The piece in question is by media analyst Ken Doctor who notes the FT is the first newspaper to have “crossed over” by amassing more digital subscribers than print ones. As of February, the respective numbers were  316,000 to 286,000; the feat fulfills the FT’s prediction at paidContent 2012 that the cross-over would occur in 2013. (You’ll be able to hear more digital-media industry predictions at paidContent Live on April 17).

As Doctor explains, the accomplishment results from shrewd business decisions such as persuading companies to buy individual subscriptions for their employees: “Rather than leaving B2B customer sales relationships to aggregators like Lexis Nexis and News Corp.’s Factiva, the FT began converting corporate FT buyers to direct relationships.”

Doctor acknowledges that daily newspapers don’t have the same corporate opportunities, but says that they can follow the FT and Politico in creating a valuable niche: “If dailies’ news and information are as critical locally as the FT’s is to a global business clientele, why not test a new model? .. [Politico] Pro works several niches. Mr. and Ms. Publishers, what’s your niche?”

If a publisher can come to occupy such a niche, they may enjoy the same virtuous cycle as the FT where margins rise with digital revenue while distribution costs stay nearly fixed.

But it’s hard to see how the FT case study can apply to anyone other than the FT. Recall that even the New York Times is struggling to “cross over;” its digital revenues are rising but, overall, the paper’s overall operations are shrinking. The Wall Street Journal, with a similar global business niche, may be the only other publisher with a hope of crossing over this year.

Doctor also cites the FT’s 30-person data and analytics team as integral to the company’s digital transition. He points out that such teams can supply critical intelligence about customer targeting and revenue optimization. But do other publications, which can no longer afford copy editors, have the means to hire dozens of data scientists? Probably not.

How many other newspaper and magazine brands can you name that even stand a chance of making this crossover?

At first blush, the number is small but the Globe‘s publisher and a respected newspaper analyst see cause for optimism. Here’s a closer look at what the number represents for the Globe and the rest of the country’s newspapers.

[Update: Late Wednesday afternoon, the New York Times Company announced it is putting the Globe up for sale]

A new revenue stream

In October of 2011, the Boston Globe removed its more highbrow content from its general information portal, Boston.com. The paper began charging $3.99 for this content (feature stories, columnists and so on) while continuing to offer bread-and-butter city fare (Red Sox, car crashes, weather, etc) for free on Boston.com.

The strategy reflected a view that most people don’t want to pay for basic online news but that some might pay for a more high-fiber news product. As of last December, a total of 28,000 people have signed up — including some at a 99 cent promo rate — and this number is not growing fast. To put this in perspective, the New York Times has around 640,000 digital-only subscribers; yes, New York is a bigger city but it’s not 22 times bigger.

In a phone interview, Boston Globe publisher Christopher Mayer disagreed that 28,000 was a “small” figure and noted that the $3.99 subscription was just one of several digital products the Globe will be selling. Others will include a new tablet offering with a different pricing point.

“We’re not looking at having one digital product provide an alternative to one print product,” he said, adding that the strategy was based on tapping into the “brand promise” of the Boston Globe.

Ken Doctor, an analyst of newspaper economics, said by phone that the Globe’s 28,000 figure is actually good compared to other papers. He adds that it provides a new revenue stream while also permitting the Globe to justify significant increases in its home-delivery prices. Half of these home subscribers, who get free access to the website, have signed on, which suggests they may be primed to pay for digital-only in the future.

Doctor also said the company’s “tremendous penetration” with Boston.com is an under-used asset that can be a discovery vehicle for the Globe. And this may be where the paper is headed. As Poynter reports this week, the company intends to do more to “untangle” the Globe and Boston.com

A borrowed time strategy

In the larger picture, the Boston Globe is doing a passable job of playing a weak hand. Unlike the New York Times or the Wall Street Journal, the Globe can’t hope to pull in new digital subscribers from across the country or the world; its potential growth is limited to New England.

The Globe’s strategy to use its digital products as leverage to squeeze more revenue out of its home delivery service thus makes sense in the short term. But the paper simply won’t be able to maintain its 360 person newsroom much longer unless there is a sudden uptick in people under 30 buying home delivery subscriptions.

