The performance in the third quarter was affected only partially by the worldwide financial panic that froze the credit markets in mid-September, throttling the already waning demand for hiring, auto sales and home purchases.

The outlook for the final period of the year is worse, when the three classified verticals are likely to experience the full impact of the economic meltdown.

So it looks like I’ll need to update this chart I created at the end of Q2, showing constant-dollar print revenue at newspapers dropping below 1982 levels. When I made that estimate in September, I said 2008 print revenue would hit $36 billion, a number that needs to come down by at least a half billion (applying 2007 Q4 decline percentages, clearly an optimistic projection), if not a whole lot more.

So the American Press Institute has declared a national emergency, grabbed the newspaper industry by the lapels and summoned its leaders to a hotel ballroom the API campus in Reston Virginia.

The API Summit on Saving an Industry in Crisis happens on November 13th. Here’s what they’re saying about it:

The summit conference will be a discussion on the theory, practice and application of techniques of corporate renewal. Facilitating the discussion will be James B. Shein, Ph.D., a former turnaround CEO for several companies and currently clinical professor of management and strategy at Northwestern University’s Kellogg School of Management. Prof. Shein will lay out for us:

• The predictable path to decline that our industry is taking
• How to determine where an organization is on that path
• Strategies for reversing the decline.

All discussion will be on a non-attribution basis. At the end of the day, participants will have a greater understanding of available tools for engineering the renewal of our industry, and a shared vision of the way forward.

Lauren Rich Fine of paidcontent.org, recently made the intriguing point that, until newspapers start forcing advertisers to take a hard look at interactive, the industry will remain locked in the same 10-20% range for interactive revenue as a slice of the whole pie. She suggests killing the print edition, as painful as it will be, to be the bitter but necessary medicine that will start the healing.

I wonder, though, if there isn’t a bridge to that future that allows for a hybrid print-online model that would be worth discussing at the API summit. So, with all the hubris I can muster, herewith is my straw man for the publishers in Reston later this week.

1. Combine all your staffs. If you have an interactive team, a community newspaper team, an online entertainment product team, a TV interactive team and a print newsroom, put ‘em all together. You’re going to need a multi-disciplined content team for the plan I’m proposing.

2. Pour out a 40 for your beloved daily broadsheet. Here’s your new product mix:

• Daily free tabloid, limited to 48-60 pages. (Editorial/Ad mix 50/50 or 45/6555) It’s not time to give up on print. The readers you have aren’t ready and lots of your advertisers aren’t ready. By printing a Monday-Friday news tab, you continue to serve their immediate needs, while keeping a significant piece of the print revenue pump flowing. Assuming you do a good job of it, and you actually pick up readers through a combination of smart editorial focus and zero-friction for pickup through the free price-tag, you could very well get into the kind of scarcity-pricing that is common in television and radio. When demand from advertisers increases, you don’t add pages; you raise the prices on the ad spaces you have.
• Weekly Magazine, paid, 100 pages or more. (Editorial/Ad mix 60/40) This is where you publish your best print work. Think of this as a Newsweek for your local market. It’s the publication that doesn’t get recycled at the end of the day; it sticks around for a week (or longer). For years have been telling daily newspaper publishers that they don’t have time to read a paper every day, that they felt guilty dumping so many unread papers. This solves that, providing the insight and perspective that only a major newsroom can, at a print frequency more attuned to the needs of modern readers. (Big question to be solved: how to carry inserts, a huge part of weekend revenue. Should this be a standard magazine size, poly-bagged, or would a stitched, tabloid-sized publication work? Need to balance the revenue needs with the shelf-life objectives for the publication.)
• Significantly enhanced digital presence. A 24/7 digital newsroom is a given. Everybody who is in your newsroom – with the possible exception of the page designers – works for digital first. This is where you will meet the promise to your local market of being the preeminent local news organization, reporting news and data in whatever digital form your market needs it, including enhanced phone delivery, consumer-searchable databases, open APIs into your reporting and datastream, and an aggressive program of outreach to the rest of the local web in your market. And, yes, web sites. Not just one uber-site (though that’s welcome), but also a family of niche-focused thin sites that meet the unique needs and desires of your markets. These thin sites, built around events databases and social media tools, can be run by a single reporter-blogger who’s passionate about a topic that ma

Even writing this, I can think of a dozen arguments for why this is not the perfect answer. Good. Because these aren’t times for perfection. These are times for experimentation. The readership trend and the revenue trend are both heading in the same direction. They’ll eventually hit zero if we do nothing. But with the right attitude and a little bit of risky behavior, I believe both of those trends can improve.

