Back? OK. For extra credit, here’s a condensed and edited–but still very long!–version of a chat I had yesterday with Times digital czar Martin Nisenholtz. I’m not convinced Nisenholtz is convinced that the plan the Times rolled out yesterday is the best possible plan. But if that’s the case, he certainly didn’t let on.

The big takeaways:

• The Times is limiting referrals from Google because it can. Specifically, it’s taking advantage of Google’s “first click free” program. (Worth noting that the 5-a-day limit gives you another 150 articles or so a month above the initial 20-per-month cut off. So it’s not particularly punitive.)
• The Times is charging more for access to its iPad app than for smartphone apps, because it thinks it can. iPad users spend more time with the paper, and the Times thinks people who spend more time with the paper will pay more for it.
• The Times only expects a small sliver of its Web readers to become paying users. Niseholtz doesn’t exactly say this out loud, but if you piece together his commentary, that’s what he’s saying. He doesn’t expect the “vast majority” of readers to ever see the paywall, so what he’s really trying to do is convert a percentage of the remaining minority. But if you’ve read Doctor’s piece, then you already know this.
• The Times isn’t trying to price its digital subscriptions in a way that protects its print subscription business. On the one hand, this makes sense–after all, the subscription plans are aimed at converting heavy users of its Web site who aren’t already print subscribers. On the other hand, given that print subscribers remain the Times’ most valuable asset, this one seems hard to reconcile.

Peter Kafka: Just to be clear, when the Times says non-subscribers can read stories above their 20-per-month limit if they come from referring links, you’re not just talking about Twitter and Facebook, but any link from any site, right?

Martin Nisenholtz: That’s correct.

Kafka: It could be the Journal. It could be a blog, it could be the Financial Times, anything on the Web, right?

Nisenholtz: Yes. The only other thing is that Google has a methodology where they can limit the number of inbound links per day, and we intend to take them up on it.

Kafka: So that’s Google doing the actual gating, not you?

Nisenholtz: Right. They had made this feature available prior to us going pay, so it’s not like it was inspired by us per se. We’re just taking advantage of it.

Kafka: Why limit Google’s links, but not any other site’s?

Nisenholtz: I think the majority of people are honest and care about great journalism and the New York Times. When you look at the research that we’ve done, tons of people actually say, “Jeez, we’ve felt sort of guilty getting this for free all these years. We actually want to step up and pay, because we know we’re supporting a valuable institution.” At the same time we want to make sure that we’re not being gamed, to the extent that we can be.

Kafka: But if you really do want to game the wall, you’ll be able to do it. You could could go through Microsoft’s Bing, for instance.

Nisenholtz: We’re obviously going to be vigilant over the next couple of months, in looking at the ways that people are doing that.

Kafka: I’m surprised to hear you say you’re going to spend calories trying to make sure that people don’t abuse the system. I would think you have other things to do.

Nisenholtz: I don’t think we’re going to spend enormous resources to go tracking people down. But at the same time, we’re going to obviously work to see where the source of these workarounds are, and work to close them off, if they become substantive enough.

But in looking at the research that we did, we expect [paywall jumpers] to be a very significant minority, a small, small number of people. When you look at your Twitter feed, based on the people you follow, it probably seems like it’s looming very large. But in the scheme of things, among people who don’t live in Silicon Valley or don’t cover it, the vast majority of people do not have this on their minds.

Kafka: What does research say about the total number of subscribers you can expect?

Nisenholtz: Obviously we haven’t released that. We are very, very confident, based on three rounds of research with three separate groups of loyalists, three separate vendors, over three separate time periods, that the conversion rates among that group are going to be sufficiently high to layer in the second revenue stream.

But I’d just remind you that we’re still very much in the advertising busienss. It’s our core business. We don’t expect the vast majority of our users to see the paywall, and we expect to remain a very very large player on the web. The conversion rates are built off of folks who are fairly heavy users.

Kafka: Why charge different prices depending on the screen–laptop, smartphone, iPad, etc–your subscribers use to read the Times? Netflix charges one price and that seems to work well for them.

Nisenholtz: We built the pricing architecture off of the research as well. We basically found a greater willingness to pay among iPad users. We see iPad app users spending much much more time with our brand than either Web users or smartphone users. So the more you use it, the more you value it.

This pricing research was very clear from a consumer perspective. It was not built off of what we charge for the paper, or what we think we desrve, or anything like that. It’s what our loyal users said they would be willing to pay.

Kafka: For first-time subscribers, at least, you can get more for your money by buying a print subscription than a digital-only offer. I assume that’s intentional.

Nisenholtz: Not really, no. I don’t think anybody ever had a discussion of favoring print over the Web. This research was done on digital loyalists. Obviously, the print subscribers are very, very valuable to the franchise, but I can’t remember a single disucssion where we linked the digital price point to our print subscriptions.

Kafka: You announced this in January of 2010, and now you’re going to launch it in March 2011. I know you spent time researching your customers, but what else have you been doing?

Nisenholtz: If we were just rolling out a web-only digital subscription to the Times website it would have been a 3-month project. But you have to remember that we were very intent on trying to create the kind of customer view that took customers in one setting–for whatever they had–across platforms.

What that means is we had to tie in a legacy circulation management system, as well as a digital system, as well as our legacy customer systems. You have these big iron legacy systems that have to be joined with web systems.

For us, the 14 months didn’t feel like a particularly long time. We were starting from a standing start.

Kafka: When Apple announced its subscription plans last month, you guys said, essentially, that it wasn’t going to affect your plans. And now you’re working within Apple’s new rules. Did you know about them in advance?

Nisenholtz: No. We had heard the same rumors that you had, so we knew what the rumors were. But we heard about Apple’s plans pretty much at the same time as everyone else.

