fine, let’s measure the value of what exists today and look at the resources that go into producing it (including the waste on repetition and commodification). So fine.

But I think the study also brings some dangers.

First, predictably, it only fuels the defensive passion of old media nya-nyaing the news, witness the NY Times: “But the study offered support for the argument often made by the traditional media that, so far, most of what digital news outlets offer is repetition and commentary, not new information.”

Second, it defines news as news has been defined. We should be rethinking our definition of what is news — for many people, it’s not stories about juvenile justice, one of Pew’s subjects — and how it should be covered — not necessarily in articles — and how it is spread — that is the role of blogs and twitter — and not be stuck in old measurements.

Third, it sets up a strawman and then lights the match: Do blogs give us most of our news? No, they don’t. Well, then, they must be worthless, eh? We’ll be lost without big, old media, won’t we? Just what we need. (Though to the study’s immense credit, it also notes how much of local news is repetitive and does not include original reporting.) “This study does suggest that if newspapers were to disappear, what would be left to aggregate?” Tom Rosenstiel, director of the PEJ, told the AP. There’s the strawman: Without papers, we’ll be without news. No, we at CUNY believe the market will deliver it more efficiently and perhaps — perhaps — more effectively. It may not be news as those papers defined it.

We must keep mind that we are at the dawn, the very dawn of the new news ecosystem. There is no scalable business model in place — though, in our studies at the New Business Models for News Project at CUNY, we see them on the horizon and we see new companies starting to build it. When the Associated Press called me about this study on Friday, I said I knew of four dozen reporters in New Jersey who have left their jobs at newspapers and are dying to continue reporting in entrepreneurial startups and are waiting for the kind of help we envisioned in our project. Companies such as Impremedia and The New York Times are just beginning to consider their relationships with the ecosystem.

We are also just beginning to see experimentation with the form of news, moving past the articles the study measures. News is becoming more of a process than a product; it is being disseminated in new ways thanks to search and social and algorithmic links. News is changing.

So I’m fine to look at the PEJ as a historical artifact, a touchpoint for future discussion. But, for God’s sake, don’t consider it a write-off of that future.

Here’s the wiki where we will continue to share syllabi, case studies, course materials, and videos. Here is a link to download the recording of the hour-long call (fast-forward past the howdys).

We share similar but not identical goals. We all agree that it’s important for journalism students — and journalists — today to understand the economics of news. Some of us add that it was irresponsible of our institutions not to teach this in the past. We agree it is important to bring entrepreneurship into the industry. Some of us concentrate more on new entrepreneurial ventures, others more on bringing innovation into existing companies. Some say journalists aren’t cut out to be entrepreneurs (I disagree) but all agree that entrepreneurship is a way to teach both innovation and business. Some notes from the call:

* At Arizona State, entrepreneurship is now a required course for journalism graduate students. AS emphasizes the need to get journalists to learn how to talk to people in other department and disciplines: how to work with engineers, especially. So AS gives student teams budgets for programming their projects; they’re looking at offering 5-10 hours per team for AS programming resources and 5-10 hours for programming resources teams find outside. They want teams to build but don’t want them to be tied to one platform. Cool, eh?

* Larry Kramer at Syracuse asked about cooperation between journalism and business schools but on the call there were notes of caution. Business students, one said, aren’t there to be entrepreneurs; business school teach corporate culture, said another; and these business students also don’t learn media. Kramer wants to teach the Harvard Business School case method but is looking for cases written from the journalistic perspective.

* Seek and ye shall find: Bill Grueskin of Columbia said the school has used a Harvard Business School case on the Norwegian wonder, Schibsted, and HBS will have another on Huffington Post. But HBS charges. Columbia created such a case on Politico and offered it to fellow faculty for free. Columbia also teaches a 60-minute MBA course and is putting that online.

* David Westphal of USC talked about the pluses and minuses of teaching interdisciplinary classes with students from various pursuits; he said it’s worth the effort to get different perspectives.