“Do what you do best. Link to the rest”

Linking in this case could be the literal A HREF hyperlink, but was often also about thinking about new ways to focus on the core and find ways to either jettison non-core (leaving it to others to pick it up) or find links through outsourcing, freelancing and mobilizing armies of bloggers and citizen journalists.

Jeff Jarvis, the chief provocateur for the day and organizer of the summit, set the tone early. “There won’t be any silver bullets today,” he cautioned. “If there were, we’d have already used them.”

The goal of the day was to provide an opportunity to start an intentional and ongoing conversation about how to rethink the business model for news gathering and reporting, largely at daily newspapers, but also in television and in national niche media. How do you take a business that is built on the scarcity model – there’s only one or two newspapers per town, allowing for the growth of eight- and nine-digit annual revenue streams - and rethink it for an age of information-ubiquity?

I won’t even attempt a blow-by-blow of the day when so much of it is available for watching and reading on the News Innovation web site. Also check out the contemporaneous Twitter stream. But here are some random highlights that jump out from my notes:

Edward Roussel of The Telegraph: If you’re a newspaper company, your technology sucks. Outsource it!

Dave Morgan, formerly of Tacoda: It’s time for newspapers to face reality. It’s a market problem, a business model problem and a cost problem. “Prepare for disassembly.” Newspapers, he said, need to disaggregate and start thinking about reporting, distribution, ad sales and direct marketing, printing and digital as different businesses and treath them accordingly.

Morgan on leveraging the existing structure: Newspapers have the best marketing and sales organizations in their markets. They could become strong local ad agencies if they’re untethered. Printing is either an area of opportunity – if newspaper do a whole lot more of it – or an albatross, that they should outsource.

Morgan on Digital: Making digital a sidecar to the newspapers is killing digital. Only divided (as businesses) can newspapers and digital endure.

Michael Rosenblum, Rosenblum TV: Both in the larger session and in the break-out, Rosenbloom hammered at the notion that it was absolute folly for newspapers to hire any journalists who were not absolutely adept at the full suite of digital reporting skills, including photography and videography.

Adam Davidson, NPR and creator of the excellent Planet Money: Respect people’s intelligence.

Samir Arora, Glam: News organizations need to be curators of content. The network has more value to the consumer than the brand.

Upendra Shardanand, Daylife. Before long, everyone will be a news publisher. How can you offer the best navigation of the world beyond your own content? News organizations need to do a better job of curating the world around their content.

Jay Rosen, NYU: There is a wealth of information available that your connected and interested users would be happy to share with you to make your product better. Publications that get to this point start their days with inboxes full of great ideas. How to make this happen? 1. Be two-way in your approach to reporting. Invite contributions. 2. Be clear that you need people to help you and that you will use their contributions.

More to come on the topic and goals of the day, but it was an excellent first step. Thanks to CUNY Graduate School of Journalism and, of course, Jeff Jarvis.

For years, the argument that was floated against making news archives free was that newspapers had too much revenue at stake. People would surely pay a few dollars for access to articles they wanted. Once that was put to rest (the numbers, relative to even just the current online revenue at most papers are small), we moved on to another argument: It’s too expensive to store all those articles.

Upon some poking and prodding, though, the expense turned out to be not the archiving of the articles and photos – after all, storage is as close to free as it’s ever been, and getting cheaper every day – but backing them up. The expensive hosting providers many news organizations use for their reliability and speed also charge usurious bandwidth rates for backup. And when you’re backing up years of data every single day, that does, in fact, get expensive.

So why not this: Don’t back it up. Or, just back it up monthly or quarterly. Having a 99.9% chance of an article from 2003 being available is infinitely better than not having it available at all, which is the case now when many newspapers simply throw away old articles after a few weeks.

Anyway, TechDirt (via Journerdism) has an interesting look at what opening up the archives has meant for the New York Times. There’s not a lot of new data here, but the conclusion is still valid: newspaper archives are a readership (and, if you’re doing your job right, revenue) goldmine.

