So what should the new editor do to try and right the ship? Put up a paywall like everyone else? Lay off a few hundred more staff to try and cut costs? Buy something shiny that can give the Post some online credibility? Here are a few things I think Baron needs to do if he is to avoid disaster:

Figure out what the Post wants to be

This is probably the hardest question that Baron, the former editor of the Boston Globe, is going to face — next to the ever-present paywall one, of course. As media blogger Erik Wemple notes in one of his columns about the paper (which he writes for), the Post has literally spent years debating whether it should be a regional paper for Washington and the surrounding area, or whether it should try to challenge the New York Times for the national and international market.

There are arguments to be made for both: the Post is to some extent hamstrung by its past glories, including the famous Watergate scandal, and can’t seem to give up the idea that it is a national or even global player. And perhaps it shouldn’t. But the reality is that there’s probably a far better business opportunity — advertising-wise, at least — in focusing on serving local readers rather than trying to match the NYT for national and foreign reporting. The point is that the Post has to pick one, and dive headlong into that market, rather than trying to do both at the same time, because that road leads to perdition.

Commit to the anti-paywall strategy

Publisher Katharine Weymouth and CEO Don Graham have both talked openly about how they don’t believe a paywall will serve the paper or its readers, for a number of reasons — primarily because they appear to believe (as I do) that the benefits of remaining open and free outweigh the short-term financial benefits of putting up a paywall. But it’s not enough to just make the occasional comment about how this seems like a good idea: if the Post is going to get its staff on board, it needs to be shouting this philosophy from the rooftops in the same evangelical way that Guardian editor Alan Rusbridger does.

The reality is that the Post looks like the odd man out when it comes to paywalls, and the consensus that seems to be emerging — pushed by the Columbia Journalism Review, among others — is that it is going to fail because it is fiddling while Rome burns. If Graham and Weymouth believe that this isn’t the case, then they need to embrace the idea of open journalism as much as The Guardian has and double down on that strategy: release an open API, make videos about their passion for openness, launch some ambitious crowdsourcing projects, etc.

One thing the Post could do is to try and build a membership-based or “reverse paywall” approach, the kind that was suggested by its former managing editor Raju Narisetti (now at the WSJ).

Push the innovation meter to eleven

It doesn’t get written about that much, but the Washington Post is probably one of the most innovative large newspapers out there, thanks in part to Don Graham’s embrace of social platforms such as Facebook (where he was an early advisor to CEO Mark Zuckerberg) and its willingness to experiment with new ventures such as Trove — the recommendation engine that it built on top of an acquisition, and uses to fuel its “frictionless sharing” app on Facebook and other enhancements to its web and app versions. That needs to become a much bigger part of what the Post does, not some side project for nerds.

The same goes for Social Code, the advertising and marketing operation that is run by Graham’s daughter, Laura O’Shaughnessy, and designs campaigns for Facebook and other social platforms based on an understanding of how content works on those services. That kind of DNA needs to be spliced into what the Post does online with its news as well. Whether it’s an advertising message or a news story, content lives and dies according to the same principles now, and Baron has to understand that and get his newspaper to understand it. The problem is that no one at the paper is going to see this as being as important as a beefed-up foreign bureau.

Make “digital first” a core mandate

It’s easy to forget, but The Washington Post at one time was at the forefront of online innovation, back when simply having a usable and frequently-updated website qualified as innovation — and in part that was because the online unit of the paper was a completely separate operation, based in a different building, with a mandate to do whatever it took to succeed at being digital. That’s the kind of model that disruption expert Clay Christensen has argued makes the most sense for newspapers, and it was one that worked surprisingly well for the Post for a long time.

Unfortunately, a lot of that innovative spirit and drive seemed to get watered down when the paper decided to merge the online unit and the paper unit — something former and current Post staffers saw as a victory for the “printies” who wanted to focus resources on the paper, rather than making digital a core value. That looked like not a bad strategy when the Post‘s Kaplan education arm was producing truck-loads of cash to fund the paper, but that’s not the case any more. Digital is the only road to salvation, and Marty Baron had better send that message to the troops.

All of this advice depends, of course, on Baron being a) interested in changing the Post, b) aware of the value and necessity of doing so and c) capable of following through. Whether any or all of those things are true remains to be seen. But time is running out.