* Jay Rosen at NYU said he wants to get students to grapple with the entire problem of sustainability in journalism, putting it all on the table: journalism, audience, technology, business. He wants to “override the siloization of journalism.” He also said we need to work to attract different students who are entrepreneurially minded.

* Jim Willse, ex editor of the Star-Ledger who’s teaching at Princeton this term, said we need to give scholarships to publishers to get them into entrepreneurial programs, to change their culture.

* Many of us – Maryland, Columbia, CUNY – agreed that it’s important to have entrepreneurs and investors into class to expose journalists to their thinking.

* For our part at CUNY, here is a report from my last entrepreneurial class (funded by the McCormick Foundation) and a description of how the class works. Here also are the new business models for news (funded by the Knight Foundation) that now inspire much of our work. Note that we just added a course in hyperlocal built around running The New York Times blog, The Local, in Brookyln. We are working with The Times and others to also tackle hyperlocal advertising opportunities and challenges (funded by the Carnegie Corporation); more on that as we progress.

: ALSO: In Germany Ulrike Langer polls the journalism schools there — which operate in or close to media companies — to see what they are doing in entrepreneurial journalism and finds activity at those run by Burda and Axel Springer. (It’s in German.) Next call, we’ll have our German colleagues join us. If you know of such work going on elsewhere in the world, please let us know.

Deborah died today in a roadside accident while vacationing in New Zealand. She had been ombudsman of the Washington Post, chief of the Advance Publications’ Newhouse News Service in Washington, and editor of the St. Paul Pioneer Press. She was 68.

She and I worked together in various stages of our careers, most recently consulting for our former employer, Advance, in a daring project to fold the company’s 174-year-old newspaper in Ann Arbor and replace it with a an online service based on blogs and in the community. Our former boss, Steve Newhouse, paired us because I was to be the hot-air balloon — this project was, after all, a chance to practice what I’ve been preaching — and Deborah was to be the ballast, the traditionalist with experience in the eternal verities of journalism and respect from journalists.

But our roles often reversed. I was the one holding Deborah down as she grabbed new ideas with the fervor of a convert and fretted that we weren’t being radical enough; I was cast by contrast as the conservative. She was quicker than I was to criticize and reject the work of traditionalists simply because it wasn’t good enough. She was open, eager, and fearless learning new technologies and their implications and opportunities. We brainstormed via wiki.

That was a lesson for me. My prior interaction with Deborah had been as a blogger when she was the Post’s ombudsman. In that role, she found herself more than once in a hornets’ nest. She made a mistake and didn’t correct herself quickly or abjectly enough for bloggers’ taste. The paper killed comments about a controversy involving her, violating the bloggers’ sense of the propriety of a historical record. She found herself in the middle of the print-v-online war in the Post newsroom (which simmers still). I was among the critical. She never called me on it at a personal level. She stuck to the substance.

Here’s Deborah rethinking the notion of blogging at a meeting of ombudsmen:

Jarvis thinks all ombudsmen ought to blog. His blog is at http://buzzmachine.com. He said bloggers “distrust the institutional voice and trust more the human voice. The more we represent that personal voice, the better.”

That caught me up short. I got a laugh at the meeting when I said, “I hardly have time to go to the bathroom. Start a blog?” Instead of responding to 600 letters, he said “a blog post is more efficient and adds to the conversation.” I’ll think about it.

I learned that Deborah had little fear of learning. I argue that we must all learn in public now — which means making mistakes and finding lessons and moving on. We online need to be more generous with others as they learn our ways. There’s no sense in replacing one orthodoxy with another. What we need instead is curiosity. That is what Deborah had.

Before the Post, Deborah was in charge of the Newhouse Washington bureau when I was the online editorial guy in New York and what I remember most about that time was her tireless, quixotic efforts to find a business model for the Religion News Service, which the company owned. Deborah fought for and protected this poor child the way she did all her journalists. That’s why they were loyal to her.

