Report from Newspaper Assn. of Am. Convention

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Newspapers: Can things get any worse?

Google proposes new model and exec suggests circulation cut, but gloom pervades annual confab.

SAN DIEGO (Fortune) -- As one might expect, the gathering of the Newspaper Association of America annual convention was a somber and lightly ­attended affair, relatively speaking. Highlights, if you could call them that, included bold talk of reinvention and threats from the Associated Press to clamp down on online pilfering of its content.

The overall vibe was of an industry that failed to stay ahead of technological change (everything from Craigslist to news aggregators) and has been struggling with the economy like everyone else.

The most interesting session -- after from Google (GOOG, Fortune 500) CEO Eric Schmidt's wrap-up Speech -- was a presentation from executives of two newspapers that have just undergone wrenching format changes. One, the East Valley Tribune in the Phoenix area, in January converted from a seven-day paid newspapers to a four times a week free paper with an expanded web presence. The paper, owned by Freedom Communications, cut about 40% if its employees in the process.

Even more dramatic was the conversion of the Detroit Free Press and Detroit News -­- operated under a joint operating agreement between Gannett and Medianews. Two Mondays ago, the papers re-launched and began being delivered only three days a week, on Thursday, Fridays and Sundays, with stripped-down "express" versions for sale the other days.

Dave Hunke, the CEO of the Detroit Media Partnership, said close to 85% of the papers' advertising revenue -- largely through pre-prints like coupons and circulars -- has been generated on those three delivered days. Hunke ran through a litany of challenges in the Detroit market, including skyrocketing unemployment, rampant foreclosures, and a market where 47% of adults are functionally illiterate and "we send more children to prison than to college. So we've got quite a problem on our hands." Neither paper was able to say whether their radical changes were working yet