It’s not clear if News Corp. (NWS) will end up investing in the joint venture, which is designed to control distribution of “print” content to readers like Amazon’s (AMZN) Kindle and Apple’s (AAPL) rumored tablet, or if the company will simply agree to tailor its stuff–most notably, The Wall Street Journal–to the joint venture’s standards.

In either case, News Corp. has yet to officially sign on, sources tell me. An announcement formally acknowledging the JV itself is supposed to be a couple of weeks away, though I have been hearing this for at least six weeks.

No comment from News Corp. or Time Inc., the Time Warner (TWX) publishing unit that has been assembling the JV. Other expected partners include Hearst, Condé Nast and, perhaps, Meredith. (Disclosure: News Corp. owns Dow Jones, which owns this Web site.)

In some ways, News Corp. is an obvious partner for the coalition, which I like to call “Hulu for magazines.” Murdoch has been an outspoken critic of Amazon’s distribution and pricing policies; he argues that by controlling the subscription of digital newspaper and magazines delivered through its e-reader, Amazon deprives publishers of a valuable asset.

Murdoch also wants more money for the stuff it does sell: In an earnings call last week, he said that while the bookseller was now paying his company up to $6.50 a month for each $15 monthly subscription to The Wall Street Journal, that split wasn’t good enough.

The JV is supposed to solve those problems for publishers by letting them control sales, customer billing and pricing. But it is also primarily designed with magazine publishers in mind, and News Corp. isn’t in that business.

Meanwhile, New Corp.’s Dow Jones unit is proprietary about the system it has already built to handle subscriptions to the Journal’s print and online editions and its BlackBerry and iPhone apps.

While it’s possible that the JV could use the Dow Jones subscription/commerce platform as the technological base of the JV, Dow Jones could be prickly if asked to play well with others. “Newspapers and magazines, don’t mix well, for reasons that aren’t obvious to the outside world,” says a News Corp. executive briefed on some of the company’s conversations.

In any event, balancing different partners’ interests is only one of the hurdles facing the JV. Some others, from the story I published last month:

• They’ll have to convince consumers who already have billing relationships with Amazon, Apple and other vendors to sign up with yet another service.
• They’ll have to convince device makers to play along with the strategy, which runs counter to many of their own plans. Both Amazon and Apple, for instance, have intentionally created closed systems that give them control of both devices and distribution.
• They’ll have to create content consumers want to buy. The new product can’t simply be a digital version of the magazines they’re already printing: That’s already available on the Web, and consumers have shown almost no interest in paying for it, and advertisers haven’t fully embraced it either.

So what exactly will the JV be selling? That’s probably the most difficult question for publishers to answer, made even more difficult because they don’t know what capabilities the e-readers of the future will boast. Apple for instance, refuses to even acknowledge to Time Inc. executives that it plans to produce a tablet device, let alone provide them with specs.

That has to be unnerving, but I can at least offer a little bit of comfort: The worst-case scenario the employees would be facing had they been purchased by private equity firm ZelnickMedia, which was also bidding for the publication.

The short version: Almost everybody gets fired.

Here’s the longer version of the plan, provided to me by a person familiar with ZelnickMedia’s bid. It sounds like a plausible idea for a PE group that specializes in turning around distressed assets–and a chilling one for anybody who draws a paycheck at BusinessWeek:

• Wind down BusinessWeek’s print business “as profitably as possible”–the company would have to honor existing subscriptions and could still sell ads in the magazine. But the focus would be on building up BusinessWeek’s Web site, which has a decent-sized footprint, though not a huge one.
• Dump almost all of the company’s newsgathering staff and outsource most of that work to Thomson Reuters (TRI).
• Employ a small handful of editorial employees–perhaps 20, down from the 200-plus who are there now. Some of them would run a Huffington Post-style aggregation site that produces no original content, and some more expensive hires would produce a smattering of high-quality reporting and writing designed to burnish/sustain the BusinessWeek brand. “Just to give it uniqueness and sizzle,” my source tells me.
• Dump most of the existing business side, as well, but overhaul and bulk up the sales force.

The insult-to-injury kicker: Under ZelnickMedia’s proposal, the buyer wouldn’t pay a dime for the publication it intended to rebuild. Instead, McGraw-Hill would pay the fund to take the publication off its hands. If that sounds implausible, consider that McGraw-Hill just announced that it will save up to $25 million next year by not owning the title.