I’ve long said that the only real fringe benefit to being a journalist is that you get an obit in the paper when you die. Lately, I’ve said I fear I’ll outlive the papers I worked on. But maybe there’s a new mark of a legacy. When I searched Google today for news on Deborah’s death, I found this:

Deborah’s friends and colleagues gathered around her new home online. And they spread the tragic news of her death and paid tribute to her:

Good-bye, Deb.

: LATER: Here are David Carr’s and Ken Doctor’s remembrances.

(1) Again and again lately, the company is surrendering the advertising battle. In newspapers, it is saying that advertising won’t support its high costs and so it will sacrifice traffic and advertising the hopes of building build pay walls. In MySpace, the company handed over its advertising fate to Google and then couldn’t produce. Now in TV — which is where Murdoch fils says the future of the company lies — they’re trying to eke fees from cable operators.

(Under must-carry rules, a station can demand premium placement — which would benefit audience and advertising — or can demand a fee, but the cable company can decline to pay and carry the station. That’s the stand-off occurring now.)

(2) News Corp. may succeed at getting fees from cable operators, but I predict that will raise prices for consumers as more and more fees are passed along; consumers will be further enraged that they have to spend money for bundles of channels they don’t want or watch; and that will give regulators the cause they need to demand a la carte pricing — which will end up hurting and likely killing second- and third-tier cable channels subsidized by bundles and wil hurt cable operators as they end up charging less.

Add to this the paper-tiger nature of News Corp. threat to take Fox stations off cable. Oh, no, they taunt on crawls across the screen, you won’t get American Idol. Except we will, online, on Hulu, co-owned by News Corp. For News Corp. knows that the value of its own stations as ad vehicles is diminishing as the value of internet distribution rises. And so then this story comes full circle as News Corp. will likely threaten to charge consumers on Hulu — again, a capitulation in the advertising model.

What we’re seeing is the disaggregation of another media form. We don’t buy albums; we buy singles. We don’t buy newspapers or magazines; we aggregate, curate, and link to the best stories we like, bypassing editors’ packaging. We don’t go to bookstores to get the books the system decides to put on the shelves; we buy what we want from Amazon. We listen to radio less and listen to our own playlists more (a trend that will only accelerate as we listen to new forms of radio on our phones). Now we will end up picking and choosing TV channels and even shows, diminishing the power network and station programmers’ and cable MSO’s hold over us.

At the highest level, what we’re seeing is the death of the mass audience — and the value of distribution — and the advertising model that supported it.

I don’t think advertising is dead. I think it’s dying for mass companies with high cost structures. Advertising will shrink, as Bob Garfield argues in the Chaos Scenario, and it will migrate to new media and new forms. News Corp. knows that; every media company finally does.

So I think we’re seeing News Corp. milk the dying cash cow. Newspapers aren’t going to grow and will shrivel and sometimes die. The value of local stations is only going to shrink. (MySpace was a mistake.) So News Corp. is begging for cash wherever it can get it — from readers online or viewers on cable (via cable companies’ billing) — no matter that there’s no strategy there.

There are eight million stories in the naked city and soon every one of them will be available on your phone through visual, aural, and geographic search and augmented reality in our newly annotated world.

Every address, every building, every business has a story to tell. Visualize your world that way: Look at a restaurant and think about all the data that already swirls around it — its menu, its reviews and ratings and tags (descriptive words), its recipes, its ingredients, its suppliers (and how far away they are, if you care about that sort of thing), its reservation openings, who has been there (according to social applications), who do we know who has been there, its health-department reports, its credit-card data (in aggregate, of course), pictures of its interior, pictures of its food, its wine list, the history of the location, its decibel rating, its news…

And then think how we can annotate that with our own reviews, ratings, photos, videos, social-app check-ins and relationships, news, discussion, calendar entries, orders…. The same can be said of objects, brands — and people.

Thinking about Google’s synchronicity made me turn search on its head in my head. Rather than having to query a data base — how aughties that is – we will be able to point our phone — or whatever we call it — at anyone, anything, or anyone and get its story or ask about it or tell our own story about it. The challenge — which Google, among others, is attacking — is to organize all that annotation around the place, thing, or person.

