Mainstream consumer media is, it is agreed, in trouble. The idea of paying for one or two newspapers a day is now confined, it seems, to quaintly old-fashioned types who boast of their ignorance of the Internet, or business who actually need the information in the pages of the Financial Times and the Wall Street Journal.

Wire services’ content is processed so fast by subscribers that one can barely spot the time difference. Local newspapers are seeing their stock in trade diminished. When one’s entire life is catalogued on Facebook and Flickr, there’s little thrill in having your picture in the local paper, or indeed huge necessity in publishing births, deaths and marriages. And why place a classified ad in a newspaper, when we have eBay and Gumtree?

The solution? Some, such as “Wired” magazine editor-in-chief Chris Anderson, would suggest simply giving things away. Anderson’s new book, “Free: The Future of a Radical Price” is available for free from the web until 1 August, while the hardback edition will be sold, at a price, in shops and on Amazon.

The idea, Anderson tells the Los Angeles Times is that some of those who download for free will also buy the book, if they are sufficiently impressed, of course. It’s a principle that has already been seen at work in the music world, where Radiohead released ‘In Rainbows’ freely on the web, and later released the album to shops, without any noticeable decline in sales.

But can this model work for news, long term? Books and songs are thing we accumulate, collect and return to. Professionals, academics and institutions aside, very few people retain newspaper articles in any way. Yesterday’s news tends to be precisely that, condemned, at best, to the recycling bin. Online, trends tend to move so fast that one could seriously question Chris Anderson’s ‘Long Tail’ theory.

Old news articles’ major purpose now seems to be for cutting and pasting into online arguments on forums and messageboards, useful for those engaged in debate, but perhaps not so much for anyone wishing to create revenue from content.

Some have put forward the idea that governments could fund local and national media to a much greater extent. But while the continued high reputation of the BBC shows that state ownership is not necessarily a bad thing, but in the UK there are already fears that local government funded media, such as freesheets and online TV stations, all too quickly become nothing more than propaganda for the leading party in the council chamber.

And internationally, while government-funded media may be relatively trustworthy in liberal democracies, there are far too many examples of state-run media in less free countries about the capability of reporters to stray from the party line, and governments have proved adept at manipulating media, even to the point of slowing Internet connections — the 21st century equivalent of smashing the printing presses.

Independent media needs independent funding. But how will this be done, in the age of free? Is it too late to ask people to pay for news online?

When searching for news and checking facts reporters often have to bend the rules and possibly break the law. But through its purchase of confidential mobile phone messages the “News of the World” has blackened the reputation of British journalism.

In a true democracy journalists have to be free to investigate without the constant fear of falling foul of the state or of being hounded by the police and the courts. Indeed principled journalists are ready to go to jail rather than reveal their sources.

But there is a huge difference between a justified breach of personal privacy in support of investigative journalism and a blatant fishing trip for private and confidential information.

From what is already known about the hacking into mobile phone messages of Prince William and others – for which a “News of the World” editor was sent to jail — it is clear that this was a calculated, commercially driven operation that was not only in breach of the law but an affront to established journalistic standards.

So great is the competition for exclusive stories that increasingly British newspapers and magazines have had fewer and fewer scruples when it comes to purchasing confidential information, whether it was leaked, stolen or gained through unauthorised access.

For example, every week the “Sun” and the “News of the World” offer their readers cash in return for exclusive stories and pictures. When there is money on offer, the temptation can be too great.

There are numerous cases where some of those who were responsible for safeguarding confidential information and data have abused their position. Police officers, tax inspectors, bank staff and a host of other workers who gave access to personal and private data have been accused of passing on information to journalists.

Advances in technology have facilitated this trade and the opportunities multiply: incriminating footage on CCTV tapes find a ready market and so do pictures of notorious prisoners taken on mobile phones.

British newspapers are in the dock because the purchase of information is now so commonplace. But whatever the reservations of some journalists, the Daily Telegraph has demonstrated – with its disclosures about the abuse of MPs’ expenses – that even when confidential information has been purloined and then sold, there is a public interest defence.

What added justification to the purchase by the “Daily Telegraph” of the misappropriated disc from the House of Commons fees office was that MPs had changed the law on Freedom of Information in order to prevent the data from being published.

No such extenuating circumstances apply to the “News of the World”: by encouraging and condoning hacking into mobile phone messages and then by acquiescing at the sale of that information to the highest bidder, the “News of the World” shamed the good name of investigative journalism.

Have Your Say: Tabloid trickery versus the right to know

Despite the report's obvious conclusion, it's worth reading for Puchalla's analysis of the cost structure that newspapers deal with. Here's an excerpt from the press release announcing the report:

Currently, a structural disconnect exists in the newspaper industry's cost structure. Just 14% of cash operating costs, on average, are devoted to content creation -- the primary value creation activity -- while about 70% of costs support the print distribution model and corporate functions. The remaining 16% of cash operating costs relate to advertising sales -- another critical task that drives the majority of newspapers' revenue. The overall imbalance limits the industry's flexibility to overcome competitive threats. ...