Given the above terms, it’s easy enough to see why McGraw-Hill ended up going with Bloomberg. For starters, the winning bidder actually paid cash for the magazine, and McGraw-Hill will end up netting a $5.9 million gain, after taxes, on the deal.

Also important: McGraw-Hill won’t have to anguish as it watches one of its flagship properties get dismantled.

So what will happen to BusinessWeek now that Bloomberg owns it? Nothing nearly so drastic, at least in the short term. For now, Bloomberg is talking about bulking up the title, not shredding it, so that’s a good sign for both employees and readers.

Alas, Bloomberg can’t take on all of the magazine employees looking for jobs, and that pool is only going to get bigger.

Forbes slashed deep into its staff this week, and next week Time Warner’s (TWX) Time Inc. will lay out some of its layoff goals. I’ve heard Time Inc. employees refer to layoff plans as “tree-trimming” or “surgical,” but I think the trimming will feel much blunter to the folks who lose their jobs. The publisher’s cost-cutting plans include hundreds of layoffs–something likely similar to the cuts the publisher went through last year, I’m told.

The New York Post’s Keith Kelly reports today that Time’s News and Finance unit, which includes Time, Fortune and Sports Illustrated, will be particularly hard hit, and I’ve confirmed that myself.

UPDATE: No surprise here: BusinessWeek President Keith Fox is stepping down. Mild surprise: He’s staying on at McGraw-Hill. Here’s his memo:

When we announced that McGraw-Hill was exploring strategic options for BusinessWeek, I promised to communicate with you as openly and often as I could. In this spirit, I wanted each of you to know that I will be remaining with McGraw-Hill after the deal with Bloomberg is closed. I will continue to play a role in the integration post-close and plan to take on a new role at McGraw-Hill in 2010.

During this process, our collective goal was to find the best buyer for BusinessWeek. I am proud that I played a role in ensuring that BusinessWeek has a new home at Bloomberg, where it will thrive under the leadership of Norman Pearlstine. I am committed to the transition and helping in any way that I can.

It’s been a privilege to be the President of BusinessWeek. I thank Terry McGraw for his confidence and trust in me and Glenn Goldberg for his support, direction, clarity, and sense of humor. I’ve also been a member of an amazing team which has navigated the transformation of the media environment with agility, focus, passion, and integrity.

The team–Steve Adler, Jessica Sibley, Tania Secor, Linda Brennan, Roger Neal, and Carl Fischer–is the best in the industry. Like BusinessWeek, they have bright futures ahead of them. I will miss the daily interaction, but I am wiser (and a little grayer) because of their collaborative spirit and desire to make BusinessWeek the global leader in business that it is today.

I also have a special thanks to Patricia Hipplewith, my assistant, who juggled my calendar, protected me from solicitors, and kept me on schedule and well fed! She is the personification of commitment and integrity.

I am humbled by BusinessWeek’s 80-year history. Thank you for allowing me to play a small part in it.

Keith

The publisher said newspaper revenue dropped 20 percent in the third quarter, and print ads dropped by 28 percent; both of these numbers are worse than Q2, which saw revenue drop by 14 percent and print ads by 20 percent.

No relief from Web ads, either: Internet revenue dropped 18 percent, a decline from the nine percent drop in Q2. And online display ads, which had been more or less flat for the last few quarters, fell off a cliff, dropping 14 percent.

Don’t be duped by headlines reporting a drop in the newspaper division’s losses, by the way. That’s due to one-time accounting charges the previous year. If you look at operating revenue and expenses via a less formal, but more practical, lens, the results are very unpleasant: Losses increased by 55 percent (see summary below; click to enlarge).

Want more bad news? Okay: The company’s magazine group says revenue dropped 33 percent, driven by a staggering 48 percent drop in ad sales at Newsweek.

If you’re at, say, Time Warner’s (TWX) Time Inc. and want to whistle past the graveyard, you can try blaming the drop on the title’s unsuccessful overhaul. But I find it hard to believe that Newsweek’s woes don’t reflect a larger magazine malaise. We’ll see next week.

The good news, as always: The big difference between the Post and many other publishers is that its parent company doesn’t depend on print media. The company’ core education business, which is what has sustained it for many years, continues to do well.

Surprise! They’re not that awful, at least by the diminished standards of the newspaper industry:

Excluding one-time charges, the publisher earned 16 cents per share on revenue of $570 million. Analysts expected the Times (NYT) to lose a penny per share on revenue of $561 million.