Local news organizations — if they were truly local — should want to do the same thing: organizing a community’s information so the community can organize itself. I call that, too, journalism. They are losing that opportunity to Google and Yelp (which this weekend was to be part of Google and then was not) and Foursquare — or at least they are losing the opportunity to work with and exploit what those companies are building, the next view of local. That’s the real definition of hyperlocal: what’s happening around me right now.

Witness these videos (via the Digital Strategy Blog [in German]):

About places:

And where you are:

And people:

And (from me): things and the communities that exist around them:

This is the new way I want to look at search: not to search a data base but to search my world, to see what is around me in new ways because I can.

To understand the power of Brin’s and Page’s focus, go to Google’s home page now and type “weather in Ed” and stop there. Google will not only understand you want weather in Edinburgh but will give you the forecast right there in the search box; it will answer your question before you’ve even asked it. Google’s true holy grail is understanding, anticipating, and serving our intent.

When we’re using Google devices with Google operating systems and Google browsers and Google software to ask Google questions in text or voice or even pictures and Google gives us each the personal answers we need from any source – no, the best source – in the world, in the context of the moment and our needs, that will be the culmination of the Google age. Google’s next frontier is not to organise the world’s information, but our lives.

The AP lists the status of six newspaper companies that have declared bankruptcy: Tribune, Freedom, Philadelphia, Sun-Times, Journal Register, Star-Tribune, representing 66 daily newspapers among them.

Mostly they are using bankruptcy merely to restructure the debt they shouldn’t have gotten themselves into in the first place — the debt that nearly killed them. Often they are leaving in place vestiges of the legacy management that made those bad decisions and did not make the brave strategic moves the digital age demanded. Tragically, none of them has used the great if difficult opportunity bankruptcy gives them to reinvent their businesses and themselves, as I suggest here:

Bankruptcy enables a newspaper company to shed its past. It can get out of contracts and leases for paper, printing plants, delivery, trucks. It can also get out of labor contracts, reducing severance costs. That is terribly painful but I fear it is as inevitable as the end of the ITU (the typesetters’ union). It offers a one-time chance to rethink, reinvent, and rebuild the company for the future. Is it better to stretch out the pain and never get anywhere? And if tough decisions and actions are not made, the likelihood that the company will die and all will be lost only increases.

This is another reason I say that the future of news is entrepreneurial. Given the opportunity of market leadership and 15 years since the introduction of the commercial web and then, failing that given the opportunity of bankruptcy to change, the legacy institutions can’t bring themselves to do it for any of many reasons: It’s too expensive to change and cut back; it’s too painful to corporate valuation and ego built on size over profitability to reduce the scale of the company; it’s too difficult to shift the culture (especially after much of the best talent left with buyouts); the strategic vision just isn’t there. Whatever, the tale is too often told.

Even so, it’s not too late for the legacy institutions. Perhaps foolishly, I refuse to give up on them. If these companies took just one or two papers each among their 66 to experiment with new models, to radically rethink and resize them and to learn instead of demolishing their old institutions brick by brick, they and their still-dying industry would be much better off; they might find a new way.

I consulted on my former employer, Advance’s, project to do that in Ann Arbor, killing the Ann Arbor News and starting a new, blog-based, community-based company and service, AnnArbor.com; the industry should be watching and learning from it. That’s one model, but my no means the only one. Our work at CUNY in new business models for news (funded by the Knight Foundation) presents another vision, also not the only one.

Before it is too late, I’d like to see these companies — especially companies still in or going into bankruptcy — try more models:
* staying in print but splitting up the functions of the company and outsourcing everything possible;
* investing in a widely distributed network of independent local and interest sites with the company adding value with curation and sales;
* creating a pure ad network;
* creating a very high quality product and — yes — charging a lot for it;
* creating a series of special-interest niche services and, in some cases, publications;
* creating the still mostly free but higher value craigslist with more curation for quality and more services;
* experimenting with new services for local merchants — especially those too small to ever have afforded big, inefficient newspapers — including helping them succeed through Google, Yelp, et al;
* creating citizen sales forces to scale while serving those small merchants;
* what else?

