We set out to be intentionally provocative, because Bill and I have seen too many great ideas for projects and products turn into smoldering wreckage because of miscommunication between journalists and business folks. (OK, and partly because Bill and I just like being provocative.)

So we taught it as if it were a master’s level business-school class. We used case studies about interesting media start-ups. We taught the ABCs of financial statements (yes: We made journalists look at numbers) and the grandular details of different revenue models. And we required every student to pitch a sustainable news-and-information venture.

We heard some terrific ideas. But as Tom O’Malia*, a serial entrepreneur and director emeritus of the Lloyd Grief Center for Entrepreneurial Studies at USC,  reminds anyone who will listen: Ideas are cheap.

Entrepreneurial ideas are only useful if they can be refined into a workable business concept – one that has real, paying customers, and delivers clear value to those customers.

Tricky distinction, especially for reporters.

No, your audience is usually not a paying customer. (We won’t get into the tiresome paid-content discussion here – but even at newspapers and magazines, subscription fees from the audience are a small portion of revenues, and an even tinier portion of the profits. The real paying customers are the advertisers.)

We were gratified at how quickly the group caught on.

Many of the ideas were terrific, and got only better by the final pitch session. We’re going to be intentionally vague about the specifics – several folks are still working on their ideas with an eye towards actually executing them in the real world. Suffice to say our interest was piqued by proposals to:

• Mine rich internal archives of entertainment reviews at a major media company
• Connect reporters and people who have compelling information to, um, share. (“Leak” is such a loaded word, wouldn’t you agree?)
• Attack a classified-advertising niche that has largely – and strangely – been left untouched. So far, anyway.

Great. But you know what was even better?

The weak ideas – the ones that started life as “Hey, kids! Let’s put on a website!” (All credit to Mark Potts for that line.)

Over just two months, those weak ideas got better. From vague beginnings emerged sharp proposals to create:

• A unique alliance around a hyperlocal site to provide modest, yet stable, funding that doesn’t rely on local ad dollars.
• Community and hobby-driven sites that focus on narrow, but attractive, niches. (All I’ll say about one of those niches: The hobbyists scraped together $15 million to construct a building for their pastime?!? That’s a niche I’d like to capture.)
• A clever blending of non-profit status, cheap technology and Internet cafes to support women in West Africa.

The point here is not that all of these ideas will work. Perhaps none will.

The point is that 18 young people – hard-core traditionalists, inexperienced cubs, even some NGO and government types – innovated. They combined creativity, perseverance and some basic business principles to develop concepts that are worth testing in the marketplace.

And therein lies the future of journalism: Smaller, nimbler, more creative.

*(As an aside: Bill and I owe a huge debt to Tom for graciously sharing his curriculum and research.)

Over the past month or so, I’ve been plowing through an extensive stack of resumes to fill some openings on my new team at PBS.

Many of the resumes were sort of sad – those of journalists with impeccable traditional credentials, and no clue what I meant when I asked for work samples that showed creative use of different digital story forms in service of the content.

Call ‘em The Lifeboaters:  “This digital thing is going to be huge, and I’d be proud to learn it from your team!”  Umm, sorry. The ship that you want left 15 years ago. The good news: New ships leave everyday if you’re willing to swim out to the meet them. WordPress.com offers blogs for free. Start there, keep playing, and we’ll talk in a year.

A second pile included people who are incredibly good … at a singular thing. Call ‘em the The One-Skill Wonders: Very adept at slideshows. Or digital video. Or shoveling existing text onto a page. Yes, those are useful skills (and, candidly, they’ve been enough to get very good production jobs at many shops for a long time.) But that’s not what my team is trying to do.

Happily, however, there was a third pile of those resumes: Digital natives (or digital immigrants who work hard to remain conversant) who understand the whiz-bang toys are only useful if they serve the story. They also understand there will be a new whiz-bang tool next year.

My favorite example: One of the candidates is a wizard at a certain vector-graphics program that’s hideously expensive, ridiculously proprietary, notoriously hard to learn – and incredibly useful. Which, of course, leads some to treat it as the Universal Truth to all journalism questions, and to treat themselves as priests.

Not this guy. He wouldn’t bite on my trick question (something about whether this program was the most useful skill he’d ever learned): “The technology is always changing, so I just feel like the ability and willingness to adapt is the best skill someone can have.”

Guess what? He got an interview. So did most of the others in the third pile. They’ll be the ones making up our new team.

