This interview is a part of a series where Anvil focuses on the future of news.  Please read The Future Newspaper & Social News and join the discussion on Twitter by adding the #futureofnews hashtag to your update. We also greatly appreciate any comments.

Steve Woodward, the founder of Nozzl Media, sat down with Anvil to discuss the future of online publications and the news industry.  Nozzl Media builds local, real-time streams of news, and ads for newspapers delivered as branded content on their websites.  Nozzl uses the mobile web, social media, micro-blogging, and filtering technology to deliver a live, flowing, interactive stream accessible on any smartphone or web page and filtered according to search terms and location.

Anvil: How do you get your news?

Steve Woodward: My daily general news sources are The Oregonian, the Huffington Post, and (this is heresy for a former mainstream journalist) The Daily Show with Jon Stewart. I also subscribe to several daily e-mail newsletters and listservs for specialized topics such as mobile, social media, and journalism.

A: If you had to put your money on one, who would win in a heads-up battle: Digg or the New York Times?

SW: To me, they co-exist peacefully in two very distinct niches. But if one were forced to choose between the two, I would go with the NYT.

Digg is a popularity contest, not really a “front page” — unless you’re talking about a front page of random, often weird, often trivial news. It’s fun, but does it support public discourse in a way that benefits democracy? Maybe it does, but that’s not its purpose.

The NYT, on the other hand, is a news product that is more than the sum of its parts. Individual stories may not be as entertaining or, at times, even as important as stories found on Digg. But taken as a whole, over time, the NYT gives its readers the unmistakable gestalt of the nation and its most important issues.

A: What are the barriers/entrenched ideas large content producers face in adapting to a digital medium?

SW: Large content producers are prisoners of their own past success.

Michael Nielsen had a fantastic post in June that came closer than anything I’ve ever read to explaining why entire industries run by smart, well-intentioned people can simply disappear. The best companies have created organizational “immune systems,” blocking out new ideas that threaten the traditional practices that led to their success. The example he gives is newspapers that spend hundreds of dollars sending Pulitzer Prize-winning photographers on assignments that may not even result in a single photo in the paper.

A blog, in contrast, can use a free handout photo. Yet the paper can’t simply start using handout photos, because its reputation and success are partially built on outstanding photography. So the organization is trapped by its inability to improve by making incremental changes and is stuck with unsupportable high costs. The only way out is to completely disrupt its own business and start over from scratch. Few executives will put their own jobs and the jobs of potentially hundreds of people on the line to attempt something so dramatic and so prone to failure. So they stick to what has succeeded in the past — and hope for a silver bullet.

A: Who is doing it well?

SW: The Bakersfield Californian has a long history of citizen journalism. Its home page features not only staff blogs but also reader blogs, videos, and reviews. The paper also launched successful industry-specific job sites. Its most famous initiative is Printcasting.com. The paper’s senior manager of digital products used a foundation grant and the paper’s own investment to create a site where citizens could build their own printed niche newspapers or magazines. The content comes from writers who contribute material through the site and share in a portion of the ad revenue.

The Las Vegas Review Journal went from zero to 60 on its website last year, blowing up a static, template-heavy existing site that was simply a repository for newspaper copy. Now it’s multimedia-centric. The paper also is participating in some interesting digital projects, such as the Digital Newsbook Publishing Project, which republishes multipart newspaper series as e-books.

The Lawrence (Kansas) Journal World & News was one of the first papers to create a nicely interactive site that didn’t look like the typical newspaper site with 10,000 links on the home page.

And of course, The New York Times has top-notch online and mobile people who produce great content and stunning interactive graphics. The Times also had a lot of foresight several years ago, when it bought into broadcast TV, not just for the money, but also so its print people could learn how to do video properly. As a result, they’re miles ahead of other papers, which are simply shoving video cameras into the hands of inadequately trained reporters and still photographers.

A: Anyone doing exceptionally poorly?

SW: Tough question. I’d have to say most newspapers do it poorly. I can’t think of any in particular that are SO bad they deserve to be called out more than the rest. Most are poorly designed for navigation and eye-tracking, have no discernible organizing principles, contain too many links and elements on the home page, hide their staff blogs, run annoying display ads that jiggle and flash, publish news in chronological order rather than order of importance, update news on a print schedule rather than immediately, make no distinction between writing for print and writing for web, post-amateurish-looking, staff- shot video…. I could go on.

A: Aggregators have a notable advantage to content producers in that they don’t have to pay to develop the content.  How are content producers at an advantage over aggregators?

SW: I used to believe that aggregators were mostly a force for good because they drove traffic back to the original content site. But studies show most readers are satisfied with a short hit on the aggregators’ sites and never click through for a fuller story. So I’m now ambivalent. Aggregators succeed because they provide a valuable reader service. Reader’s Digest, for instance, had a huge circulation for decades because it aggregated print content and made it easy for people to read multiple content sources under one cover. It seems to me that content producers, ironically, have to become their own aggregators for content that is specific to their local markets.

Say a newspaper prints a story about shenanigans by the mayor. The landing page for the story should include not only the story itself but links to past stories from the newspaper’s archives, related articles, and multimedia from other, even competing, publications, Twitter feeds, blog posts, commentary, polls, whatever you can think of. An aggregator may be able to “steal” someone else’s content, but they can’t steal context.

