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.)

My time working with both GrowthSpur and Localist.com has been a blast. But the chance to work with Christine Montgomery and the crew at PBS was too much to pass up.

I remain involved with GrowthSpur as a member of its advisory board. The team there has better insight than just about anyone into the growth of independent journalism in the blogosphere (and the economic challenges those independent blogs place), and is doing vital work to help invent the future of journalism.

The same could be said about my new work, too. More on that in the coming weeks. Suffice to say that my new social-networking avatar is the guy on the left here.

Astute Muppet watchers will recognize him as Dr. Bunsen Honeydew, chief scientist at Muppet Labs, “Where the future is being invented today.” How cool is that? I mean, what could possibly go wrong?

If the prospect of being Beaker-ed doesn’t scare you, I’m still looking for a couple of savvy digital producers who join the new team. Details are at pbs.org/jobs.

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.

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.)

(People who make up asinine policies first need to understand the underlying technology.)

Hat tip @JeffJarvis – who will not seek damages for me linking to him.

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.

Watching all the hoopla – on multiple media platforms at once – gives us all another lesson on the folly of the paid-content argument from some traditionalists.

We’re baseball freaks in this household. I’ve been a fan of the Minnesota Twins since long before the last time they played a home game outdoors. My wife jokes that she was born within sight of Shea Stadium. Our first date included a raucous discussion of which team had denuded their farm system more badly through stupid trades. (Hint: It was the Mets.)  The poor kids didn’t have a choice.

So as the Twins open Target Field today, I’m watching via the MLB Extra Innings package on Verizon FiOS ($179 this year). If I have to run to get one of the kids, I’ll be able to keep an ear on things via Sirius-XM Radio ($12 a month, and baseball is the only reason I keep satellite radio). As backup (or while traveling), I can tap the MLB.TV feed.

As I write this, it’s three hours before the game, and thousands of fellow Minnesotans are gathered outside the stadium. (How do I know? Webcams.)  After the Twins thump the BoSox today (crossed fingers), I’ll read every word I can find, especially on the Star-Tribune’s excellent blogs by LaVelle E. Neal and Joe Christensen. I gleefully wallow in the modern media soup.

Oh – and my wife sprung for a 20-game season ticket package this year for me. Yes, I live 1,250 miles away. Your point?

What’s hard to remember is this sort of overload wasn’t always so. (I had an extended conversation many years ago with a presidential candidate right after my team beat his in the World Series. We swapped stories about the insane lengths we went to – driving to the top of hills outside town! – to pull in games on AM radio skips.)

Not so many years ago that only a handful of each team’s games were televised – maybe 50 a year, almost all of them away games. The troglodyte owners thought that allowing people to watch every game would “devalue the product” and lead inexorably to declining attendance.

They made a couple of basic mistakes: First, they assumed that they were primarily in the business of selling tickets to games – not making money through multiple channels. Second, they thought that watching a game on TV was a perfect substitute for the experience of sitting in the ballpark.

Over the past 25 years or so – thanks in no small part to the phenomenal cable-TV success of some truly awful Chicago Cubs and Atlanta Braves teams – baseball owners figured it out. Make money by selling TV rights to every game. Split the games up between over-the-air and cable broadcasters. Offer those feeds through any possible medium (even video on mobile devices this year).

Do all that right, and it won’t harm attendance – it’ll whet appetites.

(Yes, one result of this is seemingly absurd contracts. But at least Mauer didn’t sign with the Godless Empire.)

Here’s what this has to do with the eternal (and infernal) paid-content debate: Newspaper owners who stubbornly insist that people will pay for news on the web because, well, they should are behaving like baseball owners of old.

The results speak for themselves.

Instead of fighting to wall off the web, innovate on other platforms – not just the iPad, though that’s a start. Figure out what consumers want in different circumstances, then how to use technology to deliver that information. They won’t always pay for it – but they will sometimes, and there’s an ad model out there for just about every transmission vehicle.

Give your audience what they want – when, where and how they want it. For God’s sake – Bud Selig doesn’t even do e-mail, yet even he was smart enough to figure that out.

(OK, Bob DuPuy figured it out. But Bud let him.)

He offers this guest post, from his seller’s perspective, on the publishing-industry frenzy over Apple’s iPad.

By Bill Day

Much is being made of the iPad as a vote of confidence from Apple for traditional publishers like The New York Times.  Boosters point to the resurrection of the music industry on the backs of iTunes and the iPod.  They predict a similar resurrection for publishers with the pending release of the iPad. 

Poynter has an interesting take on the potential impact of the iPad on publisher subscription models here.  It’s  kind of like the cell phone loss-leader model – giving away flashy tech toys for long-term subscription revenue.  It’s not a terrible idea.  It just misses the point. 

What’s lost in these discussions is a firm grasp of the mechanics of revenue generation for old-line media. As in “what’s the advertising model?”

 Look, record companies made their money on product sales – LPs, 8-tracks, CDs, concert tickets – before the advent of the digital age.  Apple didn’t change that model – it simply converted CDs to digital downloads.

 Publishers and broadcasters, by contrast, rely on ad revenues to drive top-line revenue.

 Subscriptions and newsstand sale are proxies for audience engagement – not dedicated revenue streams that are large enough to fund content creation.  Ad revenues, particularly high-value sales of limited or exclusive audiences, are the foundation of the old-media economy.  Apple’s forthcoming iBooks or iNews or iStuff will only accelerate the trend towards separating those who produce content from those profit from its distribution.

 Traditional media organizations have struggled for years as digital innovations have eroded advertising pricing power, destroyed their marketplace effect and hammered their content dominance. The emergence of tablets only further fragments content delivery mechanisms. 

Mass media and fragmentation are not friends.

 My two cents – Bill raises a powerful point. Largely lost in the iPad love-fest is any discussion of carrying ads inside the iPad content-publishing apps. I hope that Arthur Sulzberger (or even better, Eliot Pierce) has  had those discussions for NYT – but I haven’t heard anything that makes me think there’s a solid answer there yet.

Without those sort of clear advertising plays, we’re left with a hail-Mary pass: Maybe the industry can make enough in iPad subscriptions to save our phony-baloney business model!

That highly unlikely. We’ll run some numbers on that, and post ‘em in a couple of days.

We think journopreneurs – and people who just want to operate great local sites, whether or not they claim the “j” word – are one of the key parts of the emerging local information landscape. If you’re interested, drop a note to Mark Potts or to me.