A few days ago, I had a related email discussion with John Paton, head of Impremedia, which rolled up a number of publications to become the largest Spanish-language publisher in the U.S. In the process, the company has made the difficult decisions to shrink by outsourcing and finding efficiencies and focusing and has changed its culture to put digital first. The industry should be watching these efforts as well. John asked why legacy companies are these days so often counted out in the discussion of the future of news. I recounted my views, above, and added that entrepreneurs have an easier time building from the ground up than big institutions do trying to rebuild from the top down. But I ended saying this: How can the legacy companies stay in the game? By acting like entrepreneurs, by bravely facing the new realities and by making bold moves to utterly transform themselves. It’s by all means possible. But it’s hard. And it’s rare.

There’s still a minute before midnight to try.

Meanwhile, journalism schools are no longer content just to teach the inverted pyramid. A few weeks ago, I was at CUNY’s graduate school of journalism to help judge presentations from more than a dozen teams of young media entrepreneurs. There were some clunkers, as there always are, but there were also some scary good, real-world proposals from students who don’t have to think out of the box because they were never in one to begin with.

I tried to be courteous and deferential, partly out of a small fear that I may work for one of them someday. There are worse places to end up.

I see a strategy emerging that has Google profoundly improve search by better anticipating our intent and then moving past search to build hegemony in local and mobile (which will come to mean the same thing).

Add up Google’s recent moves in local/mobile:

* Yelp would bring Google a scalable platform to get information and reviews about every local business using community. Yelp enhances Google’s place pages. Place pages enhance Google Maps. Google Maps are our pathway to local information on what we still mobile phones but will soon see as our constant connectivity devices.

* Google distributed 190,000 QR codes for local businesses to paste on their front windows. Take a picture of it and Google will give you information about the place (see: above). Businesses have another reason to advertise on and be found through Google and its business center.

* TechCrunch also speculates that we could use these QR codes to check in to Foursquare, Gowalla, et al. Local is social.

* Google Goggles goes the next step and lets you take a picture of a place — or object (or soon, person) — and use that as a search request to get local information — or leave it.

Thus Google becomes a doorway to the annotated world. Everyplace has information swirling around it; Google organizes it and motivates and enables us to create more information for it to organize (more on this idea of the annotated world in another post).

* Google’s reported phone is said to have a “weirdly large camera.” If that camera becomes a key to visual search, that makes sense, eh? That also gives us a better way to take more geo-tagged photos, which better annotates the world and gives Google more information to serve back to us.

* Google is trying to get better at recognizing speech to prepare for a voice-controlled (read: mobile) web world. That, say Chris Anderson and Tim O’Reilly, is why they give away GOOG411 for free: to learn our voices. And now note that Google is asking people to donate their voicemails to Google’s effort to improve its own transcription. Search will become visual and aural (read: mobile).

* Google Earth is coming to the cockpit of the new Audi, giving drivers rich geographic data about where they are and where they’re going.

* GoogleMaps on Android will now tell you what’s nearby.

* Let’s not forget that Google will make money on local — Eric Schmidt said on CNBC a year and a half ago that Google will eventually make more on mobile than the web (which, to me, doesn’t mean phones; it means our constantly on connection devices). This is why Google bought mobile ad leader AdMob for $750 million.

That’s mobile. Now look at some of its search enhancements to better intuit intent:

* Go to the Google home page. Start typing “Weather in Lon” and stop there. Google will not only suggest that you want weather in London, it will give you the forecast for London right there in the search box. You didn’t even finish typing in what you wanted to ask and Google gave you the answer without you even having to click and go to a site.

Google’s holy grail, they’ve long said, is to anticipate your intent. That explains, I think, some of Google’s other moves.

