At first glance, one would think that the citizens of Naples, Florida, weren’t ready for the newfangled ideas of Rob Curley. Perched comfortably on the SunshineState’s GulfCoast about 100 miles west of Miami, Naples is a refuge for the rich and the retired. Steven Spielberg has a home there; so does former Miami football coach Don Shula. It’s the sort of town where driveways in the morning are more likely to sport The New York Times or The Wall Street Journal than the local rag. But with Mr. Curley’s help, the local rag is not surrendering.

With a circulation of 57,000 based in a town with 20,000 residents, the Naples Daily News is attempting what many larger newspapers in bigger markets have failed to do: Make smart use of the web. In January, 35-year-old Mr. Curley, the paper’s new media director since August, debuted Naplesnews.com. The revamped web site offers online video, podcasts, blogs, photo galleries, and news alerts about high school football games delivered to subscribers’ cell phones. It will soon offer nightly videocasts.

Naples Daily News

Newspapers have been resisting death by World Wide Web for a decade. Survival tactics reflect the era in which they are conceived. In 2000, media watchers viewed Time Warner’s $183-billion merger with AOL as a savvy bid to keep an old media company viable in a time of upheaval. It turns out that Time Warner didn’t need AOL quite as much as it thought. Talk to any newspaper executive today and it’s clear that the wild ride isn’t over. This time, newspapers are turning to the trappings of Web 2.0 to stay relevant. Old media and new media don’t have to compete. They can cooperate. “If the newspaper lands on the driveway at six, and there’s a double homicide at eight, the site can pick it up,” says Mr. Curley. “And you have to see how many times we reference newspaper stories on the podcasts.”

Time Warner

What new media brings to the equation is evident when you look at the numbers. Mr. Curley estimates that Naplesnews.com will easily bring in $5 million in 2006. His confidence is supported by earnings reports from larger companies in the news business.

Mr. Curley estimates that Naplesnews.com

Digital Cash Cow

While Knight Ridder’s sales rose 3.1 percent to $819.9 million in 2005, the digital division’s revenue jumped 54.5 percent to $164.5 million. Venture capitalists have started cottoning to the idea that there is money in news. New companies sprouting up to tag, community edit, or aggregate the news have drawn at least $45 million in venture capital over the past two years, according to VentureOne.

The small companies attracting venture capital—such as Digg, a technology news site where readers vote on stories, and the yet-to-be-unveiled Newsvine, which will allow readers to comment and blog about stories on the site—are looking to grab the readers that newspapers have lost. Newspapers are watching ad revenue migrate to the Internet. The current bugaboo of the newspaper trade, Craigslist, a popular community site that people use to barter, search, buy, and sell, is essentially a channel for classifieds on the web—classifieds that support conversations in real time and are for products and services that were never found in the local paper’s classified section.

“A lot of what’s on Craigslist today never existed in a paper,” says Ross Settles, vice president of strategy at Knight Ridder. “The beauty of what Craig has done is he’s actually brought a lot of the conversation up to a broader audience.”

The amount advertisers spend on print ads still outstrips what they spend online, but the latter is growing fast. Revenue for the online ad business was $10 billion in 2005, less than 15 percent of the nearly $74 billion spent on ads in print. But Piper Jaffray projects online ads will grow to $55 billion by 2010. The tiny Naples Daily News, which is owned by E.W. Scripps, isn’t the only old media company with its eye on that money.

Naples Daily News

The New York Times is making sure it isn’t left behind. The $3.4-billion company, best known for its flagship newspaper, owns 17 other newspapers (including The Boston Globe), nine TV stations, two radio stations, and 35 web sites, most of which are the Internet faces for corresponding traditional media properties. However, in February 2005, The Times did something bold. It bought About.com, which isn’t a news site, for $410 million.

The Boston Globe

About, with 30 million users per month, gives the company a lot more clout in the marketplace, says Martin Nisenholtz, senior vice president of digital operations at The Times. The acquisition got the company the top spot in the online news business with 34.3 million unique visitors last December, a 328 percent year-over-year increase. It also brought the company consumer-oriented content, which has the potential to get readers to stay longer on—and return to—a site.

“There is a spectrum of content creation on the Internet from traditional journalistic practices to user-generated content,” says Mr. Nisenholtz. “About is in the middle. It’s neither journalistic in nature, nor is it heavily edited—but it’s not user-generated. The content is written by very knowledgeable people called guides. It completes, in a real sense, the content creation processes we’ve had for many years.”

It’s About Revenue

But it’s not just about content. It’s about About’s lucrative revenue stream from online ads. About CEO Scott Meyer says the company has a range of advertisers. It also has revenue from e-commerce as well as the source many web publishers turn to—AdSense, which brings in money every time readers click on the ads Google serves up on its pages. And they’re all working together to push up About’s numbers. The Times says revenue at the site grew 51 percent in the most recent quarter.

While it’s easy to cite statistics charting the decline of the newspaper industry in the United States—The Los Angeles Times, for example, lost nearly 100,000 subscribers in 2004, the year it won five Pulitzer prizes—newspaper folk are figuring out new media fast, says Chris Tolles, vice president at Topix.net, a news aggregator. Mr. Tolles is in a position to know. Three old media companies, Knight Ridder, Tribune, and Gannet, bought 75 percent of Topix for an estimated $50 million in 2005.