Ad revenue declined 26.9 percent, which is unpleasant but better than the previous quarter, when it dropped 30.2 percent. Internet revenue dropped by 7.2 percent and Internet ad revenue was down 8.2 percent. Both of those results are improvements over the previous quarter as well: Last quarter, Internet revenue was down 14.3 percent and Internet ad revenue was down 15.5 percent.

Some cautious optimism from CEO Janet Robinson:

Looking ahead, visibility remains limited for advertising in the fourth quarter. But as is the case across the media sector, we have seen encouraging signs of improvement in the overall economy and in discussions with our advertisers. Early in the fourth quarter, print advertising trends, in comparison to the third quarter, have improved modestly, while digital advertising trends are improving more significantly.

A little more color on digital: The big improvement this quarter was driven by a turnaround at the Times’s About.com content mill: Revenue was up 7.2 percent, way up from the 5.1 percent decline posted in the previous quarter. This makes sense, given that About is driven by pay-per-click ads and these have come back across the industry, led by Google (GOOG).

But the story is less impressive at the Times’s traditional Web sites. Ad revenue there was down 18.5 percent, which is better than the 21.6 percent drop the previous quarter, but nothing to write home about. As it has done in previous quarters, the publisher blames the decline on a drop in online classifieds, and I assume that much of the drop stems from vaporized employment ads. If this is the case, it’s going to be hard to move those numbers significantly for quite some time.

The publisher plans to start selling digital copies of its print titles via a yet-to-be-approved app. Condé will start with the December issue of GQ, which it will sell for $2.99 (versus a newsstand price of $4.99), but the idea is that the publisher can use the same technology to sell other issues of other magazines down the road.

Condé says the GQ digital issue will replicate the print one on a page-by-page basis, including the ads. Digital bonuses include related videos, as well as links to sites for products (clothing, music, etc.) featured in the issue.

I wasn’t able to attend Condé’s presentation this morning, so I can’t tell you how its attempt to transfer a rich glossy magazine onto a phone (or iPod touch) actually works. But for now, I’ll take the company’s word for it and assume that it’s a nice alternative to carrying around some dead trees.

The interesting question is the business model, which I think has some real potential. This doesn’t solve Condé’s core problem–its costs are too high to support its shrinking ad revenue–but it does have several things going for it.

For one, this approach reaches its potential readers where they are: I don’t want to read a magazine at my desk, and I’m far from sold on the idea of buying a specialized reader to consume it digitally. Getting it to me on my phone, which goes wherever I do, is the way to go.

It also generates some (potential) additional revenue for Condé Nast right off the bat without creating a channel conflict with its analog product line: Condé will be able to count any magazines sold via its app platform toward its audited circulation numbers, a trick that no publisher has been able to pull off with Web products so far. Meanwhile advertisers in the print publication who want to add digital links to the iPhone version will pay a premium, Condé says. And the publisher has been able to extract additional dollars from Grey Goose and Gillette, which will be “premium sponsors” of the GQ issue.

Bonus upside: Condé says the technology it has assembled for this effort should work well for future Apple (AAPL) products, like, say, its mythical tablet. “We think that the minute Apple is ready, if they ever are, to announce that they’re going forward with a tablet, that we’ll be ahead of everybody,” says Sarah Chubb, president of Condé Nast Digital.

This doesn’t solve the distribution issue that Condé and other publishers have with Apple, Amazon (AMZN) and other potential digital delivery outfits: Apple, not Condé, will control the billing relationship for the app. But then again, Condé doesn’t get to interact with you when you buy a magazine at a newsstand either, so at least it’s not getting disintermediated.

The question, as always, is whether customers are willing to pay anything at all for content they’ve been getting free on the Web. I still think we’re going to end up with a small segment of people willing to pay up for specialized stuff and a very large group that are going to end up with free things of dubious value. It would be great to be proved wrong, though.

It doesn’t. Except when it does.

Contrary to News Corp. (NWS) CEO Rupert Murdoch’s comments earlier in the week, Dow Jones will not be charging customers who subscribe to both its Web and print versions a weekly fee to read the paper on its iPhone or BlackBerry apps.

But if you’re only subscribing to one version? That’ll be a buck a week, starting Oct. 24. The Journal will also start charging mobile-only users $2 a week, which is essentially the same price as a Web-only subscription.