* Google DNS is supposed to speed up the web for you (speed is a big Google cause these days) but it also gives Google an invaluable source of data about web usage: who goes where when and before and after what sites looking for what. Now, your ISP knows that. But with DNS, Google could know that. It makes Google smarter about the web and its content as a whole, certainly, and so long as it is careful about privacy, it can enable Google to target to us better.

I see a day when search (like news) is no longer one size fits all. Search will be customized, personalized, and targeted to us and our contexts: who we are and where and when we are asking for something. This, I think, could mean the slow death of the dark art of SEO.

* How will Google get us to use its DNS? Well, I’ll bet it will be the default in computers equipped with Google Chrome OS. And I wouldn’t be surprised of the Google Chrome browser can provide some of this data to Google.

* Google launches social search. This creates more context and gives Google another clue to intent.

Now add back in all the mobile developments above. This gives Google more context to anticipate our intent.

But that’s not all. I’ve said for sometime that Google is behind in battles for the live and social web and was going to say here that it was bypassing those strategies to concentrate on mobile/local. But as I wrote the post, I saw more threads in both live and social.

* Google added Twitter to its search results. That’s pretty much a BFD. But it shows they’re trying to grapple with the live web. And that’s why there are never-ending rumors about Google buying Twitter.

* Wave is an important shift in the metaphor for content creation, making it collaborative (read: social) and live. Google added social tools to Google Docs. It make Docs a path to publishing (and being found via search) on the web. Creation itself is a social act once it enables us to connect.

* Add in the social bits above: Yelp is a community tool; QR codes and visual search will let us talk about places and things and find each other and meet; Foursquare and Gowalla make local social and Google could help them.

Last night, after the Yelp report, I tweeted this: “Yelp + GoogleMaps + StreetView + PlacePages + GOOG411 + Google Goggles + Android + AdSense = Google synchronicity”. Om Malik piped in: “@jeffjarvis I love your unrelenting belief in google. I think u need to start look at world in a non-search context.” But then I said – and others agreed: “I also think Google is starting to look at the world in a non-search context (i.e., local, live, mobile)”.

I believe that’s what we’re seeing here: the start of Google’s view of itself after search. Not that search will go away but it will become less important in the shifting mix of out rings of discovery. And if search is going to stay preeminent, it had better update itself profoundly.

: See also Gina Trapani’s excellent roundup of Google’s amazing 2009 developments.

: LATER: Kara Swisher says Google is also eying real-estate search Trulia.

Or as I put it in a tweet: “Yelp + GoogleMaps + StreetView + PlacePages + GOOG411 + Google Goggles + Android + AdSense = Google synchronicity”

In the interest of continued transparency for the sake of those who follow, here are the other updates (TMI warning):

When my surgeon, Raul Parra, came into the examining room at Sloan Kettering this morning, he said, “How are you?” I said, politely, “Fine, how are you?” And he replied, “No, how are you?” It’s the one time when someone really means the question. And the answer is that I do feel fine; I feel great, in fact. I get tired still and fellow patients warned in comments under my previous posts that’d be the case. But other than that and the two items I’ll go into next, I wouldn’t know I’d had major surgery only three months ago. The wounds are healed, the pain is long gone, and I can carry on as before.

My incontinence is almost over. Almost. Every time I have a few dry days in a row and think I am about ready to throw away the pads, I am struck down as if by God punishing my hubris … with a drip. Damn. If you see me in the halls suddenly grimacing in frustration and anger, that’s what happened. I’m hopeful I’ll be rid of the pads soon. But truth be told, if this half of the condition never got any better, I’d find it livable — far better than what I’d feared. For that, I’m grateful.

The impotence is another matter. Not a bit of progress there. And it’s not just that I can’t have an erection, it’s that the poor thing is chronically deflated, like the Balloon Boy’s craft at the end of its flight. I could be assured victory in a small-penis contest with Howard Stern. Yes, you know a man is talking about his penis when juvenile jokes start. Here’s how silly a man’s mind can get: I’m going to Munich in January and enjoy going to the (co-ed) sauna in the hotel there but I’m once again feeling like George in Seinfeld’s shrinkage episode. Yes, it matters.