The only constant is that, in the words of Don Ameche’s character in the David Mamet movie, “things change.”

Right now, we’re all living through a big change. In a downturn, money dries up. People spend less. Businesses advertise less. News organizations struggle to cover their markets on less revenue.

But even in the current tough scenario, online looks to grow in the coming years. We’ll see if the predictions hold, but recent prognostications by some key analysts, while ratcheting their projections downward, still hold out hope for mild improvement in digital ad revenues.

The problem is, of course, that these are just projections. You have to look only as far as last December to see how far ad projections can be off when conditions on the ground change.

But if we don’t invest our efforts and our dollars where the growth is, we might as well pack up and go home.

Mutter presents a credible anecdotal argument that any such projections are made of air, given the current swoon of the U.S. economy.

Fortunately, he didn’t take a peek back at the NAA’s 2008 projections, made back in December 2008. If he did, he’d be in an even worse mood:

Newspaper Association of America Business Analyst Jim Conaghan expects advertising revenue to decline only 1.2 percent in 2008, compared to 7 percent this year. That is to say that online revenue growth, which he predicts at 22 percent, will not quite cover continued losses of revenue from classifieds.

2008 Prediction: 1.2% down
2008 Actual: 11.5% down
2009 Prediction: 5.5% down
2009 Actual: Stay tuned, and buckle up

I’m still bullish on newspaper companies figuring out ways to grow the business in 2009, but the last place I’d look for reliable predictive data is the NAA.

It was a classic defensive move: stop the outflow, then recover the share. And it worked. Careerbuilder and Yahoo’s newspaper-centric HotJobs both are in the game with Monster, often beating it. Mission Accomplished.

So, why then is this chart still going in the wrong direction? Why is the money-pump of recruitment advertising sucking air?

It’s Craig. Starting around 2000, Craigslist went national with a largely free ad model. Over time, businesses discovered they could fill their open positions with an ad on Craigslist. Money that once was spent on a newspaper ad or a Monster or Careerbuilder ad simply was not spent. Hundreds of dollars per ad did not change hands. And yet the position was filled.

How do you compete against that?

Like the Grinch standing atop Mount Crumpit believing Christmas would never come without packages, boxes or bags, newspapers scoffed at the Craigslist model: “It can’t possibly work”

Well, it does. Mix in vertical job sites that do charge, but at a much lower rate than newspapers and online megasites, and you’ve got the makings of the swoon the newspaper classified business is currently in.

And can you really blame the hiring manager, who fills a job without spending a dollar in a newspaper or on Careerbuilder, for never spending there again? Especially in an jobs economy that’s becoming less of an applicant’s market with each passing day?

This should not be news to anyone in or out of the newspaper classified business. Yet the slippage continues, accelerating even in the past year. We shouldn’t need to say this almost a decade into the 21st century, but we do: We need to change. Fast.

If I had P&L responsibility for print classifieds, these are some options I’d consider to shore up one critical category, recruitment, still the largest slice of the classified pie:

1. Get out of print. The “Want Ads” of previous generations worked well because the classified section was a reliable database of most available positions. A printed database, yes, but for most people well into the end of the 20th century, a printed database was the most accessible database. Today, however, when huge swaths of our population are online with devices both tethered and wireless, a printed database is a museum piece. Convert to 100% digital classifieds now and use the paper to promote the heck out of the online product. This will cost in the short run, but so will doing nothing.

2. Create a weekly tabloid which aggregates the best local classifieds and distribute it along with the paper on Sunday, then free on Monday. This may simply be forestalling the inevitable, but there’s also the possibility that it could pump new life into the old beast, rebuilding the teeming marketplace of old through sheer volume:

• All 3-4 line ads are free if users create them online. If a user wants the traditional phone support, there’s a $20 fee for the service.
• Offer aggressively-priced upsells for both print and online.
• Aggregate classified content from other sources, either through partnerships or straight-up content-scraping.
• Surround the ad content with original editorial content. Give the publication a voice and an attitude to encourage readership by more than just the hard-core jobseeker.
• Extend your reach outside of your paying newspaper customers, but still give them the early look by holding off the free edition for one day.
• If your newspaper owns community papers or other niche publications, use them to distribute the new classified tab.