The Globe — and other papers like it across the country — must hit on a digital growth strategy soon if they are going to survive. One option may be partnering with premium international brands like the New York Times. For now, a young person in Boston who can only afford one digital subscription is likely, I suspect, to find more value in the Times over the Globe — but a bundled option that included Globe content could prove attractive. Mayer said the company has yet to explore such bundles.

Meanwhile, the Globe is also experimenting with partnerships with MIT media researchers and iPads in classrooms.

As news guru Ken Doctor notes in a Nieman blog post, the LA Times and Chicago Tribune are set to come on the block in 2013. Meanwhile, there are reliable rumors that the venerable Financial Times and part of The Economist will be shopped early next year too.

While news of the sales have been around for a while, they are made more interesting by Doctor’s prediction that regulators could relax cross-ownership rules that limit how many TV and newspaper properties a media titan can own in the same market. Here’s the key upshot from Doctor:

Today, though, most of the reporting power, much of the brand power, and the political power still resides in big companies and their leadership. We may well get our strongest display of that early in 2013: In Washington, the FCC cross-ownership debate may move to center stage in January.

It’s a pretty safe bet that the coming newspaper sales are beyond the reach of people not named Buffett, Bloomberg or Murdoch. More interesting will be five years from now — to see if the titles are still around and if, by then, companies like Twitter, Google or Facebook have media mogul aspirations of their own.

(Image by Everett Collection via Shutterstock)

Launched today at Qz.com, the new publication is optimized for reading on mobile devices and aimed at the “global business leaders” who have become something of a white whale for media outlets looking for reliable revenue streams.

The new Atlantic product is pretty, staffed by smart people and designed for readers who share stories from mobile platforms. This all amounts to a sound strategy but there is one wildcard: the price.

Unlike its compatriots in the elite business niche, Quartz is free — no paywalls, no registration, no app walls, nothing. This is a marked departure from sites like the Journal which have made a very good business of charging hundreds of dollars a year for digital subscriptions.

So where does the revenue come from? Like its competitors, Quartz has flagship high-quality advertisers like Boeing and Cadillac that will engage in ”full-page takeover ads on Quartz’s mobile, tablet and website,” according to AdWeek. This “takeover” style of ad — in which the advertisers gets to occupy the whole page for a hot second — has been touted by Flipboard (one of Quartz’s big partners) and others as the optimal format for tablets.

“Like Wired in the 1990s and The Economist in the 1840s, Quartz embodies the era in which it is being created,” saidQuartz Editor in Chief Kevin J. Delaney in a statement.

At the same time, Poynter cites a Ken Doctor report that explains that Quartz will offer a form of sponsored stories known as “deep content ads.” The idea here is to create ads that seem native to the publication — a scheme executed very well by Buzzfeed, another successful media pioneer.

But will ads bring in enough money to pay for all that elite content? Probably not. Few publications, elite or otherwise, can live on advertising alone these days. That’s why the analyst, Doctor, seems on the money with his prediction that the Atlantic will offer a professional subscription product like Politico Pro. In other words, one for another, the Atlantic will eventually target reader revenue.

With Quartz, Atlantic appears to be making smart tactical choices in pursuit of a viable medium term strategy. And, as David Carr reports in the New York Times, its backers have already tasted success with other digital endeavors like Atlantic Wire and the Atlantic Cities.

The Atlantic’s new business gambit is worth watching closely. Equally interesting will be how the other members of  the “elite” fraternity react. Will they lower prices to stave off Quartz’s arrival or double-down on the “high quality for a high price” digital model that has worked so far?

Here’s how a look at a future News Corp and Publish Corp (our name) and why both could be good investments.

Creating a new corporation

Late Wednesday night, News Corp’s board approved the plan to split the media conglomerate into two pieces. Here’s what is likely happen next:

• News Corp creates Publish Corp as a new independent entity to act as a holding company for book and newspaper assets
• Current shareholders will be offered shares in Publish Corp, which they can accept or decline
• Publish Corp begins operations and possibly prepares an IPO of its own to raise more capital

While the corporate process is fairly predictable, there are some important strategic questions that will only be decided in the coming year. Two are particularly important. The first is whether News Corp decides to put certain publishing assets into Publish Corp or simply sells them outright. The second is how much cash and debt News Corp will distribute to Publish Corp.

Why newspapers may be better off without News Corp

News Corp’s share price is up nearly 15 percent over the last month while the rest of the market stayed flat. Investors clearly believe the company would be better off cutting ties with its publishing division in order to focus on its highly profitable and growing broadcasting and entertainment empire.

