But will they actually pay up? Here, the conventional wisdom is not so helpful. Nor are studies predicting consumer behavior. To wit:

• Nearly 50 percent of U.S. Web users are willing to pay for online news, says the Boston Consulting Group.
• Not a chance, says Forrester (FORR): Try 20 percent.

For what it’s worth, my money’s on the Forrester number, or one that’s even lower. My gut says people love consuming news, but only in the broadest sense–Obama doesn’t really Twitter! What was Belichick thinking?–and that sort of stuff, which appeals to a very large audience, will always be free, and you’ll get it from Google (GOOG) or something like Yahoo (YHOO). Which leaves you with a small audience willing to pay for everything else.

But! We should note that people are indeed paying for “content” right now. In fact, they’re paying for a lot of it: $115 a month, up seven percent from last year, says NPD Group. The breakdown:

As of August 2009, 81 percent of U.S. households subscribed to a television service (satellite TV, basic/premium cable, or fiber-optic television service). A similar percentage of households (76 percent) paid for Internet subscriptions. Seventeen percent subscribed to an online music service or satellite radio; and 14 percent subscribed to online gaming subscription services.

More traditional forms of entertainment subscriptions, however, did not fare so well. The number of people subscribing to newspapers fell by 2 percentage points to reach 29 percent in August 2009. Forty-one percent of consumers subscribed to magazines this year, compared to 43 percent who did so last year.

According to NPD, an influx of new smartphone owners has led to an increase in mobile data-plan subscriptions: 9 percent of U.S. consumers had mobile data subscriptions this year, versus just 6 percent last year. Fourteen percent of consumers subscribed to a home-video subscription service, like Netflix, this year, which is 2 percentage points higher than last year.

Ah, see? Problem solved: If you want Americans to pony up for stuff on the Web, just link it to something they’re already paying for, like their cable or Internet subscription.

This is what smart guys like John Malone have been talking about for a while, and it’s also the core of the strategy behind the Time Warner (TWX)/Comcast (CMCSA)/everyone else “TV Everywhere” gambit. But it’s also what many people have been trying to do for a very long time–ask the music industry–with limited success.

The latest unpleasant news comes from magazine heavyweight Meredith (MDP), which does its best to explain that things aren’t that bad: Two of the publisher’s big titles–Better Homes and Gardens and Family Circle–saw ad revenue grow in the last quarter, and the company says its magazine unit notched its “third consecutive quarter of advertising performance improvement.”

That sounds good, right? Except that magazine ad revenue still dropped five percent compared with the same quarter a year–and last year’s quarter was a terrible one in which ads dropped by 18 percent.

More data points to watch for in the next few days: The Washington Post (WPO), which reports tomorrow, and Time Warner (TWX), due up next week.

Today’s example doesn’t come from a magazine per se, but from the company’s digital group, which let go of “more than” 15 people, MediaWeek reports.

You should see a trickle of these reports in the weeks to come, and from other publishers as well: Employees at Time Warner’s (TWX) Time Inc., for example, are bracing for cuts this fall, or in early 2010, and my former colleagues at Forbes expect to hear about another set of layoffs in the next week or so. And whoever wins the bidding for BusinessWeek will almost certainly take an ax to that company’s payroll.

My pal Owen Thomas, late of Valleywag, has published a piece for NBC’s Bay Area local site that suggests that Time Inc. wants to get into the hardware business and produce its own e-reader.

That’s something other publishers, like Hearst and News Corp. (NWS), are actually doing or have at least mulled. But multiple sources familiar with the Time Warner (TWX) unit’s thinking say that’s not the case here.

But the publisher certainly is thinking about ways to create specialized content for e-reader devices and about the best way to distribute that content.

Time Warner executives have talked about this openly for many months–see Time Inc. digital guru John Squires’s comments in June–and Thomas appears to have gotten his hands on an internal document that addresses the same topic.

Most intriguing, according to Thomas’s read of the documents: A Hulu-like spinoff that would do…something:

The presentation concludes that Time Inc. and other partners should form a new, jointly owned company. Time Inc. might spin out its Maghound service, a service which lets consumers bundle multiple magazines together into a single monthly subscription, to form the base of the joint venture. The company is also considering acquiring other businesses to jumpstart the venture.

No comment from Time Inc.