It’s part of a spending spree the three companies have been on for the past few years. They also own CareerBuilder, a job board, ShopLocal, a web shopping services company, and Classified Ventures, an online classified ads company.

Unlike a podcast, say, such properties don’t mean much to the average newspaper reader. But they can be a lifesaver to the newspaper ad sales rep tasked with selling ads in a volatile market.

don’t mean much to the average newspaper

Mr. Tolles agrees. “Newspapers are not burying the problem. They see it clearly, but the issue is as they translate viewers from offline to online, the monetary model is still evolving.”

And that’s probably because media companies are still trying to figure out who their audience is. It isn’t the 20-somethings everyone expects it to be. The biggest chunk of online news readers are in the 35- to 44-year-old age group, according to a study from JupiterResearch. However, it’s the baby boomers who really pore over newspapers and magazines—and they also consumer more online news than the 18- to 24-year-old segment, according to the report.

according to a study from JupiterResearch.

Love and Hate

As in any period of transition, everyone’s still experimenting. Knight Ridder’s Kansas City Star, for example, has a project with Kansas City to provide local video and audio on the site. “It is an example of stuff we are doing that is trying to capture and stay abreast of new behavior—it’s exciting and scary at the same time,” says Knight Ridder’s Mr. Settles.

Kansas City Star

WashingtonPost.com recently saw the scary side, when it shut down one of more than two dozen blogs on its site in January. A column by ombudswoman Deborah Howell elicited a large enough number of personal attacks to overwhelm the site. But WashingtonPost.com has seen some love, too. It has provoked readers to gather on Yahoo Groups to discuss writers, columnists, and self-styled chatters like Gene Weingarten.

Yahoo

The Post lets readers discuss stories with the staff, but hasn’t gone the citizen journalism route. Instead, it has taken steps such as acquiring online magazine Slate from Microsoft in December 2004 to expand its audience. “That’s something we’re always looking at—looking to find new audiences,” says Jim Brady, the executive editor of WashingtonPost.com.

Microsoft

For a large company like WashingtonPost.com, acquisitions are a way to expand audiences as well as to buy functionality that could take a while to build in-house. “Right now, we’re looking for partnerships—the ability for citizens to upload photo and video, and to upgrade video player capabilities,” says Mr. Brady.

But there are many newspaper sites around the country encouraging their readers to blog, as they learn about the power of community—not just in the abstract, but practically, too. “Blogging’s a great way to enhance coverage,” says Jim Debth, Internet general manager at the Austin-American Statesman in Texas. “News sites can get coverage from people going to events for which they don’t have manpower.”

Austin-American Statesman

Local papers have obviously figured this out—and they’re encouraging citizen journalism the most. They also have less to lose, as they don’t have as many eyes on them as national papers like The Washington Post and The New York Times, says Dave Panos, the CEO of Pluck, a company that helps sites with citizen journalism, where readers can contribute with stories and comments of their own.

The New York Times

One of the sites Pluck has worked with is the one for the Austin-American Statesman. The paper puts up blogs written by citizen journalists right next to blogs written by paid staff. It lets anyone create a blog, and shows the ones it deems the most relevant.

Austin-American Statesman

“You’ll find increasingly in 2006, that big and small publishers get the MySpace phenomenon,” says Mr. Panos, referring to the popular social networking site.

As publishers try to figure out where to invest their dollars in order to get the most returns, they need to realize that both old and new media need to be looked at and managed as separate entities, says Kip Cassino, the vice president of research at Borrell Associates, a media consulting firm.

“They should be congruent with each other,” says Mr. Cassino. “But they shouldn’t be the same. If they’re the same [content], that’s cannibalization. They should be supportive. It should be another way of expressing a brand.”

Peaceful Coexistence

Both print and online media will continue to exist, he adds. Papers will change radically, but will stay. Studies show that people still like the portability of paper. And print publications certainly have a certain degree of credibility; if attached to a site, they can boost its brand. Some of it is just plain economics. Certain forms of magazine advertising are just not convertible to the web, points out Mr. Cassino, and people seem to be waking up to that. Google, which thrives on online ads, launched a program in late 2005 to sell ads in print publications.

There are some places even Google can’t —or won’t bother to—go. Mr. Curley was at one such place before he landed on the balmy shores of Naples, Florida. Retrace his steps back to Lawrence, Kansas, and the Lawrence World Journal (circulation 20,000). On the day after Super Bowl XL, Dan Simons, the paper’s director of electronic media (and the publisher’s son), wasn’t talking about the big game. He was talking about a KansasUniversity basketball showdown. A son of Kansas, Mr. Curley understands provincialism and knows how to harness it to the web, says Mr. Simons, who employed Mr. Curley from 2003 to 2005. “Google can’t out-Lawrence us,” says Mr. Simon.

On the Lawrence World Journal web site, elementary school softball players are treated like major leaguers. Parents can sign up to have stats and scores from high school games sent to their cell phones. On a recent afternoon, the lead story under a tab labeled “Game” recounted the action in a third-grade basketball match: “After getting the opening tip, Gator Jay Dineen took the ball to the hoop; unfortunately it was at the Yellow Jackets’ end of the court.” Now that’s local news.

Lawrence World JournalMr. Curley is trying to rework his magic in a different community with different interests. It shouldn’t be hard. Southwest Florida boasts more golf courses per capita than anywhere else in the world. Just cover the local duffers like the PGA beat writers do Tiger Woods, and traffic will soar.