A: How do you see newspapers and magazines generating revenue in the future?

SW: If you look at the history of mass markets over the past 25 years, you see they’ve been wiped out by the twin forces of fragmentation and consolidation. Retail is a perfect example. Mass-market merchandisers like Meier & Frank are gone, replaced by tons of specialty retailers (fragmentation) and a few big-box, big-volume, low-price retailers such as Walmart (consolidation). Everything in the middle is mostly gone. Mass media are no different; the Internet-enabled the decline to happen at a much more rapid pace, but it would have happened anyway.

So I see mass-market newspapers in local markets shrinking, with their readership migrating to a wide variety of niche media (fragmentation) and big-box media (consolidation).

In essence, magazines have already gone through this phase. Local niche media — catering to neighborhoods, interests, online readers and even print readers — will draw their revenue from low-cost local ad dollars, nonprofit grants, advocacy group sponsorship and revenue sources we haven’t even thought of yet. At the same time, the new Walmarts of media — Google, Yahoo, Microsoft, AOL and maybe even mainstream national papers such as the New York Times and Wall Street Journal — will become hybrid aggregators and content producers funded by national advertisers (consolidation). I can envision freelance journalists replacing staff journalists throughout the country. I can also envision entrepreneurs creating companies that employ reporters and editors and contract with both large and small media companies.

A: Any thoughts on Facebook’s announcement recently regarding FB Connect for mobile?

SW: I saw it as validation that mobile is going to be increasingly important in ways we can’t begin to understand. Facebook has more than 65 million active users on mobile, and those users are 50 percent more active on the site than non-mobile. I can’t help but think that mobile can change journalism just as it’s changing society. What will it mean to be a mobile journalist in the near future? I don’t know, but it will be exciting to find out.

A: If you started a newspaper today, where do you spend the bulk of your money allocated for content?

SW: I would spend much of it on investigative and explanatory journalism, which are expensive because of manpower but also vital to a healthy democracy. My approach would be to turn readers into assignment editors, asking them through polls, blog commentary or other means to help define what my newspaper should delve into. My reporters would post their daily reporting progress, source lists and source documents, allowing readers to add, comment, make suggestions. Every week, we would publish the results of the most recently completed investigation, both online and in print. The print edition would contain not only the major story but also summaries of the week’s major news, including news broken by competitors. That would be how I would *spend* my money. Fortunately, you didn’t ask where I would *make* my money.

A: What could Nozzl do tomorrow to help a struggling local paper?  A national paper?  A monthly pub?

A struggling local paper can benefit in several ways. First, local mobile advertising favors transactional advertising (coupons, sales, special

deals) and smaller advertisers over brand advertising, which tends to be the bailiwick of large advertisers that largely ignore local papers. Second, the sales staff can sell by CPMs, just as they do for online ads, avoiding the necessity for extensive new training. Third, Nozzl’s real-time, GPS and filtering technologies enable new sales products pegged to mobile search, locational advertising and trending topics that can be sold at set prices or by auction. Fourth, on the news side, the ability of our software to search thousands of public records, RSS feeds, calendars and websites gives the newsroom, in effect, hundreds of new reporters that can do routine newsgathering, freeing up the staff to do higher-value journalism.

A national paper can provide its mobile advertising clients with far easier tools with which to conduct national ad campaigns. Mobile advertising’s growth has been held back by the need to rent common shortcodes, optimize ads for thousands of different handsets, sign agreements with dozens of wireless carriers, and custom-design WAP landing pages, Nozzl’s in-line ad system turns each ad into more of a tweet, metatagged with keyword(s) and location, enabling it to flow into the streams of people who are following or searching for content with similar tags. A click on the ad takes the user to an automatically generated landing page populated with links for maps, phone numbers and social elements such as a “share” button.

Because our product is real-time, the highest value is for publications whose audiences expect them to be updating continually.

So a monthly publication is a tougher value proposition — but not impossible. Take Portland Monthly, which appeals to readers who, I imagine, spend big on entertainment and lifestyle purchases. A Nozzl- powered Portland Monthly site would contain lots of content targeted at the right demographic: restaurant reviews, events calendars, movie schedules. Each item in the stream would take the user to a Portland Monthly-branded landing page, where the magazine could sell more ads in addition to the ones it sells monthly in print

A: How does Nozzl differentiate itself from Eqentia, OpenCalais, and Evri?

SW: Our business model is quite different from any of these, particularly since we emphasize mobile delivery of advertising. Basically, our business model calls for us to be a white-label solution for newspapers and TV stations that want to provide not only their own content but also aggregated content and public records that reside in databases in the deep web, where they are invisible to search engines. Eqentia, for now, has a limited number of topics to choose from, and most are tech-oriented. Evri is a cool site, although I like Kosmix better. But both Evri and Kosmix tend to be encyclopedic rather than real-time. If you unspooled our content from real-time, took out the filters and geo-tagging, and made a Nozzl Media-branded website out of it, it would probably resemble Evri or Kosmix in content. But that’s not what we’re trying to do.

As for OpenCalais, we think it’s awesome and are using it to help create metadata for our content.