But I do know that Time Inc.’s executives have met with other publishers about collaborating on e-reader standards, etc. And I do know that Time Inc. executives  think a special version of their print products, designed specifically for e-readers, is a good idea. Most everyone I talk to in magazine publishing, in fact, believes this.

And I understand why they do. In their minds, the e-reader versions of their products function just about the same way magazines do: People pay to read them and advertisers pay to distribute their messages through them. And–this part is crucially important, from their perspective–publishers retain control of distribution and the billing relationship with their customers.

That relationship gets obliterated in Amazon’s (AMZN) Kindle model: Publishers wholesale the stuff to Jeff Bezos, who deals with consumers directly. This is also one of the music industry’s big regrets about the digital age. Even though labels are selling their stuff on the Web, via Apple’s (AAPL) iTunes and others, they still don’t have direct relationships with its customers.

Which is why publishers are desperately hoping that they’ll be able to push their stuff through someone other than Jeff Bezos. On the surface, at least, it looks as though their wishes are being met: A bevy of Kindle competitors–Sony (SNE), Plastic Logic, iRex, etc.–is surfacing. Surely one or more of those will figure out how to offer publishers the terms they want.

But even if one or more of the Kindle clones succeeds, print publishers still have a core problem: They need to convince consumers that content–in any form, on any device–is worth paying for. That will work in some cases, but for many it’s going be a very hard slog.

But it will come at a price: The device, shown below (click on image to enlarge), will retail in December for $399. That’s $100 more than the current price of Amazon’s Kindle 2. And that price point is almost certain to drop in coming months.

Sony wouldn’t let reporters handle the Daily, and didn’t put it through its paces, either. So hard to get a sense of much here. But here’s a video I shot of Sony exec Steve Haber holding the machine while talking up its virtues — which include free access to books from your public library.

EXTRA, EXTRA: SONY’S DAILY EDITION ROUNDS OUT NEW LINE OF DIGITAL READERS

Wireless 3G Reader Extends Sony’s Commitment to Bring
Open Digital Reading to Mass Audience

NEW YORK, August 25, 2009 Delivering on its promise to give consumers a variety of choices, Sony today announced the third member of its new Reader family–the Reader Daily Edition™, a highly-anticipated wireless model with 3G connectivity. The Daily Edition caps its new line of Reader products, joining the Reader Pocket Edition™ and the Reader Touch Edition™ which were announced earlier this month.
The Reader Pocket Edition and the Reader Touch Edition are available immediately, and the Reader Daily Edition will be available this December in time for the holidays at SonyStyle stores and SonyStyle.com.
“We firmly believe consumers should have choice in every aspect of their digital reading experience,” said Steve Haber, president of Sony’s Digital Reading Business Division. “Today, we take another large stride to deliver on that promise. We now have the most affordable devices on the market, the greatest access to free and affordable eBooks through The eBook Store from Sony and our affiliated ecosystem, and now round out our Reader offering with a wireless device that lets consumer purchase and download content on the go.”
A Family of Three Readers
The Reader Pocket Edition sports a five-inch electronic paper display packaged in a stylish chassis and is available in a variety of colors, including navy blue, rose and silver. It is available for the ground-breaking price of $199, making it the most affordable dedicated reading device on the market.
The Reader Touch Edition features a responsive, menu-driven six-inch touch screen panel that enables quick, intuitive navigation, page turning, highlighting and note taking with the swipe of a finger or by using the included stylus pen. It comes in red, black or silver and retails for about $299.
The Reader Daily Edition gives consumers wireless access via AT&T’s 3G mobile broadband network to Sony’s eBook store from just about anywhere in the U.S. Book lovers will be able to browse, purchase and download books as well as select newspapers and magazines when and where they want. There are no monthly fees or transaction charges for the basic wireless connectivity and users still have the option to side load personal documents or content from other compatible sites via USB.
The seven-inch wide, touch screen display provides for intuitive navigation and comfortable layout of content, including newspapers and magazines, whether you’re reading in portrait or landscape orientation. In portrait mode, about 30-35 lines of text are visible, making the experience very similar to that of a printed paperback book. A high contrast ratio with 16 levels of grayscale ensures that text and images are crisp and easy to read. The Daily Edition also boasts an attractive aluminum body with an integrated cover for durability. It has enough internal memory to hold more than one thousand standard eBooks and expansion slots for memory cards to hold even more. It will sell for about $399.
All three models feature Sony’s award-winning industrial design and an E Ink® Vizplex™ electronic paper display that emulates the look of ink on paper. Sony’s eBook Library software 3.0, which now includes support for many Apple® Macintosh® computers as well as PCs, makes it easy to transfer and read any Adobe® PDF (with reflow capability), EPUB, Microsoft® Word®, BBeB® files, or other text file formats on the Reader.
Access to Even More Content at the eBook Store by Sony
In addition to announcing a new family of Readers, Sony has also made several changes and improvements to its eBook Store to provide better access to an even greater variety of ebooks. Earlier this summer Sony announced the availability of more than one million free public domain books from Google, and the company made new releases and New York Times bestseller titles available for $9.99.
Today also marks the launch of Sony’s Library Finder application. Sony, working with OverDrive (www.overdrive.com), the leading global digital distributor of eBooks and to libraries, will now offer visitors to the eBook Store by Sony easy access to their local library’s collection of eBooks. Thousands of libraries in the OverDrive network offer eBooks optimized for the Sony Reader, and visitors can now find these libraries by typing their zip code into the Library Finder. Through the selected library’s download website, visitors can check out eBooks with a valid library card, download them to a PC and transfer to their Reader. At the end of the library’s lending period, eBooks simply expire, so there are never any late fees.
The Reader Pocket and Touch Editions, as well as available accessories such as AC adaptors, cases and covers with reading lights, are available now at SonyStyle.com and SonyStyle stores. Book lovers interested in trying out a Reader in person will also be able to find them for sale at Best Buy, BJs, Borders, Sam’s Club, Staples, Target, Toys“R”Us, Wal-Mart and other authorized retailers nationwide.