I can have orgasms but they’re strangely muted, as if wrapped in cotton. And they are quite strange being dry (the seminal vesicles are removed with the prostate.) I’d also been warned about that. I was prescribed Viagra but stopped taking it for a bit when I was getting palpitations and I feared an onset of afib (my heart arrhythmia; don’t I sound like an old coot, recounting my ills?). I’ll try Cialis next. The doctor said the nerves he moved out of the way and spared in surgery can begin healing anywhere from three weeks after surgery (I’m not so lucky) to two years. I’ll keep my fingers crossed.

That trip to Munich comes on the way to Davos and this year I’ll be participating in a dinner about prostate cancer led by Dr. Jeffrey Drazen, editor-in-chief of the New England Journal of Medicine, and including Dr. Patrick Walsh, who, Dr. Parra explained to me, is the father of radical prostatectomy and the nerve-sparing procedure (thank you, sir) along with other leading doctors. What the hell am I doing there? I’m to bring the patient’s perspective.

I plan to say that publicness has benefitted me and that I wish the doctors would, in turn, be more public. The response I got from my posts here was helpful not only in the support I received but especially in the information I got from fellow patients who proceeded me and told me in frank and brave detail what I would experience. I owe them all. I’ve argued before that doctors should use the web to become curators of the best information they have. And together, the more we talk about this, the more we will bring it to the attention of men who should be screened and take away the mystery, fear, and stigma associated with cancer and surgery affecting our penises.

My bottom line: I am glad I was screened. I am glad I have written publicly about the experience. I’m glad I had the surgery. And I’m very glad today to see that less-than sign: <0.05.

I spent an hour on the phone the other day with Steven Kydd, exec VP of Demand Studios, to understand their model—using algorithms to assign content creation based on search and advertising demand and to minimize cost and maximize revenue—because I wanted to learn a deeper layer of lessons than I think we’re hearing in the discussion of Demand’s allegedly evil genius.

The talk thus far misses their key insight and the opportunities they create. Much of what I see online is fear that Demand Media—with the slightly rechristened “Aol.” following fast behind—will cheapen content and flood the internet—that is, search results—with crap that’s just good enough to fool algorithms. Some also fear that while putting content creators to work they will put better content creators out of work: the dreaded deprofessionalization and deflation of media.

Michael Arrington marks the end of “hand-crafted content” (somewhere I hear Nick Carr and Andrew Keen cackling maniacally). And Read Write Web’s Richard MacManus worries that the web’s quality will suffer.

They may be right. But then again, the internet has always been filled with crap. So the challenge has always been how you find the cream. That’s where opportunities lie. That’s what Google saw. The new question is whether Google can keep ahead of the content farms and continually find new and better ways to find better stuff. I’ll bet on Google over crap-creators. But they better get cracking.

This is why, when I proposed an X prize to solve media’s key problems at Yale symposium, Clay Shirky responded with a call for work on what he called “algorithmic authority.” A few of my students’ proposals in my entrepreneurial journalism class tackled just this problem with discovering and prioritizing content for us: one using humans aided by algorithms, one using algorithms aided by humans; neither operated like a one-size-fits-all search engine (but then, soon, Google won’t either).

I think we may see search fall as the sole or even key means of discovery and filtering of quality content. I see three rings of discovery today: search (Google); algorithms (see: Google News, Daylife); and humans (see: Twitter). Note again that Bit.ly alone causes as many clicks a month—one billion—as Google News. Human power rises again. That’s what Fred Wilson says today when he argues that social beats search, because “it’s a lot harder to spam yourself into a social graph.” As search becomes more personal and no longer universal, SEO as a dark art and as the fertilizer for content farms will diminish and the social graph — our own circles of authority — will become more important in search as well. So I have faith that there are solutions to stem any rising tide of crap.