That second charge makes some sense to me. The Journal has always said that it would start charging for the apps it makes for Apple’s (AAPL) and Research in Motion’s (RIMM) handsets. Right now these apps are gratis, which means you can either pay the Journal to read it in print or on the Web, or read it on your iPhone and pay zilch. That had to change at some point.

But while I have to be a tiny bit delicate here–Dow Jones owns this Web site, and I still have some aversion to insulting my employers in public–I don’t see how dunking paying customers a second time makes sense.

I do understand some of the impulse. Publishers of all stripes seem to think that while charging for content on the Web is tough, people are happy to pay for something delivered wirelessly. I think that many publishers are going to be very disappointed when they try this out in practice, but that’s another story.

And I also know that News Corp. has steadily been pushing Dow Jones to raise its subscription prices for the WSJ since it acquired the company, and this strategy sort of dovetails with that.

But seems to me that if I am paying for information, I will expect to consume it wherever I am, at the same price. And you’re starting to hear some publishers say the same thing–see Variety’s comments about subscription plans today in PaidContent.

I don’t actually pay for my WSJ subscription; my employers, who, I should stress, are truly excellent people, have hooked me up–so maybe I’ve got this wrong. Or maybe it’s merely a marketing issue: If you jack up my WSJ subscription and tell me you’re throwing in access to the mobile app for free, I might be okay with it.

But tell me you’re charging me an additional fee to read it on the go and it will stick in my craw. Let’s see if the paper’s paying subscribers feel the same way.

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.

Simulmedia founder and CEO Dave Morgan told an industry conference today that Rep. Rick Boucher, the Virginia Democrat who has become the loudest voice in Congress in the advertising/privacy fight, is prepping a bill that will force publishers to let Web surfers “opt in” before they’re served with any third-party tracking cookies.

Not a huge surprise: Boucher laid out the case for the bill last week at a Congressional hearing. It’s unclear just exactly what that would mean for the business: Could Google (GOOG) not send cookies out if you, say, played a YouTube video embedded on a third-party site (like the one the White House runs)?

But right now the details of the proposed bill don’t matter: The industry has already started arguing against it via promotions that explain just how valuable Web advertising is to the country (and by extension, the targeting/tracking that cookies enable it). From MediaFlect’s Dorian Benkoil:

“Congress’ position is that consumers are not appropriately aware of what is being done on their machines, and the use of cookies delivered by a third party is something consumers have not been appropriately informed of,” said Morgan, who oversees privacy initiatives for the Internet Advertising Bureau [and who] was in Washington last week talking to FTC officials and congressional staff, he said. “Congress’ default position is that that will require an opt-in,” to serve a third-party cookie.

That’s a perfectly sensible position from a consumer’s perspective: Why should advertisers and their proxies track what you’re doing on the Web without your consent? But from the advertising/publisher perspective, an opt-in plan means a plan no one will ever agree to, which means no more cookies/tracking, period, which means Web advertising becomes as imprecise and clumsy as good-old TV and print ads.

Which is why the Web guys prefer a bill that allows surfers to opt out–or preferably, no bill at all.

I still like my Solomon-like solution, which I’ve thrown out before: Let consumers opt in, but give them a reward for doing so.

It doesn’t have to be much–consumers say they care about privacy, but in reality, they’re very happy to trade personal info for trinkets and geegaws. Maybe you get “privacy points” every time you visit a site for the first time and sign away your right to complain about tracking. And if you earn enough you get a bag of Cheetos, etc. Sure we can work something out.

[Image credit: rpongsaj]

We all know tomorrow’s newspapers won’t be printed on paper, but delivered via the Internet. The question for today’s publishers is whether consumers are going read them on smart phones like Apple’s iPhone or the Kindle from Amazon (AMZN).

But that shouldn’t be a question at all, argues Martin Langveld at Nieman Lab: Smart phones are winning this one running away.

And, I agree.

Langveld’s piece is worth reading, but I can sum it up here: If you’re a hardcore book or magazine person,  perhaps you’ll carry a Kindle or similar device around. But everyone has a phone on them already, and they’re already using them to read stuff online. The New York Times (NYT) says it’s generating 60 million mobile page views a month, up 100 percent in the last year.

And while Langveld’s post doesn’t get into this, I’ve yet to figure out the appeal of reading newspapers on a Kindle, or any of the other e-readers I’ve fondled to date. Yes, the screen is bigger, but it to me the experience is an unhappy compromise between print and the Web.