DIGITAL READING ECOSYSTEM EXPANDS FOR SONY’S READER

NEW YORK, August 25, 2009 Further evidence of the broad support for its open approach to digital reading, Sony today announced relationships with a variety of traditional and digital publishers who provide content in industry standard formats to create a universe of reading material compatible with the Reader.
All of these sites will offer content in the EPUB format, the International Digital Publishing Forum’s (IDPF) XML-based standard format for reflowable digital books and publications. EPUB has gained acceptance among major trade book publishers with dozens of publishers already producing the majority of their eBooks using the standard. Sony recently announced that the company is transitioning its entire content library to the EPUB format, giving consumers the freedom to purchase or download free eBooks from the eBook Store by Sony and read them on any EPUB-compatible device.
“From the beginning, we have said that an open format means more choice for consumers,” said Steve Haber, president of Sony’s Digital Reading Business Division. “Now, working with other industry leaders, we can provide a device that is compatible with the widest selection of content available. Readers can shop around for what interests them rather than be locked into one store.”
Sony’s eBook Store already provides access to more than one million public domain Google Books in EPUB format and, starting today, Sony’s Library Finder application will go live. Library Finder offers visitors to the eBook Store by Sony easy access to their local library’s collection of eBooks. Thousands of libraries offer eBooks optimized for the Sony Reader, and visitors can now find these libraries by typing their zip code into the Library Finder. Through the selected library’s download website, visitors can check out eBooks with a valid library card, download them to a PC and transfer to their Reader.
Other sites offering EPUB content include:
• Independent Bookstores–More than 200 participating members of the American Booksellers Association–including stores such as Tattered Cover (Denver, CO) and Vroman’s Bookstore (Pasadena, CA)–will have the ability to sell e-content to consumers beginning this fall. The stores using ABA’s IndieCommerce platform will offer content in the EPUB format and protected by Adobe’s Content Server 4 (ACS4) digital rights management, which is compatible with Sony e-Reader products. In addition, plans are underway to make Sony’s e-Reader devices available for purchase from independent bookstores in time for this holiday season. ABA is a not-for-profit trade organization devoted to meeting the needs of its core members–independently owned bookstores with storefront locations–through education, information dissemination, business products and services, and advocacy.
·        BooksOnBoard–BooksOnBoard, the largest independent eBook bookseller and member of both the ABA and IDPF, has been a staunch supporter of the EPUB standard through its founder Bob Livolsi. BooksOnBoard was the first eBook site to offer the EPUB standard to its burgeoning customer base and has sold more EPUB formatted books than any other online bookstore. BooksOnBoard believes that the EPUB standard significantly benefits the publisher, authors and most importantly the consumer.
·        NetGalley–NetGalley is an innovative and easy-to-use online service and connection point for book publishers, reviewers, media, librarians, booksellers, bloggers and educators. NetGalley delivers digital galleys and promotional materials to professional readers and helps promote new and upcoming titles. Starting today, NetGalley will support the Reader with the ability to download a protected PDF file and this fall the company will offer digital galleys in EPUB format.
• Powell’s Books and Powells.com–Powell’s Books is the largest independent bookseller in the world.  Innovative since its inception in 1971, it was one of the first booksellers online (beginning in 1994), and one of the first to sell eBooks for reading devices (the Rocket eBook) in 1999. Powell’s offers EPUB content for a wide range of compatible devices, including the Sony line.  Powell’s is an important player in the open access world of eBooks, where titles are provided by a wide range of publishers in a competitive retail environment, read on a range of devices, and downloaded and owned by millions of people around the world.