This is how I put it in a tweet: “algorithm-aided human writing will meet human-aided algorithmic curation; quality will rise.”

In all of this, I caution us not to miss Demand’s key insight: that the public should assign the creators, including journalists. The public often knows what it wants to know. I learned this lesson when I consulted at About.com and saw how they monitor search queries to see where there are questions for which the don’t have answers. When that happens, they go write answers; Demand automates the process. Makes sense.

This is not how we have operated in media: We decided which questions to answer because we asked them. What hubris! Today, I teach my students to find conversations on the internet and add journalism to them in the form of answers, corrections, reporting, explanations. In 2007, my students in a seminar at Burda in Munich and in my class at CUNY asked why the public doesn’t assign us and my entrepreneurial students in two classes have worked on that problem. Jay Rosen just started playing with this notion at ExplainThis.org, creating a platform for the public to ask reporters to report their questions. Demand and About are doing the same thing, only through search queries. Jeff Sonderman compiles some more examples. Where appropriate, reversing the assignment pipe is a good idea.

Demand is also creating a system they say will find the best writer for each assignment. We are free to disagree with their methods and results, but there’s insight here, too. Two students in my entrepreneurial journalism class won a grant to create a platform to do just this with local and hyperlocal news assignments (note that Kydd told me Demand isn’t touching news); I’ll report more on their project as it gets closer to launch. Can’t news organizations learn and steal some lessons from Demand? What if you wanted to create a content asset — say, a complete travel guide — and you opened up the process and its discreet tasks to a marketplace of paid contributors, enabling you to do larger projects at lower cost than before?

I always tell my students: Wherever you see a problem, look for the opportunity. That’s Arrington’s point: The next generation of content creation is here; deal with it. If you don’t like what Demand et al are doing, see the opportunity in it to surface quality content and to create competitive quality stars whose creations rise not just through algorithmic search cynicism but through human recommendation. Dig to the next layer.

I got lots of details from Kydd about the Demand method. In their view, they have combined content-creation and social-media platforms to enable content creators with “spare cycles”—his nerdy words—to earn money.

Kydd says 11 community members contribute to each article by fulfilling the discreet functions Demand identified: writing, copy-editing, copy-chiefing, reviewing titles, managing topic pages, checking facts. That is done by freelancers. The staff directs, edits, curates, and manages them. The algorithm makes all this more effective as it tracks content and ad demand and writes headlines for pieces it says will get traffic and earn money. Editors are 1.5 times more effective in creating assignments that will generate traffic, Kydd said, but the algorithm is 4.9 times better than creators.

Kydd said Demand pays from $0 (with revenue sharing) to $100 per piece; it averages at $20. Copy editors make $2.50-$3 per piece, which works out to $15-20 an hour. He said these people like to wake up and know there’s work they can do—there are 100k assignments waiting for takers right now—while they wait for old, human editors to respond to pitches. He said they also like being paid twice a week. Kydd said Demand employed 4,500 creators (text and video) and 400 copy editors in the last 30 days.

What amazed me most is that Demand uses its method not only for service content but for jokes at Cracked.com. Could an algorithm and social network replace Jay Leno? Easy.

: LATER: See also Doc Searls on junk food and chefs.

: Paul Marcum tweeted today: “Prediction: increasing clutter from algo content farms + mobile app convenience will have even @jeffjarvis paying for news by 2011.” I responded seeing the irony here: that value will come from aggregation and curation of quality content. But imagine then if the aggregators become more valuable than the creators and start charging; the creators (i.e., Murdoch) will go batshit. I’ve argued that in the link economy, there are two creations of value around content: from those who make the content and from those who bring together the public around it. Where is there greater value? We’ll see….

: LATER STILL: See Upendra Shardanand (founder of Daylife, where I’m a partner) on the need for new tools to create new handcrafted content. Problem is, he says, we’re using old text tools. See my related posts on storytelling and post-page media.