To download the complete version of "The Story So Far: What We Know About the Business of Digital Journalism," a new report on digital news economics from the Columbia University Graduate School of Journalism, click here.

Forbes also encourages its largest advertisers to contribute content directly to the magazine and the site as part of their advertising buy. The companies are given tools to publish content—text, video, and photos—on their own page on the site. This might startle journalists who expect strict separation between the editorial and business sides, but DVorkin sees this effort as a logical way to bring in advertisers who know they can create digital content elsewhere, through websites and e-mail. Labeling the material as coming from advertisers helps inoculate the company from violating the church-state divide, DVorkin says, adding that Forbes’s approach allows marketers not to be confined in the “ghetto” of freelance-written advertorial. The advertisers’ material is not edited by Forbes and appears online and in the magazine as “Forbes AdVoice.” (If it’s for the print edition, DVorkin reads it for tone, but says he does no more than that.) The print AdVoice column—limited to one per issue—appears in the table of contents and may run next to a related story. An online column is featured near relevant editorial content.

Giving advertisers direct access to an audience without previously approving the message is a big departure for media companies. The American Society of Magazine Editors’ standards, revised in January 2011, are strict about separating ad content visually from editorial content, but they are silent on the access issue.

Eric Hippeau, who has gone back to being a venture capitalist, calls this approach “turning your customers into publishers.” Advertisers, he says, will not only create content that will increase traffic, but this will represent “a great diversification of revenues” away from advertising sold by the page view. Before Hippeau left the HuffPost, the company had just launched a program that charged flat fees and gave advertisers the opportunity to “have a conversation” with the site’s audience through posts and responses. He believes that once companies start interacting with the audience in this environment, they will be hooked. “Once a brand starts that process, they are not going to stop. This is a great benefit to the media companies.”

Managing digital journalism properties often means stepping away from roles and job descriptions that were found in traditional operations. At AOL, executives have decided that content areas such as business or technology should become their own business units, or “towns” in the AOL patois. And editors are increasingly responsible for determining the revenue potential of stories.

An explicit rendition of AOL’s strategy can be found in a fifty-seven-page internal PowerPoint called “The AOL Way,” which was leaked to Business Insider in February 2011. The handbook outlines AOL’s plans to lower the cost of creating content while increasing revenue, with explicit targets; it was written a few weeks before AOL announced its deal to buy The Huffington Post.

The company’s rule of thumb is that the cost of acquiring a story should be no more than half the amount of ad revenue expected to come from that story. An editor who wants to pay for a premium freelancer must also estimate the size of the audience for the assignment—in other words, the editor must cost-justify every story. In the chart below, the company shows average costs and revenue by story type. The first column lists the department or source of the story, and the next column states the average cost of these stories. These figures are then matched with the “eCPM”—or effective cost (to advertisers) per thousand page views—and from that, AOL estimates the number of page views needed to break even on that story.

Bill Grueskin, Ava Seave, and Lucas Graves are the co-authors of "The Story so Far: What We Know About the Business of Digital Journalism." Grueskin is dean of academic affairs at the Columbia University Graduate School of Journalism. Seave is a principal of Quantum Media, a NYC-based consulting firm. Graves is a PhD candidate in communications at Columbia University. For further biographical details, click here.