The story went up on VF.com six days ago and has generated just under two million page views since then, says executive online editor Michael Hogan. (Disclosure: I’ve been a free-lance contributor to Vanity Fair’s “New Establishment” list in the past and will be again this year). Had Palin not made her blockbuster announcement on the Friday before the Fourth of July, the piece would be doing even better: Vanity Fair generated more traffic on the Tuesday the story was posted than the day after Palin made her news.

Still, it’s a big coup for the magazine’s site. The only way to generate more attention would be to run a slideshow featuring young attractive women.

Which the site can also do: Its story-and-photo package on Jessica Simpson, which ran in May, attracted 5.5 million page views to the site over a two-day period. Vanity Fair has generated 85 million page views so far this year, Hogan says.

And if you really want to generate traffic, run slideshows featuring very young attractive women. Last year the magazine’s 18-picture slideshow featuring a kind-of-topless Miley “Hannah Montana” Cyrus attracted some 18 million page views in a couple of days.

None of that will be terribly surprising to people who’ve wallowed in Web publishing for any amount of time. What surprised me a bit, though, was Vanity Fair’s decision to publish the piece in its entirety from the start. Doesn’t that cannibalize newsstand sales?

Maybe, says Hogan. But “it’s an open question as to what costs newsstand and what doesn’t.” And as the magazine tries to figure that out, he says, it has been experimenting. Some stuff goes up online before the magazine hits newsstands, while other pieces won’t appear on the site until a month later.

In the case of the Palin piece, the magazine had originally prepared to run an excerpt/summary of the story at first, then make the whole thing available by the end of the month after the news cycle was extinguished.

But on Friday, June 26, a few days before the excerpt was scheduled to run online, the magazine rethought its plan, assuming that the piece would be widely quoted and discussed before most people would ever see it. “The PR department started getting concerned that it was going to be controversial, and they wanted people to read the whole thing, and draw their own conclusions,” Hogan says. The final call went to Editor-in-Chief Graydon Carter, who, I gather, isn’t really much of a Web guy.

Meanwhile, I’m still waiting to read Michael Lewis’s latest piece for the magazine, on AIG’s (AIG) notorious “financial products” division. That one’s only available, for now, in excerpt form online, which means I’m actually going to have pay cash to read it, or wait a few hours–Hogan says it should be available in full later today.

So says ad-tracking firm TNS Media Intelligence, which pegs the slump at 9.2 percent for the last three months of the year, compared to an overall drop of 4.1 percent for all of 2008.

I’m sure that someone, somewhere, will get some benefit from knowing exactly how terrible the ad market was several months ago–we also know, for the record, that ad sales were very bad during the first three months of 2009. But every media person I talk to is consumed with the state of the market right now–and what it might look like six months from now.

The good news: Some of the people I’ve talked to recently actually have good news to report. Or at least, good news as measured by the standards of  the “down six percent–or 20 percent–is the new flat” era.

For instance, execs at big Internet publishers tell me they think the decline in display ad spending may have bottomed out last quarter, which would bode well for restructuring efforts at wounded giants like Yahoo (YHOO) and Time Warner’s AOL (TWX).

Cable executives are even more bullish, and some of them, like Viacom (VIA) CEO Philippe Dauman, will even say so in public: “Signs over the last weeks have been encouraging,” he ventured during the company’s earnings call on Friday.