Post and thumbnail images courtesy of Flickr users Zert Sonstige and Giuseppe Bognanni

The list of major newspapers that haven’t at least experimented with a paywall or subscription option for online content is pretty short, and one of the most prominent abstainers is the Washington Post. While the success of the New York Times metered paywall has sparked a wave of imitators throughout the industry, the Post has remained steadfast in its opposition to that approach — despite the financial pressures the company is under. At a recent technology conference in Colorado, CEO and controlling shareholder Don Graham talked at some length about why the newspaper hasn’t jumped on the paywall bandwagon, and his reasons make for an interesting counterpoint to much of the conventional wisdom in the media industry.

Graham’s comments occurred during an interview with author Walter Isaacson, the author and CEO of the non-profit Aspen Institute, where the conference was held. In addition to the Washington Post publisher, the interview also included his daughter Laura O’Shaughnessy — the CEO of Social Code, a subsidiary of Washington Post Co. that manages social advertising campaigns for companies on Facebook and elsewhere (and recently hired 15 staffers who made up the core of the social-sharing community Digg) — and Graham’s son-in-law Tim O’Shaughnessy, the founder and CEO of the group-buying service LivingSocial.

A digital paywall would have more downside than upside

In response to a question about why the Post remains steadfast in its opposition to paywalls, Graham said that a subscription option like the New York Times or Wall Street Journal offers wouldn’t make sense for the paper for one simple reason: because the vast majority of its digital readership comes from outside the print newspaper’s circulation area, and therefore there isn’t any way to tie an online subscription to the print publication the way most of the Post‘s competitors do. As he put it:

The New York Times or Wall Street Journal… can say we’re going to charge, but we’re not going to charge you if you subscribe to the newspaper. The Washington Post circulates in print only around Washington, D.C., but way over 90 percent — I think over 95 percent of our Internet audience is outside Washington, D.C. We can’t offer you that print or online choice. So, the pay model would work very differently for us.

In that sense, the Post is unlike most other newspapers in a fairly critical way: because of the impact that news coming out of Washington, D.C. has on the rest of the world, the paper’s influence and/or potential readership is much broader than its print distribution. So in print, it seems more like a small or medium-sized metropolitan paper — with about 500,000 readers, according to recent figures from the Audit Bureau of Circulations — but its online audience is about 17 million unique visitors a month.

The other major newspaper that has resisted implementing a paywall, The Guardian newspaper in Britain (see disclosure below) is in a similar situation to the Post in many ways. Its influence, particularly online, is much larger than its print circulation could ever be, and that influence and readership would likely be dramatically reduced if it were to erect a paywall around all of its content — and there would be no corresponding benefit for its print business. So while the NYT meter has boosted its Sunday print circulation, which has an impact on advertising revenue, the Post likely wouldn’t see any boost at all.

Paywalls are backward-looking, not forward-looking

In his comments at the Aspen conference, Graham made it sound as though the Post was more or less thrust into this situation by the nature of its market and its content. As he described it:

Circumstances have made it so we are the one great news site, stemming from a company with a big news room, that’s free at this point, and we’re going to try to make something of that.

That said, however, the rest of the interview makes it fairly obvious that there’s another reason the Post hasn’t jumped on the paywall bandwagon: because the Washington Post CEO’s inclination leans far more towards experimentation with new media formats and platforms than it does towards backwards-looking efforts like paywalls. It’s no coincidence that the Post is probably (next to The Guardian) the newspaper that has tried to innovate the most in digital media, with projects like the Trove news-recommendation service and the Post‘s Facebook social-reader app — or even Social Code itself, which in many ways is a potential alternative to traditional newspaper banner advertising.

As Graham described in an interview with Om last year, the reason why he is interested in experiments like the Facebook reader is because he wants to “go where the readers are” instead of pursuing the traditional media model of trying to convince readers to come and spend all their time at the newspaper’s website. And the Washington Post CEO said at the Aspen conference that he remains committed to doing this despite the fact that Facebook occasionally makes changes that dramatically affect the impact of things like the Post’s social-reading app.

The Post‘s critics would no doubt argue that the success of these efforts is questionable at best, particularly for a company that has seen the same kind of widespread layoffs and belt-tightening as the rest of the industry, and yet still faces some considerable financial pressures, as Ryan Chittum of the Columbia Journalism Review detailed in a recent piece abut the paper. And it may be that the kind of balance that Graham is trying to strike — with a small-circulation print paper that punches far above its weight in terms of online influence — simply isn’t financially sustainable. But it is fascinating to watch.

Disclosure: Guardian News and Media Ltd., the parent company of the Guardian newspaper, is an investor in the parent company of this blog, Giga Omni Media

Post and thumbnail images courtesy of Flickr users Giuseppe Bognanni and George Kelly

But he knows, as do I, that changing news organizations these days isn’t always a zero sum game. Sometimes it’s a matter of different budgets covering different areas. Sometimes it’s a series of tradeoffs. If you want to invest in X, you have to cut back on Y. If you want to have reporters covering one area, sometimes you have to give up on another. Sometimes it’s about dumping the costs of having more experienced journalists to make the budget. (See the mention of ex-editor in the lead.) Sometimes one part of a company is cutting back while another area is expanding.