(I do understand why publishers are so eager to get consumers to read their papers on e-readers–they think that if they can reproduce a newspaper-like experience, they can reproduce newspaper economics, where they get money for both subscriptions and advertising. But future technology won’t revive extinct business models.)

Kindle-like readers will get better over over time. Screens will get lighter and more flexible, and add color and video capabilities, and navigation will get less clumsy.

But that could be many years from now–while more and more people become used to reading anything and everything from their handsets–$99 iPhone from Apple (AAPL), anyone? If you’re still in the newspaper business, and think you will be in a year or two, you’d better figure out to get your stuff on my phone, right now.

[Image credit: Paolo Camera]

The  TV advertising market is $70 billion, give or take a few billion. So when peeling off a few million dollars from that constitutes progress, you can see just how far Google (GOOG) has to go.

In fairness, Google’s TV business isn’t really designed to get ad commitments, at all–the whole idea is that advertisers can buy spots on the fly, the way they can with its core Web business. So this at least constitutes a willingness on the part of ad buyers to give the platform a shot.

But that platform is still pretty small after a couple years of work: Advertisers can use Google to reach viewers using Echostar’s (SATS) service, and some of GE’s (GE) NBC Universal cable networks, but that’s about it.

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?

It can’t say that anymore.

The Post says revenue at its flagship paper was down 22 percent in the last quarter and that print ad revenue was down 33 percent. That’s worse than the declines of 13 percent and 21 percent it posted in the previous quarter. And it’s lousier than the poor results the Times posted last month, when it reported that overall ad revenue had dropped 27 percent.

The same holds for the Post’s online business: Even in the good old days, it wasn’t growing fast enough to counter the decline at the print business. But now, online is declining, too.

Web revenue was down eight percent, because the classifieds business has been decimated. Online display ads, at least, were up a meager three percent. But last quarter, display ads were up 10 percent and the overall business was still growing five percent.

As usual, the real difference between the Post and the Times isn’t their performance but their corporate structure: The Times is pure-play media business that’s now choking on debt, while the Post is an education company (Kaplan) that happens to own a newspaper, which makes all of these grim results much easier to bear.

Here’s a survey of the rest of the Post’s business lines. Click on the image to enlarge.

But if you really want to know why things are really grim in the magazine world, don’t just pay attention to the right side of the graph, where ad pages plummet like Wile E. Coyote off a cliff. Look over at the left side, which shows that even before the econalypse hit, magazines were essentially flat.

That is, magazines aren’t just getting hurt by the economy–they’re getting pummeled by a fundamental shift of ad dollars away from print and to the Web.

So: Anyone who wants to stay in the magazine world needs to contemplate a career on the Web, right? Right. Except it’s unclear how many jobs the Web is going to offer, since digital content is worth so much less than its analog counterpart, at least in the eyes of advertisers. More on that later. No need to pile on the grimness on a Monday morning.

A second source says they’ve been told the staff will shrink down to three people and that a “plan would be worked out in the next couple of days.”

Also unclear: Which one of Condé’s digital units will end up adopting the Web site. Portfolio.com had been run as a standalone property. That made it a rarity at Condé, where most of magazines’ digital arms are run by its Magnet unit, and the rest are run by Sarah Chubb’s CondéNet group.

Confused? So are most Condé Nast staffers, who spend lots of time complaining about the publisher’s byzantine digital architecture. But you won’t hear them complaining too loudly right now–they’re trying to hang on to their jobs, or at least protect their exit packages.

Web site staffers were told about the cuts in a meeting led by General Manager Ari Brandt and publisher David Carey, who didn’t provide much detail, according to people who attended the meeting.

Portfolio.com staffers have been told they have been meeting their revenue goals for 2008 while the magazine has not. According to a person who attended the meeting, one of the staff’s braver souls asked Carey why the Web site was being punished more severely than the magazine.

“He gave a sort of corporate-speak answer, and what it appeared to boil down to is, is ‘This is a magazine company,’” says a person who attended the meeting. ”And it left the impression that the Web site was sacrificed to save the magazine.”

In a separate meeting, Portfolio magazine editor Joanne Lipman told her staff that the publication would cut some positions and publish 10 times a year instead of monthly.

UPDATE: A partial list of departing Portfolio staffers.