Let’s be clear: Viacom’s U.S. ad revenue dropped nine percent in the last quarter. So “encouraging signs” doesn’t mean “roaring growth.” And some moribund industries, like the magazine business, are still moribund (and broadcast TV’s day of reckoning is coming this month)

And even this faint optimism may be nothing more than delusion fueled by the stock market’s recent run or the hopes pegged to the notion that people have to start buying cars again, some day. Assuming the recession/depression lasts for another year or so, you can expect the ad market to really recover a good six months after that, since ads are a trailing indicator. But they do have to come back, some day. Right?

Expect a new large-format device that’s optimized for reading newspapers and magazines.

Here’s the full text of the invitation that just showed up in my inbox: “We’d like to invite you to an Amazon.com press conference scheduled for Wednesday, May 6 at 10:30 am ET. The press conference is scheduled to take place at the Michael Schimmel Center for the Arts at Pace University, located at 3 Spruce Street, New York City. Doors will open for registration at 9:30 am ET.”

Say this for whoever’s organizing Amazon’s product announcements–they’ve got a nice sense of whimsy. Amazon (AMZN) showed off Kindle 2.0 at the Morgan Library. And Pace University, located just next to the Brooklyn Bridge, sits on the site of the New York Times’s (NYT) 19th-century headquarters building. The Times, according to the Times, is partnering with Amazon on the new gadget.

UPDATE: There is another, more obvious, reason to have the event at Pace, according to the Wall Street Journal. The university is one of 6 schools that will be working with Amazon to test textbooks on the new devices, the paper says. The others: Case Western, Princeton University, Reed College, Darden School at the University of Virginia, and Arizona State University.

Amazon currently sells a subscription to the Times for $14 a month. That version has fewer features than the paper’s free Web site–no video, no color photography, and just one update a day–but some of the early-adopting Kindle users seem to like it. In February, the paper said Kindle subscriptions were a “modest” business.

Amazon is one of several players with plans for a new, large-format device that’s supposedly optimized for newspapers and magazines. News Corp. (NWS), which owns this Web site, has said it’s interested, and fellow publisher Hearst is already working on its own. And here’s a list of entrants you haven’t heard of.

Can a new Kindle–or any other device–reverse the fortunes of the print publishing industry? Nope: It doesn’t matter how you deliver the information if you can’t afford to generate it in the first place. And the industry’s more sober executives understand that.

But if Kindle-like devices really do take off, they will be a natural platform for whatever version of the publishing industry survives. The question facing publishers: Do you try to create your own platform from scratch so you can control your own distribution? Or hop aboard the industry leader and accept that you may end up in the position the music business is in, where one outlet–Apple’s iTunes (AAPL) store–dominates the business?

The magazine’s May issue, which is out now, will be its last. The Web site will be shuttered “in the second quarter,” the company says.

Portfolio has had its doubters even prior to its launch in 2007. Long before the advertising market cratered, critics worried that the market couldn’t support a fourth business magazine to compete with Forbes, Time Warner’s (TWX ) Fortune and McGraw-Hill’s (MHP) BusinessWeek; they also marveled at the reported $100 million budget that Condé Nast had committed to the launch.

No telling whether that bet would have paid off in a healthier market for the high-end advertising that business magazines thrive on. (But likely not: “Condé Nast made a classic mistake of spotting a consumer magazine ‘opportunity’ based on advertising and demographic considerations, not actual reader demand,” as BusinessWeek’s Jon Fine puts it). But the current market is as bad as it could get: In the first three months of 2009, magazine ad pages declined more than 25 percent, according to an industry trade group, and Portfolio’s pages dropped by more than 60 percent. Some of that drop stems from the magazine’s move to a 10-issue-a-year schedule, down from 12 a year.

But Portfolio has been suffering for quite some time. Last fall, the magazine laid off a good portion of its staff and turned its Web site into a skeleton operation. And parent Condé Nast, which also made a round of layoffs last fall, has continued to cut back this year, eliminating perks, staff and titles throughout the company. In March CEO Chuck Townsend sent out a memo warning that “as the downturn extends, we have to make additional difficult decisions to manage costs and ensure our financial well-being.”

Here’s the full statement from Carey:

Earlier today, Condé Nast announced, quite regrettably, that it is pulling back from its investment in Portfolio.