Most newspaper companies have moved only slowly away from in-house print production and distribution, said Moody's. Thus, high operating leverage for the industry remains, and is creating intense pressure on cash flow as revenue declines.

"Ultimately, we expect the industry will need to reverse the vertical integration strategy through cross-industry collaboration and outsourcing print production and distribution processes," said Puchalla. "Although newspapers may lose some of their in-house control over press time, they would also release resources to beef up investment in content and technology."

While Moody's does not anticipate a widespread shift by issuers to an online-only business model as the revenue loss is too significant at this point, such a change would meaningfully lower operating costs. Reducing the frequency of print editions is a hybrid approach that may result in cost savings while preserving newspapers' value-added service for advertisers, said Puchalla.

The upshot? Newspapers must "monetize" their online content (can we think up a real English word instead of "monetize?") at the same level as print and keep cutting costs, or else their credit ratings will suffer and more of them will shutdown.

This seems to leave managers with only one way to stay in business for now. If you want your credit rating not to fall further, lay off a few hundred or thousand more employees and make sure the newspaper features a bunch of under-edited news, lame stories and mostly wire copy. Repeat process as often as possible until shareholders and bondholders have a chance to cash out. Then look for another job, maybe as a McKinsey-style efficiency consultant.

(Photo: Reuters)

There’s nothing like a disease outbreak to highlight the value of the media in alerting and informing the public in the face of an emergency.

There’s also nothing like it to bring out some of our more excessive behavior, essentially shouting “Run for your lives! (but, whatever you do, stay tuned, keep reading the website and don't forget to buy the paper!).”

An outbreak of a form of influenza, which was known as swine flu before the World Health Organization changed the name, has killed scores in Mexico and infected others in the United States, Canada, Europe and New Zealand. It's already having an effect on markets and travel plans, in addition to the obvious impact on public health.

The impact on markets could become more significant in time, but the impact on the media was practically immediate.

Cable television programmers went into crisis mode and a look at newspaper front pages and website home pages around the world showed a range of responses, from the almost hysterical to the concerned and more measured.

• In the New York Daily News: “SWINE FLU SPREADS!” (though it was played below a sports story on the New York Yankees losing to the Boston Red Sox).
• In the New York Post: “HOG WILD!” (also playing second to the Yankees' humiliation, but illustrated with a pig sucking on a thermometer).
• In The Japan Times (using a Reuters story): "Swine flu in Mexico sparks global panic"
• In the South China Morning Post (which certainly has experience in covering bird flu and SARS): “Asia on high alert for swine flu as airports step up checks.”
• In The Guardian: “Swine flu: call for global action as outbreak spreads.”
• In the Toronto Sun: "CALM URGED AS FLU FEARS GROW."

Later Monday, after the European Union health commissioner advised Europeans to postpone nonessential travel to the United States and Mexico, The New York Times led its website with “Europe Warned on U.S. Travel,” with a deck reflecting transatlantic disagreement, “Flu Advisory Unwarranted, C.D.C. Says.”

The BBC website focused on the confirmation of flu cases in the UK, with extensive Q&A's on the origins of the disease and how it spreads and contributions from readers who were dealing with disease (some of them medical professionals in Mexico).

Big, bad-news stories can mean surges in audiences for media outlets and they certainly raise the adrenalin level of editors and reporters. They offer the temptation to go to excess, but they also offer the opportunity for us be of priceless service to our customers, clients and readers.

The question for me is how we in the media make sure we report accurately and informatively on the story and its impact on the markets and consumers’ lives without minimizing and without sensationalizing it.

"This is the type of story where our goal to stay factual and keep perspective is essential to uphold," says Reuters Editor-in-Chief David Schlesinger. "Our role is neither to trivialize nor to hype or scaremonger, but to describe accurately what is happening and put its implications in context."

Reuters has focused a great deal of resources—rightly, given our customers and audience—on the implications for the markets and the impact on the global economic downturn.

On Monday afternoon, Reuters.com was leading with “Will global recovery catch the flu?” atop a package of stories on possible market scenarios, the EU travel warning and factboxes on health precautions and industries being affected. One story noted, not surprisingly, that travel and tourism stocks were in turmoil.

Reuters.com also featured a special coverage page with the latest news, accompanied by a sober presentation of "Swine Flu Facts." There's even an invitation to receive updates on Twitter. Call me a skeptic on Twitter, but 140 characters won't do much to add context to the story. Still, no one ever said Twitter was about context and at least you can follow developments, whether or not you're near a computer.

My Reuters colleagues—especially the ones working bravely and tirelessly in Mexico—are succeeding in upholding the goal of staying factual and keeping events in perspective. It's our mission to provide the information and insight our audience and customers need to make intelligent decisions about their investments and their lives. As shown by the World Health Organization's decision Monday to raise the pandemic alert to Level 4, and later to Level 5, there's plenty of drama to report without adding to it.

The flu story is still in its early stages and it remains to be seen if this becomes one of the biggest stories of our time. Whatever happens, it won't hurt us all to take a deep breath now.