But what of the publishing division itself? The News of the World hacking scandal has created a perception in some quarters that the publishing part of News Corp is little more than a money-losing legal quagmire. A look at the books and interviews with analysts at two major investment firms, however, make clear this is hardly the case.

News Corp’s publishing division made more than $800 million in profit last year and most parts of it are healthy. Those parts include publisher Harper Collin, which had sales of around $1.3 billion. It is profitable and is finding its footing in the new world of e-books.

Meanwhile, News Corp’s fleet of more than 100 Australian newspapers generates a majority of the publishing division’s profits thanks to a near-monopoly position,  according to media analyst Ken Doctor. Those profits are expected to shrink dramatically as Australian papers are still in the early phases of the print-to-digital transition but, in the near term, the Aussie papers would provide a cash cow for any future Publish Corp.

But the real prize, according to the two bank analysts, is the expanding empire of Dow Jones and the Wall Street Journal. Both said that there is considerable value that can be unlocked in the division’s financial news brand, which is gaining traction in Germany and other non-English speaking countries. The Journal itself has a robust digital newspaper business that is estimated to generate around $200 million in annual revenue. If this model can keep growing and be replicated around the world, it could both serve as a flagship business for Publish Corp and be a good bet for investors.

Not everything is rosy in the News Corp publishing division, of course. The Times of London is a money pit and the Sunday Times is only scraping by, according to Doctor. News Corp’s other American paper, the New York Post, is also losing money. The bank analysts say, however, that properties like the Post have been a low priority amid News Corp’s rich and sprawling empire. Placed in a standalone Publish Corp, these type of assets couldn’t duck attention and would quickly have to shape up or be sold off.

Here’s why the deal makes a lot more sense than it appears:

A “three corner pool shot”

This week’s deal makes Buffett’s company, Berkshire Hathaway, the proud owner of the Richmond Times-Dispatch and 62 other daily and weekly papers in Virginia and the South. Most of the titles, like The Goochland Gazette and The Bland County Messenger, have small circulations in the range of 5,000 – 25,000.

The Oracle himself explained the deal this way:

“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper. The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”

Buffett can wax sentimental all he wants but he is still the same hard-nosed businessman who was tough enough to stick it to Goldman Sachs. Like any of his deals, this is all about money.

“This deal is like a three corner pool shot that accomplishes several things at once,” says Ken Doctor, a media analyst.

Doctor notes that the deal includes an enormous loan and credit line to the newspapers’ former owner, Media General, in which Berkshire Hathaway will earn 10.5 percent. Buffett’s company also obtained stock warrants that will likely pay out handsomely as Media General works on becoming a full-time broadcasting company.

But what of the newspapers themselves? Doctor says that Buffett got them for a steal, noting that they sold on average for about $2 million a pop — or the price of an expensive home in each of the towns where they’re printed.

Small town papers make money

The story of the catastrophic decline in newspapers has been driven by metropolitan papers like the Washington Post  (on whose board Buffett sat for years) where ad rates plummeted while readers embraced digital alternatives.

The experience of small towns and counties has been different. In these places, a lack of print and online competition has allowed newspapers to hold onto some of their traditional monopoly power.

“In these communities, the local paper is the sole source of everyday news — from high school sports, local events or obituaries,” says Gordon Crovitz, former publisher of the Wall Street Journal and founder of digital subscription service, Press+.

This lack of competition has not only meant a slower decline in their print operations, but also a longer time period to make the transition to digital. While some metropolitan papers have rushed in a panic from one ill-advised paywall strategy to another in an effort to stay alive, smaller papers have had the luxury of a wait-and-see approach. In the meantime, digital subscription strategies have become more refined.

Crovitz claims that 70 publications have recently jettisoned the “free online” offer for print subscribers in favor of charging 25 percent and then letting readers opt-out of the digital part of the package.  He says that 90 percent of the customers elected to keep paying more.

What all this means for Buffett is that he can treat his newspaper fleet as a longer term investment that will pay off in three to five years. Most of the papers will likely deliver a modest profit from print while Berkshire Hathaway coaxes them into a digital strategy in which a growing share of revenue comes from subscription rather than ads (Doctor predicts subscription-based revenue will soon rise from 30 to 50 percent). The company can then cut away many of the printing, distribution and other legacy costs associated with newspapers.