For this high-profile, 21-issue launch, the recession has helped and hurt the brand. While the unprecedented nature of these times has made business and the economy the main topic of conversation, it has also led to high levels of uncertainty and a tremendous reduction in ad spend in the five key sectors Portfolio’s business model depends on.

The company is deeply grateful to Portfolio’s readers and for the broad support of marketers and executives all around the country.

And here’s the beginning of the magazine’s obituary from soon-to-be-unemployed Portfolio.com media writer Jeff Bercovici:

For nearly two years I’ve been covering the media industry’s bad news on this blog, including some that’s hit very close to home. Now it hits closer still: Condé Nast Portfolio is closing.

Our editor in chief, Joanne Lipman, just broke the news to staff, saying the decision had been made “because of financial reasons at Advance,” Condé Nast’s parent company. “It’s not anything that the company wanted to do.” She said she was informed by Condé Nast chairman S.I. Newhouse Jr. this morning of the decision.

And here’s the press release:

Condé Nast will cease publication of Portfolio effective with its May issue and Portfolio.com will close in the second quarter of the year, it was announced today by Charles H. Townsend, President and CEO of Condé Nast.

“The pressures and realities of the continuous deep economic slump have lowered Portfolio’s revenue projections below what is needed to continue publication,” Mr. Townsend said. “Portfolio was an ambitious and innovative magazine and website, and we were proud to publish them. The challenges facing this launch however proved too great. Joanne Lipman is an extraordinarily skillful editor and William Li is a very talented publisher. We thank them and their staffs for their tremendous efforts. It is unfortunate we were unable to give Portfolio the time needed to fully mature.”

Portfolio and Portfolio.com were launched in May 2007. The magazine has published 21 issues since its launch. The magazine received a National Magazine Award in 2008 and has been nominated for multiple awards since.

Condé Nast Publications, a unit of Advance Publications, includes consumer magazines, Condé Nast Digital, the Fairchild Fashion Group, the Condé Nast Media Group, and the Shared Services Centers.

Condé Nast is “having the worst year of any publisher,” the New York Post reported last month. So the fact that that CEO Chuck Townsend sent out an all-hands memo entitled “Managing Through Challenging Times” must have certainly sent a shiver through the magazine empire this afternoon.

The good news: Nowhere in Townsend’s missive does he actually mention sackings, reorg or other personnel cuts. The bad news: Townsend warns employees that “all of us” will “have to make additional difficult decisions to manage costs and ensure our financial well-being.” But he doesn’t spell out what those are.

Condé started hacking at expenses last fall by shuttering some titles and making cuts of five percent or more at others. Meanwhile, it has refused to cut ad rates, even as competitors pick up some market share with lower-priced pages.

But while there’s constant chatter within Condé about other titles supposedly destined for the chopping block, we’ve yet to see anything materialize. Condé’s cuts are roughly proportional to the ones that Time Warner (TWX) magazine unit Time Inc. also went through last fall.

Just this week, a Condé executive told me that because individual publishers were cutting back on costs without a companywide edict, it was unlikely that the Condé publisher would need to make bigger cuts this spring.

I’ll update if I get more info.

Click to read Townsend’s complete memo:

From: Townsend, Chuck
Sent: Thursday, March 05, 2009 05:04 PM Eastern Standard Time
To: Condé Nast Publications
Subject: Managing Through Challenging Times

I continue to believe that there are two things that make our Company truly unique, world-class brands and remarkable employees. This statement is even more true today as I watch how Condé Nast is managing through this challenging economy.

While advertising pages are down, Condé Nast is gaining critical ad revenue market share through the early part of 2009. Perhaps more importantly, our consumer connectivity, as measured in key circulation statistics, is particularly strong.

So, while our Company is not immune to the economic stress that has been experienced by the media community, we have made adjustments to secure our ongoing stability, just as each and every one of us has had to personally deal with the economic challenges we face.

Unavoidably, as the downturn extends, we have to make additional difficult decisions to manage costs and ensure our financial well-being. These decisions involve all of us. We’ll all have to do more with less and accept that some of the benefits and resources that were available to us in robust economic times will have to be scaled back–and revisited when the economy and our business recover lost ground.

The best course of action is for us to prudently and responsibly manage our business costs and expenses through these troubled waters, assuring us the opportunity to fully participate in the recovery that lies ahead. At that time, we will take great pride in what we accomplished.

I can only ask that you join me in these efforts to ensure the continued success of our great Company.