You have to invest

You can’t cut your way to success and you can’t spend your way there either — although we can list plenty of people in the news business who thought otherwise. But if you want to change the trajectory, you have to invest in research and development. You have to experiment. You have to be willing to think differently or to hire people who can.

That’s what Don Graham has been trying to do at the Washington Post Co. while keeping up the standards of journalism he followed as a reporter and publisher. That’s one reason he ended up as an investor in Facebook and a member of the board. That’s why he hired Vijay Ravindran as chief digital officer and started WaPo Labs, why the WaPoCo acquired iCurrent in 2010 and launched personalization service Trove last year, why it invested in social news site Ongo with the New York Times and Gannett, why Ravindran recently hired Rob “cmdrtaco” Malda to lead strategy.

So what is it doing with Digg?

No comment tonight from WaPo, other than a PR rep declining comment. Also no direct confirmation that it’s doing anything at all with Digg but according to some reporters I trust (even if they can’t spell acqhire), at least some of the tech/dev Digg team is headed to WaPo. Engineering, tech and dev talent is at a premium these days as is the ability to mesh it with news and information. WaPo doesn’t need Digg — but it can use a talented team of makers, if that’s what is happening.

Does the company need them more than its journalists? It needs them each differently.

Whither Digg?

The WaPo-Digg storyline emerged Monday as a rumor from The Next Web that the Washington Post was acquiring Digg, the once-hot social curator that has gone dim,  followed by reports that it was hiring some of the Digg team. (Anthony, I promise you it’s acqhire.) According to Peter Kafka, Digg won’t shut down just yet. I envision this as one of those creatures that keeps living even after you cut off the head although I can’t decide if it’s a chicken, a snake or a spider. Some might argue that happened years ago and what we’re seeing now is just the winding down.

Rob Malda, who founded slashdot, will be at paidContent 2012 with other leaders in tech, media and investing to explore how to make the most of today’s opportunities. Join us at The TimesCenter in New York, May 23.

The Washington Post chairman and CEO spoke with paidContent about the decision to hire Allen & Co to explore a sale, the role played by digital’s failure to thrive, and whether he would close Newsweek if they can’t find a buyer. One question that drew a “no comment”: whether WaPoCo would accept a deal along the lines of Bloomberg’s acquisition of BusinessWeek, ie minimal cash plus assumption of liability? Some highlights from the interview:

Why now?: “In 2008, we announced a redesign for the future of the magazine that we gradually implemented through 2009, cutting the circulation back from 2.6 million to 1.5 million, increasing the price and it was overwhelmed by the decline in advertising in late 2008-2009. The reader side of the plan seems to have been quite successful. We are selling at a higher price. We are getting very favorable ratings from our readers. But we reviewed where we stood against our plan at the beginning of 2010, talked among management and board members, and concluded that we did not have a path to sustain profitability for Newsweek within the company. … In the past, Newsweek lost money occasionally but it made money many more years than it lost — and when it lost money it was typically in a recession and there was typically a clear path back. That’s not the case today.”

How can you sell the magazine if you’re saying there’s not a path for profitability in your company? Can you explain why you think Newsweek might fit somewhere else?: “The editorial staff of Newsweek, which is as good as it’s ever been, spends half of its time on a print product and half its time on digital. The print product has almost $160 million in revenue; the digital product had $8 million last year.” Graham doesn’t blame the digital team headed by Geoff Reiss (he made sure I had the spelling right), which he describes as “the best we’ve ever had,” but the inability to make significant money so far from digital is at the crux of the decision. “That’s one obvious way where someone with a better vision or who already owns a site with a large audience could quickly ramp up the revenue.” Why couldn’t Newsweek make digital work? “I think the site is very good but, again, there are a lot of good news sites.”

Are you prepared to close Newsweek if you don’t get a buyer? “We’ll get a buyer. You saw the auction of the Philadelphia Inquirer last week. I don

Rafat adds: There is background here: Don Graham has been a mentor to Mark Zuckerberg for the last three years or so, and almost invested in the company early on, as Sarah Lacy’s book Once You’re Lucky, Twice You’re Good describes it in some detail. At that time, Zuckerberg decided to go with a financial investor giving a much higher valuation, but the two have stayed friends since then, and now Graham finally has a formal role with the company he admires a lot.