It was hard not to notice a few commonalities among them. An awful lot of them passed through Medill at Northwestern, American University in D.C., or Cal-Berkeley. Several also received one of the fabulous summer-long News 21 fellowships.

I’d be horribly remiss if didn’t mention the excellent program at CUNY; as it happens, none of its kids choose to apply. I’d be equally remiss if I didn’t point out that some name-brand journalism schools aren’t on this list – and that’s not an oversight.

The kids in that third stack are solid reporters and great storytellers. When pressed, they talk about technologies as means to an end – tools they can use in service of the story, not as a flashy adornment to it. They also used overly long sentences to offer variations on a motto a longtime colleague used to have on his blog: Semper Gumby – always flexible.)

Of course, one of the people I hired said it far better than I can.

I hope this forms an optimistic riposte to a discerning entry from Wayne MacPhail on PBS’ Media Shift blog. MacPhail makes an impassioned observation that J-schools are failing their students by defaulting to traditional story forms, taught by traditional professors, with barely a mention of the information revolution occurring around us. He’s right.

Too many of my friends – the first-generation digital pioneers now in academe – talk privately about the battles they fight with tenured colleagues who insist that circa-1994 curricula are just fine¸thank you and have served generations of graduates with distinction!

Fortunately for our craft – and for my project – a few schools are taking another path. Some of their grads are going to help us at PBS.

I spoke a bit about emerging business models to support these kinds of sites (and – plug warning – the work of my partners at GrowthSpur).

You should search on Twitter for the #ONAUAB hash for some of the fascinating discussions that grew out of the sessions. Less fascinating, perhaps, was my presentation – but for those who asked for it, it’s here.

(Why, yes – I used Prezi. My friend Tim Windsor snarks that Prezi screams 2009 the same way a Yamaha DX7 synthesizer screams 1983. But, hey, I liked a-ha.)

Also: Here’s Robert Hernandez‘s excellent presentation on how journalists can use social media tools (both to build audience, and to be better reporters).

And @DannySanchez’s informative riff on free tools doesn’t have a perfect online analog – but he writes about nearly all of those tools (and even more) on his blog, Journalistopia.com.

Similarly, if you check out TwinsBaseball.com, you see video of home runs … but not an equally botched call that cost the Twins (disclosure: my favorite team) the game.

All credit to MLB Advanced Media: The glaring videos are available on the sites. You just have to hunt for them. (The Tiggers’ video is on the story-level page; the Twins/Mariners’ um, “infield single” is utterly buried on the site’s video ghetto.) Frankly, YouTube was easier. (Wondering if MLBAM has take-down notices flying this morning.)

A small thing, perhaps, in a world where cellphone and surveillance video is used as a publicity weapon in an international incident, and a major oil company is behaving like Keystone Kops in the Gulf – but one more tiny example of odd results when the economics of publishing change.

Here’s a bucket o’ links and resources I referred to in the discussion at the Knight Digital Media Center’s Entrepreneurial Boot Camp. (They may be useful, of course, to other journopreneurs.)

• First and foremost: As you think about revenue, don’t fixate on one source – no successful media outlet ever has. Look for several – specific ideas in this link .
• I freely admit that I’m a history geek (How many Virginians does it take to change a light bulb? Four – one to unscrew, three to give you the history of the old one all the way back to the landing of the first English colonists at Jamestown.) If you want to understand the context of today’s media revolution, here are some terrific (I’d say essential) readings.
• The number of independent news and information sites is exploding. To keep up – and to spot trends in sustainability – three sites are particularly helpful:

J-Lab at American University

The New Business Models for News project run by Jeff Jarvis at CUNY

The Collaboratory run by the Reynolds Journalism Institute at University of Missouri

• Several specific essays and blog posts have become intellectual watersheds of the independent-site phenomenon. I’d encourage you to read Jay Rosen’s “the people formerly known as the audience” piece – it reads like a manifesto. Similarly, Jeff Jarvis’  notion of “do what you do best, link to the rest” is critical. If you ever need to remind anyone of what’s at stake, Clay Shirky’s talk at Harvard in late 2009 is calmly frightening. Scared? Good. Now, for a glimmer of hope, read James Fallows’ piece on how Google just might not be the enemy Rupert et al think it to be.
• Enough of the intellectual stuff. Let’s get to work. And because we’re broke entrepreneurs, we’ve got to do it cheaply. Here’s some free and low-cost stuff.
• Finally, something to keep an eye on. It’s no exaggeration to say that Journal Register Company historically ran some of the worst newspapers in America – small-town dailies and weeklies with antiquated equipment, dispirited staffs, crushing debt and Dickensian management policies. New CEO John Paton is dragging it out of bankruptcy with a refreshing “question everything” style. JRC’s Ben Franklin Project set a goal of publishing an existing daily and weekly using nothing but free and open-source tools – and succeeded. It’s brilliant experimentation, worth stealing.

