What Happens When Your Local Paper Goes Online-Only? It Loses Most of Its Staff.

Conventional wisdom is that if today’s newspapers want to survive, they’re going to have to ditch their printing presses, delivery trucks, and most of their staff, and learn to do more with less in an online-only world.

OK. But exactly how much less?

I’ve been asking Mark Josephson that question for months, and now he has an answer. Josephson, the CEO of local news platform Outside.in, figures the local, online-only newspaper of tomorrow, for a decent-sized city, will have a staff of 20 people. That’s 20 people, period. Perhaps six of them will be “news gatherers.”

Josephson was kind enough to model his future newspaper in a spreadsheet for me, and I’ll get to that in a minute.

But first, the context. Josephson’s opinion is worth noting because his company is supposed to play a role in creating said future newspaper/news site.

The pitch: Outside.in wants to help local news sites by supplying them with a river of extra content created by local bloggers, Twitterers and lots of people who don’t even think of themselves as content creators, like people who post real estate listings. The local site is supposed to aggregate and filter the stuff and sell ads on it. The people supplying the content get more exposure via links from the bigger site.

The three-year-old company has just rolled out a new tool that’s supposed to make all of this easier for local publishers, which could be a newspaper site but doesn’t have to be. For instance, the company has tested its “Outside.in for Publishers” offering with sites run by local TV stations. You can read more about it here.

Now back to Josephson’s news site of the future: He imagines that the tiny editorial staff of the model newspaper produces an extraordinary number of page views–40 million per month, in this example–and then augments it with twice as many page views from a third-party network (which could be, but doesn’t have to be, supplied by Outside.in).

A sales force of a dozen people sells ads for both buckets of inventory, and uses ad networks to fill in remnant space they don’t sell. Net result: A very healthy 43 percent operating margin, much better than the 27 percent margins the newspaper industry enjoyed from 2000 through 2007, before the business imploded.

Here’s what the math looks like: I’ve broken up the P&L into three sections, and clicking on each of them will enlarge the image. Or you can view the whole thing as a Google document here.

Josephson stresses that his model is a starting point, and he’s happy to tweak any of the inputs.

If you think his assumptions about ad rates are too aggressive (and some local publishers I’ve talked have given me that feedback), you could knock them down. Same thing with page view goals. Or if you decided you wanted to run the business at break-even instead of trying to make a profit, you could do that too, and see how many more people you could afford to hire.

But no matter how you fiddle with the numbers, there’s no way that Josephson’s model gets you anywhere close to old newspaper staffing levels, whereby a paper like the Seattle Post-Intelligencer employed 150 people on the editorial side alone.

But those staffing levels don’t work anymore, which is why Hearst shut down the paper and replaced it with the online-only SeattlePI.com, which has a 20-person edit staff, earlier this year.

So Josephson’s numbers really become an ink-blot test: Do you think they spell doom for news sites in the Web age or an optimistic solution that lets them survive? Let me know in comments below.