[Image credit: Malbonster]

Fortune says Hearst, which publishes magazines like Cosmopolitan and Esquire, and, for the time being, newspapers like the Seattle Post-Intelligencer and the San Francisco Chronicle, is working its own Kindle-like device.

“I can’t tell you the details of what we are doing, but I can say we are keenly interested in this, and expect these devices will be a big part of our future,” Hearst digital head Kenneth Bronfin tells the magazine. Some more vague details, which don’t include a launch date:

Insiders familiar with the Hearst device say it has been designed with the needs of publishers in mind. That includes its form, which will approximate the size of a standard sheet of paper, rather than the six-inch diagonal screen found on Kindle, for example. The larger screen better approximates the reading experience of print periodicals, as well as giving advertisers the space and attention they require.

…the Hearst reader is likely to debut in black and white and later transition to high-resolution color with the option for video….Downloading content from participating newspapers and magazines will occur wirelessly….

What Hearst and its partners plan to do is sell the e-readers to publishers and to take a cut of the revenue derived from selling magazines and newspapers on these devices. The company will, however, leave it to the publishers to develop their own branding and payment models. ‘That’s something you will never see Amazon do,’ someone familiar with the Hearst project said. ‘They aren’t going to give up control of the devices.’”

Intriguing? Yes. But I don’t have high hopes for the Hearst reader.

That’s in part because building consumer gadgets is a lot harder than it looks–remember all those awful MP3 players that predated Apple’s (AAPL) iPod? And I’m particularly worried about consumer gadgets designed with publishers in mind instead of consumers/readers.

But I’m also skeptical because I don’t really see how a dedicated magazine/periodical player does much for readers, period.

You can debate the pricing and feature set on Amazon’s (AMZN) Kindle, but at least there’s a use case for the device: It’s designed to let you read for long stretches of time, which is pretty hard to do on iPhones and BlackBerries.

But I can easily plow through newspaper stories and magazine articles on my relatively frill-free BlackBerry 8830 (if you do the same, let me recommend Instapaper.com and/or Handmark’s FreeRange Reader). And bear in mind that Amazon’s device is also designed to let you hoover up newspapers, etc., as well; the New York Times says it is already selling a “modest” number of subscriptions to Kindle users.

So if Hearst’s Kindle Kopy is going to take up space in my gadget array, it’s going to have be something pretty special.

[Image credit: Library of Congress via Flickr]

Here’s an excerpt from the acceptance speech she delivered at the Magazine Publishers of America luncheon. I’m reprinting it here (with her staff’s help) because I think it’s a nice summation of why many of us are dismayed to see what’s happening to traditional media.

But I also think Moore’s argument–that quality magazines/newspapers/journalism will survive because society needs them to–doesn’t hold up.

The more I chew on this stuff, the more I fear that we’re headed for a bifurcated world: People with a lot of resources will get access to high-quality information. Everyone else will get free stuff that has little value. More on that later, and often.

First, I’m grateful in these crazy times that our readers have not abandoned us. On the contrary, readership of magazines is up. And at Time inc our circulation and net profit was up in 2008.

Consumers are still reading…. and buying…. It’s true — we had to go back on press four times for Time’s person of the year Obama issue. Let’s not forget 85 percent of adults in this country still read magazines

And I believe more than ever, especially during times like these, people will turn to trusted content and trusted brands. Am I the only person to notice that even “60 Minutes” has returned to the top ten tv shows?

Second, I’m grateful that print advertising is still very effective. The best [return on investment] is a media mix. So our core businesses—-print magazines–remain very effective vehicles for advertising messages in building brand awareness and purchase intent. That’ s a fact.

Third, I’m grateful that the basic need for fact-based information will not go away. Good editors will be needed more–not less– in an age of too much information. The public will increasingly understand the need for fact-based reporting…because sketchy information can lead to trouble.

The fastest way to turn a college classroom on the subject is to remind them of the price they paid for the rumor of weapons of mass destruction. We have somehow failed to teach the millenials that trustworthy information is essential for the free markets to thrive…

This is not a new problem for society, by the way. Mark Twain complained, ‘a lie can travel half way around the world while the truth is putting on its shoes. ‘ Wouldn’t Twain be amazed that it can now travel almost at the speed of light?