Also: Here’s the link Susan Mernit mentioned to Brad Feld’s VC site.

As part of the prep work, I’ve re-read a hefty stack of posts about emerging revenue models for news – advertising-supported for-profits, L3Cs, non-profit structures, even the wishful-thinking paid-content model.

Running through many of the pieces was an irksome thread: A focus on single solutions. Most framed the discussion in terms of “what’s the source of revenue,” as if there were a magic bullet that can solve every operation’s money woes.

There isn’t, of course. What’s more important, though, is there never has been. In times like these, naiveté isn’t charming – and for entrepreneurial journalists, it can be downright dangerous.

No successful news media organization has ever relied solely on a single source of revenue. In fact, the most successful industry segments – newspapers, magazines and broadcast stations – have long had many revenue sources, almost too many to list.

There’s more elaboration – and a rough list of the different sources — in this deck.

Key takeaways:

-  Don’t think too broadly. Even something as seemingly straightforward as “advertising” isn’t a single source of revenue. There are myriad advertising products – each with distinct strengths and weaknesses, sets of customers and sales models.

- As you plan the revenue models for your own proto-business (that’s what start-up journalism sites are, folks), copy the best of traditional organizations. Find multiple streams of revenue.

(Lest this come off as too scolding: I think it’s fantastic to see journalists actually interested in this sort of question. For decades, most of us acted as if the money that powered our organizations was created by magic. Worse, some assumed that it was the result of their brilliant journalism. For a welcome example of incisive, if tardy, analysis, see James Fallows’ terrific Atlantic piece on Google and the news industry.)

Walter Hussman, publisher of the Arkansas Democrat-Gazette in Little Rock, flogged his usual paywall-as-a-defense argument: In a world where online users are worth less than print readers, he seems to say don’t bother with the former. “Why would I want to be platform agnostic when I can get (ad rates of) $40 (per thousand print readers) instead of $4?”

 I was reminded of two recent, similar quotes:

•  An analysis ascribed to Washington Post president Steven Hills in a devastating New Republic piece on the paper’s woes: Post print readers are worth $500 a year in revenue; online readers are worth only $6.
• Rupert Murdoch’s assertion that users will cough up for online content: “When they’ve got nowhere else to go they’ll start paying.”  

Hussman and Hills are both falling for the same “defense first!” mentality that has crippled innovation at newspapers. They’re implicitly assume print readership will stay the same forever (it isn’t ), and that print ad revenues will maintain, too (they aren’t).

Rupert is making an even bigger mistake. He assumes “nowhere else to go,” conveniently forgetting that his media empire was built on expensive printing plants and government broadcast licenses, each of which makes competition economically unfeasible.

Clearly, Rupe hasn’t noticed that those monopolies are gone (or maybe he’s blustering). Local television stations are emerging as real competitors  to newspaper sites in many markets. Some, like Allbritton Communications in Washington, are building separate sites to target niches and general news. And there are plenty of independent  local  sites, with new ones springing up all the time. On their own, they may not seem formidable. But enough of them in a community could ruin a local newspaper publisher’s day. No wonder potential entrepreneurs are licking their chops.

 (The ease of publishing via free services like WordPress  and Blogger are a key reason that “information wants to be free.” More on that, including some semi-geeky economic theory, another day.)

 If competition makes paywalls nothing more than defense (and the numbers sure seem to make that case), then what’s a better answer? What gets at Hussman and Hills’ arguments that print readers are worth more?

Let’s take this out of the emotional world of change for a second, and into the dispassionate world of math. Everyone remember the commutative and associative properties from third grade?

If your print readers are worth 10 times your online users, then work to get 10 times the number of online users. You’ll make the same amount of money. (Actually, you’ll end up with more – production costs are lower on digital platforms. No paper, no trucks.)

Daunting? Sure. Simply regurgitating your print product in digital formats won’t grow your audience ten times. No single product will, either.

But a network of niche products is part of the answer.

So is good app for the iPad (and don’t forget the waves of similar devices that are sure to follow).

It also means forcing the business side of the house to think clearly and execute.  And it means engaging in biz-side thinking ourselves.

If our goal is to grow our audiences again – not merely milk the ones we have – we have to engage consumers. We have to give them what they want, when, where and how they want it.

