Increasingly, the newsroom is perceived as the more innovative and experimental part of the news industry. This appears truer in newspapers and Web sites than elsewhere. But still it represents a significant shift in the conversation. A decade ago, the newsroom was often regarded as the root of journalism’s disconnection from the public and its sagging reputation. “I think we may need to just blow up the culture of the newsroom,” one of the country’s more respected editors told a private gathering of industry leaders in 1997. Now the business side has begun to be identified as the problem area, the place where people are having the most difficulty changing. “My middle management in advertising and distribution is where I see the deer-in-the-headlights look,” one publisher recently told us. “Advertising doesn’t know how to start to cope,” said a major industry trade association leader. A survey of journalists from different media (being released with this year’s report) reinforces this sense. Majorities think such things as journalists writing blogs, the ranking of stories on their Web sites, citizens posting comments or ranking stories, even citizen news sites, are making journalism better — a perspective hard to imagine even a few years ago. These new technologies are seen as less a threat to values or a demand on time than a way to reconnect with audiences. News people also are less anxious about credibility, the focus of concern a few years ago. Their worries now are about money.

The state of the American news media in 2008 is more troubled than a year ago.

Here are highlights from the introduction (I will have more over the next couple of days):

• Even with so many new sources, more people now consume what old media newsrooms produce, particularly from print, than before. Online, for instance, the top 10 news Web sites, drawing mostly from old brands, are more of an oligarchy, commanding a larger share of audience, than in the legacy media. The verdict on citizen media for now suggests limitations. And research shows blogs and public affairs Web sites attract a smaller audience than expected and are produced by people with even more elite backgrounds than journalists. 
• …it appears the biggest problem facing traditional media has less to do with where people get information than how to pay for it — the emerging reality that advertising isn’t migrating online with the consumer. The crisis in journalism, in other words, may not strictly be loss of audience. It may, more fundamentally, be the decoupling of news and advertising.
• …their basic challenge: somehow they must reinvent their profession and their business model at the same time they are cutting back on their reporting and resources.

Here is an AP Story about the report, a Wired story,  a CNet News.com story and a PC World blog.

Of course, this reaffirms that our Representative Journalism trial at Locally Grown in Northfield, Minnesota is indeed extremely important.