Real reporting takes expertise, wisdom and judgement. That’s why i still believe great news brands will be standing…like those in the Time and Life building — when the economic recovery comes.

And finally I’m also grateful that we’re not in the newspaper business…although i’m rooting hard for them. A world without newspaper journalism is not a better world.

I believe our children will eventually understand that all content can’t be free.Someone has to pay for a Baghdad bureau in the red zone. For investigative reporting. For fact checking. A world without journalism is not a better world.

And that’s what’s happening right now between publishers and Source Interlink Distribution and Anderson News Co., two distributors that represent about half the industry’s retail sales. Source and Anderson have been demanding an extra seven cents for each magazine they deliver, citing higher costs. Publishers have balked, citing lower revenues.

Now Time Warner’s (TWX) Time Inc., the industry’s biggest player, has upped the ante, telling Source and Anderson that it’s taking its business elsewhere, starting next month. It delivered the news to Source yesterday; today it told Anderson, which handles most of Wal-Mart’s (WMT) magazines. Here’s the statement from spokeswoman Dawn Bridges:

In view of the new structure that both Source Interlink and Anderson are implementing, as of Feb. 1, Time Inc. will not be providing either group with any our our titles. Our intention is to have the business replaced by other wholesalers. We hope to have specific details to share shortly.”

I’m assuming that 1) Time expects its distributors to back down before it makes good on its threat and 2) it does indeed have a backup plan.

But if Source and Anderson do call Time’s bluff, I’d have to assume that the logistics involved in switching distribution partners are considerable, and pretty hard to execute in a couple days. If you’re a fan of titles like Time, Sports Illustrated and People, and you like to buy your copies at stores or newsstands, you might want to make alternate plans for the near future. Like reading them online.

This morning Nina Link, the CEO of Magazine Publishers of America, presented a state-of-the-industry talk for a conference call hosted by J.P. Morgan, as part of its “virtual advertising & marketing summit.”

Don’t worry if you missed it–the accompanying slides, which I’ve embedded below, do a good job of summing up Link’s presentation. And I can do the same in a couple sentences: Things aren’t great, but they could be worse. And they’ve got to get better: People like magazines!

I actually agree with part of Link’s thesis: People do like magazines, and will continue to do so. In fact, the more time I spend creating and consuming online content, the more value I see in print titles. They’re a refreshing break from the relentless crush of the Web, which tends to make really good stuff read and feel just the same as really bad stuff.

Also, as my old employer and current Forbes Media investor, Roger McNamee, likes to point out, you can read magazines on the toilet.

But none of that changes the real problem magazines face, which isn’t going away: Publishers rely on advertising for most of their revenue, and advertisers are increasingly moving their money to the Web.

And almost none of the publishers have figured out how what to do about that–Time Warner’s (TWX) Time Inc., which has been perhaps the most aggressive about getting on the Internet, gets only 10 percent of its revenue from the Web.

Surely more will follow suit, but when they do, they’ll face a new problem: The clichéd-but-true “analog dollars for digital pennies” phenomenon, which means that the same content becomes much less valuable once you move it from print to the Web.

But you’ve heard plenty about that and will continue to hear about it going forward, and I promised you the bull case. So here you go. Click on “full screen” button to make this pitch legible and right arrow button to page through the presentation.

MPA presentation – Free Legal Forms

[Image Credit: dickuhne]

And if you think that none of that makes sense, don’t worry. Everyone knows you can’t charge people a penny to read something on the Web–especially a weekly publication.

Except that you can: The Economist does a (relatively) healthy business while keeping its weekly magazine behind a subscription paywall. So does the Wall Street Journal’s Barron’s. And as the online ad business continues to evaporate, charging people for access to stuff they want does not seem completely insane.

“We’re creating a tailored product for readers that does what the old newsweeklies did, which was to stop time for people and say ‘What the heck happened over the last week?’ and make sense of it,” editor Brian Kelly tells Portfolio.com’s Jeff Bercovici.

Alas, the new publication seems like a classic tweener: It won’t have enough heft or substance to justify an offline existence. And it won’t be nimble enough to take advantage of the Web’s real-time, did you hear what just happened flexibility, because it’s literally going to be a weekly publication, distributed via downloadable PDF file.

But I’d love to be proved wrong here, because I’ve got a vested interest in viable content production models. And if this one works, I’ll be happy to eat my words. Maybe you’ll pay to watch.