Yes, it’s not easy. Innovation never is.

But doing nothing – or hiding behind a paywall – merely guarantees a slow, lingering death for newspapers. That’s unfair to shareholders, to employees – and ultimately to the communities we serve.

He’s the creator of WordPress, one of the free tools that’s reinventing the world of media and the very definition of what it means to be a “journalist.”

How does Mullenweg justify giving away the results of years of work? Then working more untold hours on upgrades (helllll-ooooo Version 3!)? Then giving it away, too?

Simple: He builds complementary businesses that play in the WordPress eco-system.

You can set up your blog at WordPress.com for free. Want extra features – like truly massive amounts of storage for video, or a custom domain name? Pay a few bucks a year.

His company, Automattic, does other things, too. It provides hosting services for high-volume blogs. It builds paid add-ons for sites, like poll/ratings widgets. His latest is a service that makes it easy to create backups for WordPress sites – especially people who run large blog networks – for less than $20 a month.

None of these fees are large themselves, but they add up.

There’s a lesson there for journopreneurs:  Don’t get embroiled in the endless, economically unviable wishful thinking about paid content on the web. Relent and give the content away – then figure out how to make money elsewhere in the ecosystem.

That could be slick, intuitive and innovative delivery mechanisms – especially on tablets and mobile devices.

It could be building real communities around topic pages, comments and local blog networks, and serving as a sales-and-servicing agent for them. Or banding that community together for group-buying experiences.

Or – and this is the fun, scary part – it could be an idea that no one has figured out yet. One of just might.

(This is why one of my icons at Gravatar – another of Mullenweb’s companies – is a mad scientist. A small prize, and an AARP card, to the commenter who first identifies him. ;-) ).

But many people – traditional journalists especially – struggle to get Moore’s Law. “Half as expensive per unit of computing power every 24 months … wha?!?”

This analogy struck me today (and, thanks, Florida, for blowing my bracket on the very first afternoon): The NCAA tournament is an example of a Moore’s Law function in action. How do you get from 64 teams to the Sweet Sixteen in just four days? Simple: The number of teams drops by half every round.

The tournament grinds down 64 teams to the final four in just eight game days.

Moore’s Law grinds down a $500,000 server to under $10,000 in a decade.

Don’t let the math equations freak you. Just know that whatever kind of entrepreneurial journalism you want to try, the hardware is cheap. And it will only get cheaper. (The software, too.)

Fear the Turtle.

I’d love to write extensively on it. But, as usual, Hal expresses his ideas far better than my pea brain can. In about 1,100 words, he manages to explain why paid content probably won’t work for most news sites; remind newsies that Google isn’t the enemy; and exhort news organizations to “experiment, experiment, experiment” for the civic good.

I know this won’t stop the incessant whinging from some quarters, or end the drumbeat of self-referential and circular thinking: “My work has value! Therefore someone should pay for it! So throw up a pay wall! Because my work has value!”

For anyone willing to explore these topics with cool detachment, a couple more facts to give Hal’s work more weight. His Information Rules, written with Scott Shapiro, is a seminal book in the field of information economics (I’ve given away several dozen copies over the years, and it’s Book No. 1  in my personal essential bibliography of information economics). And odds are if you studied microeconomics in college, you read Hal’s work there, too.

Dismiss him as some sort of biased Googler at your own peril. This is one of the finest economic minds of our age.

A side note: I’ve heard some grumbling already about Hal’s assertion that very few advertisers are attracted to hard news.

I’ll go him one better, based on too many years of sitting in Monday-morning meetings where the previous week’s ad lineage results were discussed: About the only advertisers who insisted on being close to the hard news – in the A section, as far front as possible – were major regional and national advertisers like the department stores and cell-phone companies. Some wouldn’t even pay for the ad if they were bumped back to the Local section.

The rest of the advertisers? They didn’t care, or wanted to be far away from the news:
- Car ads (buried in the back of the classifieds sections, generally)
- Real estate ads (ever notice that they’re not in the Sunday real-estate or home section? Realtors hate news that isn’t “everything’s great! Buy a house!”)
- Help-wanted ads

- Sunday free-standing inserts, tucked in the comics or some other pre-printed section
- Zoned retail ads in the Neighbors or hyperlocal sections

At most newspapers, those categories easily comprised 60 percent or more of advertising revenues in the halcyon days. Think about that: The majority of the money didn’t want to be near the news; they simply wanted the newspaper as a convenient delivery package.