Buffett being Buffett

Going into the newspaper business is a strange proposition for most investors but not for Buffett. This week’s purchase is consistent with a number of his investment mantras, including sticking to what he knows.

Buffett knows this business well from owning the Buffalo News and sitting on the board of the Washington Post, but also has more personal experience in the industry such as using $5000 from his savings as a paper-boy to launch Berkshire Hathaway. He also claims to read five newspapers a day.

Buffett also has a history of squeezing value out of traditional or troubled industries that scare off many investors. In recent years, for instance, he has bet big on airlines, autos and railroads.

There is also the question of scaling. According to Doctor, Berkshire Hathaway has long excelled at finding large scale efficiencies and the company now has enough newspapers (it also has six Nebraska papers in addition to the Omaha World-Herald) to make that happen.

Finally — and this is only speculation — some might wonder if Buffett, who has been close to the Obama Administration, might enjoy owning dozens of media outlets in swing states Virginia and North Carolina in an election year.

Join us for paidContent 2012: At The Crossroads on May 23 in NYC to discuss these issues and lots more.

The members of the American Society of News Editors are the church in church and state, for the most part, but they are the ones who manage the effects of business on the newsroom. They get to hire and spend when times are good, lay off and trim when they’re not — which we all know has been the case far more often of late. They can’t afford not to be concerned about the money side and they’re grasping for information like fish on a sidewalk. (They’re also not always in the know about what their own companies are doing and may not realize some form of paywall or online subscription is around the corner.)

What they heard was the Chinese menu version complete with the MSG headache: keep print valuable by charging for online (Walter Hussman, paywall pioneer and evangelist); use a meter/start a club/charge for something (Merrill Brown, Journalism Online consultant); accept that charging online is a lost cause for most but mobile is new frontier (Ken Doctor, Outsell); forget the breakfast table readers, you can reach users all day now (Jim Brady, Allbritton Communications).

Charging as retention tool: The Arkansas Democrat-Gazette‘s ArkansasOnline.com started free and switched to pay in 2001 after owner Hussman heard one too many times from online readers who canceled print subs. Print subs get full online and mobile access included in their $15 monthly fee; non-subscribers can get large chunks of news, information and all the classifieds but not local news. Hussman shudders when people brag about being platform-agnostic, describing how he gets $40 CPMs from Best Buy for print circulars and only $4 per thousand for web ads: “Why would I want to be platform agnostic when I can get $40 instead of $4? I want to maintain that platform as long as I can.”

Hussman also warns against seeing online as a major revenue source: “You’re not in it to try to generate a lot of revenue.” But he thinks they can retain readers and by maintaining circulation, create value for advertisers and keep costs of advertising down. Otherwise, circulation is going to continue to erode, costs are going to go up, it will be a less effective advertising buy, more will struggle and eventually go out of business. (Hussman also sat down with me for a lengthy interview so we’ll have more from him.)

Try it. Now. Journalism Online’s Press+ is a few weeks away from launching betas for the metered model (MediaNews); the content model (charging only for access to obits at The Intelligencer Journal-Lancaster New Era; and the club/membership model (GlobalPost), according to Brown, speaking about pay models with the fervor of a true believer who admits no one is sure what will work. His message: even newsrooms that think charging is out of the question should be experimenting now. “In the next five-ten years, you are all going to be offering subscription products in one form or another. Get engaged in it today or the bus is going to pass you by.”

The ‘Do-over’ Decade: Doctor, the author of Newsonomics: Twelve New Trends That Will Shape the News You Get, calls the web age “the lost decade” but sees opportunity in mobile and a change in mindset with people who weren’t willing to pay for content, paying for access to content they value. “For local newspapers, this is the biggest opportunity in a decade for a do-over.” Hussman’s D-G has a recently launched iPhone app and is rushing to get one ready for iPad. As Doctor warns, there’s been very little money for news outlets in smartphone ads so far but both see the potential from the iPad and other larger-format tablets.

Sustainable business models: For Allbritton’s Brady, who is in the process of launching a DC metro site, sticking with an ad-supported online model is “less about content wants to be free” and more about building a sustainable business model. “You can’t build business models on what people should pay for.” That doesn’t mean don’t charge — but don’t assume that because you think what you do is valuable people will pay with more than attention.