The year has started out with more hand wringing about the predictable (and predicted), but very dire, economic situation of newspapers, particularly in the US. News organisations’ belief that quality will be their saviour is usually the result of projections of their own information consumption patterns and standards for quality on their audience, motivations that their audience may or may not share.

Newspapers are not maintaining the audiences necessary to support their current costs. Steve Yelvington just wrote this post about the bad news for newspapers and rays of hope, which is a comment that he left on Jeff Jarvis’ list of newspaper bad news from 2008:

At the core, it’s not an advertising problem. Local businesses still need to reach potential local customers, and they’re willing (although certainly not eager) to pay for results.

It’s primarily a failure to attract and retain a commercially relevant audience that’s breaking the newspaper business model.

I agree with Steve that multi-platform, multi-revenue stream businesses are necessary to survive, and many publications are in the process of the wrenching change required to achieve that.

But there is another, equally important, way to make the necessary change for news organisations looking to survive in this very challenging economic environment, and that is to disrupt their own costs (and I don’t mean cutting head count even further). While some blame digital technology and the internet for the death of newspapers, I would argue that embracing disruptive digital technology could lead to substantial cost savings.

Off the shelf, pro-sumer gear straddles the line between consumer and professional kit but costs substantially less. Open source software can extend the life of aging computers in the office, can run the servers and handle most CMS functions. Open-source content-management systems might not be ready for the largest sites, but most small- to medium-sized news sites could easily use Drupal or WordPress for their entire site. In the hands of a competent contractor with the occasional tweaking from a third-party vendor, the site will easily cope with moderate traffic.

I even think there is a possible radical model where there is a small office that handles core administrative and sales functions but the journalists are by and large dispersed, tele-commuting as much as possible. They would work as close to the story and their sources as possible and file remotely. They can use Skype or IM to communicate with their managers, and Twitter-like service Yammer to keep in touch with each other and help prevent a sense of isolation. Maybe I’m advocating this because as a journalist who worked in a foreign bureau and often out in the field for several years, this type of working seems natural to me.

A lot of successful digital content businesses already work on this model, and I think that we’ll see more competition in this space from within the industry. In this downturn, digital outcasts made redundant by traditional news organisations will start their own boot-strapped news organisations, potentially pushing many of their former employers to the wall, unless the incumbents radically, not incrementally, remake themselves. It is only a matter of time. The digital disrupters will run very lean, digitally-focused businesses with multiple revenue streams, as Steve suggests.

For a model of the thinking that will drive this type of business, look to this post by Eric Ries HOW TO: Raise Money in a Down Economy on Mashable. He serves as a venture advisor for Kleiner Perkins Caufield & Byers and talks about trying to raise money for a venture in 2004, when scepticism remained after the dot.com crash. His advice is:

The most important thing you can do to improve your chances of raising money in a down economy is to build a great company. A great startup is more than just a miniature version of a great large company. All of its process should be focused on innovating and learning. Today, it’s possible to use a combination of free and open source software, community-generated content, and agile software development to bring new products to market with extremely low cost.

Add professionally created and curated content and apply this model for an innovation-led business, and you’ll find a way out of this perfect storm affecting the newspaper industry. It’s eerily similar to the Newspaper Next project recommendations for good reason.

However, I ask those of you toiling in the industry right now. How close is this disruptive way of doing business to the environment at your news organisation?

• Is your company focused on learning and innovation?
• To what extent is your company using free and open-source software?
• Is your company focused on delivering information while cutting costs?
• Is your company looking for new ways to partner with and build new relationships with your audience?

Cutting costs doesn’t just have to happen through job cuts. Companies need empower their people to work smarter, spend money more wisely, and focus on doing more with less. There are many ways to achieve this, and I think we’ll see experimentation and innovation this year as the economic crisis deepens. Necessity will be the mother of re-invention.