(Note: a variation on this option recently launched at The Baltimore Sun. I had a small hand in the development of the idea. The Sun’s product as launched does not contain free or aggregated ads, a critical difference to my mind.)

3. Be your niche. Take a look at the Sunday jobs section – a great deal of the jobs there are blue collar and entry-level. Under the current model of the newspaper employment section as an omnibus job source, this is a bad thing. But what if we embraced the reality? Move all of the professional listings to online and focus the printed product on helping employers fill the manufacturing and service jobs in your market. Publish it in English and Spanish to better meet the needs of the workforce. Distribute it outside of the traditional newspaper rack system, employing hawkers at major work sites and home improvement centers, for example.

4. Charge for leads. This is Lucas Grindley’s idea, and I think it has a lot of merit. It starts with free online and in-print ads. Then it gets interesting:

After those ads are printed for free in the newspaper and posted online for free, numerous people will obviously respond wanting to apply for the job or buy the merchandise.

When that happens, notify the job poster or car seller that someone has responded. If they’d like to view the response, they’ll have to pay a fee.

That’s right. Charge them to view responses.

To encourage usage, maybe give away the first response for free. Then charge per response after that.

These are just a few ideas. I imagine Steve Outing at Reinventing Classifieds will be assembling quite a few good ideas about fixing classifieds now that he’s created a $500 bounty for the best idea.

But we’ve got to do something soon – that trend line’s moving far too quickly toward zero.

WHAT CAN THE NEWSPAPER INDUSTRY DO TO 1) BRING BACK CLASSIFIEDS CUSTOMERS (BUYERS AND SELLERS) THAT HAVE BEEN LOST TO ONLINE COMPETITORS, 2) ATTRACT NEW CUSTOMERS WHO HAVE NOT USED NEWSPAPER CLASSIFIEDS BEFORE, AND 3) RETAIN ITS REMAINING CLASSIFIEDS CUSTOMERS?

Good questions.

But to back up a little, Step One in solving any crisis it to define the crisis. We’ve all seen the numbers, watched them slip year-over-year. But sometimes the numbers aren’t enough. You need a picture. Here’s what the biggest slice of the classified picture, help-wanted, looks like in 2008:

(2008 estimated based on first-half performance. All data from NAA.)

You don’t have to be a draftsman or Photoshop guru to visualize that trend line’s forward direction if nothing changes. It hits zero in mid-2010.

Zero.

You can look at the chart two ways. The first, is that we’ve got $2.6 billion at risk that we have to do everything in our power to save. That’s been the approach of the newspaper business so far. We said the same thing when we had $5.1 billion at risk. And $4.7 billion. And $3.8 billion. And still the slide continues.

Or, we could take another approach. We could say that in 2011 dollars, we have nothing at risk. Because if we don’t do something dramatic, that’s exactly what we’ll have. Nothing.

Next: a modest proposal to help stem the tide and relieve Steve of his $500.

Hint for where this is going: Look at the chart above and remember that Craig Newmark started his expansion in 2000.

Generating an audience first requires attracting advertisers. It’s NOT a chicken and egg situation. Luring advertisers is more important than users.

To get on the advertiser’s list, posting an ad absolutely must be free. Otherwise, you’re asking the employer to take a risk and abandon one of their old standbys.

If it’s free to post an ad, then all you have to do next is convince the potential advertiser it’s worth their time to fill out an online form. Here’s a sure-fire way to persuade them.

Print the ad.

That’s right. After completing the online form, the reader’s ad will appear in the newspaper for free.

It’s really not as odd as it sounds. To protect their market share, newspapers around the country already give readers free ads for merchandise under a certain dollar amount. But I’m saying let all ads appear in print for free.

You can read the whole piece here. Stay until the end. It’s worth it.

But that’s comparing 1996 dollars to 2008 dollars. If you look at print revenue performance in constant 2008 dollars, the industry hasn’t seen numbers this grim since 1982 (click to see the chart in full size):

What’s really bracing about that chart is how the rate of decline clearly accelerates in the past few years.

This chart does not include online revenue, which NAA has tracked since 2003.

(Obligatory warning: I was an English major in college, not a stats geek. This constant-dollar hack was made with simple web tools and the original data from the NAA. If this is way off, please let me know.)