———-

Again, the Q&A above is an edited excerpt of our chat. As an experiment, I’m embedding our entire 21-minute conversation here, just to see if anyone derives any value out of it. I can’t advise listening to it, as the sound quality is sub-optimal (it’s recorded via a BlackBerry’s speaker phone onto a digital recorder) and it’s also, um, rambling. But if you’ve got a weird desire to see/hear some Web content sausage being made, have at it.

[UPDATE: The Times argues, gently and politely, that it would have been nice had I told Nisenholtz in advance that I intended to publish the audio of our conversation. I think they're right, so I've taken down the track.]

Instead, she says, she prefers to think of the publisher as as “multiplatform” brand. That’s the Web, the iPhone, the iPad, the iPad competitors we haven’t seen yet, etc.

Okay. Except that Robinson spent much of her remaining time this morning underscoring just how important the newspaper–as in, ink and paper–business is to the New York Times (NYT).

On multiple occasions, Robinson pointed out that the print business, which accounts for about 75 percent of the paper’s ad revenues (that number would be higher for overall revenue), isn’t going away. That seems obvious but for some reason needs repeating: “It’s very clear that our print business is a very profitable business, and we will be printing the New York Times for many many years to come.”

And Robinson repeatedly stressed that the Times’ upcoming digital paywall plans will focus intently on hanging on to print subscribers, and that valuable, direct relationship they have with the publisher. “We’re continuing to look at how we marry print and digital,” etc. etc.

What about those plans? Stay tuned, Robinson said–the paper will announce pricing and bundling options later this year. But as we’ve previously surmised, the pay plans won’t be specific to the Web, but will also include options for the paid iPad app the Times is working on, and perhaps for other devices.

Meanwhile, asked to comment about the Times’ relationship with Apple (AAPL) and its interest in an Apple-run newspaper subscription service, digital head Martin Nisenholtz did a masterful job of not saying anything conclusive. He did, however, note that:

• The Times’ free iPad app is a big hit with advertisers, and that “we have no reason to be working iAds”–Apple’s in-house ad program–for that app. The Times does use iAds for its iPhone app, though. (I’ve found them to be quite buggy, by the way.)
• Even though the Times sent developers to Cupertino prior to the iPad launch, and Nisenholtz got stage time with Steve Jobs during the launch event, the paper “[doesn't] align ourselves” with any particular platform. And they’re very excited to see the new tablets running on Google (GOOG) and Microsoft (MSFT) software.

But for a certain slice of the advertising technology world, there’s no debate: They believe advertisers and publishers are going to consume increasing amounts of personal data to make advertising more targeted and more effective. End of story.

Add the investors betting on eXelate into that group. Carmel Ventures and Menlo Ventures are putting $15 million into the company, which brags that it runs the “the first and largest open marketplace for audience targeting data.” The Israeli company had previously raised $4 million.

Data marketplaces like eXelate, Blue Kai and Magnetic are supposed to help advertisers and publishers fine-tune their products; they work hand-in-hand with display advertising exchanges like Google’s (GOOG) AdX.

But while some parts of the ad technology ecosystem appear threatening to the status quo, eXelate has made a point of reaching out the establishment: The company recently added New York Times (NYT) digital boss Martin Nisenholtz and Interpublic Group (IPG) venture head Matt Freeman to its board of directors.

Let’s see if the paper’s executives can turn that around during their earnings call. We’ll also be looking for any updates the Times can provide on its pay wall plans, and, of course, its role in the launch of the Apple iPad.

UPDATE: As I noted below, though the New York Times (NYT) was a featured partner at the launch of Apple’s (AAPL) iPad, even sending a small team to Cupertino to create an app a few weeks before the event, there was zero discussion about iPads today.

CEO Janet Robinson made a generalized comment about the growth of the Times’s mobile distribution, but that was it. And not a single analyst showed any interest in this stuff–a good reminder that neither the Times nor Wall Street expects the iPad to be material to the company’s business for quite some time.

Liveblog

On the call: CEO Janet Robinson, CFO Jim Follo, Times Media Group boss Scott Heekin-Canedy, and Digital boss Martin Nisenholtz

In a preamble, CEO Robinson highlights cost-cutting, balance sheet repair, and asset sales (radio station, but not the Boston Globe; the company is still looking at selling its stake in the Boston Red Sox–the process is “complicated” and is “taking longer than anticipated”).

Robinson recaps the pay wall plan, metered approach, etc. Nothing new here so far.

The paper is waiting until 2011 to deploy the pay wall, she explains, because it wants to make “subscribing as smooth and easy as possible….It will take some time to build, deploy and test the best systems.”

Robinson offers a few revenue details, primarily a recap of the earnings release.

Ads by category: National ads down 12 percent, retail down 23 percent, classifieds down 27 percent.

News media online grew four percent, primarily from display advertising (the rest of online growth comes from About.com).

Print ad category decreases came from Hollywood, among others. Ad category increases: Print auto, health care, packaged goods.

Circulation revenue is up because of newsstand, price increases. The Times is benefiting from declines at other papers, because as local papers cut back, it is offering more info than ever. Robinson notes expansion by the paper into local news in the Chicago and San Francisco markets, adding that there are plans on going local in “several” other key markets

Time to brag about new mobile products and applications. The paper counted 75 million page views from mobile and apps in December, and the iPhone app has been downloaded three million times since launch.

Back to digital: Display ads are up, classifieds down; they improved “significantly” as Q4 progressed.

About.com is still the Times’s digital cash machine: Revenue is up 22 percent, and operating profit grew from $10 million to $18 million.

Overall, Internet businesses are up 10 percent and accounted for 15 percent of revenue for the quarter. Online advertising revenue accounted for 23 percent of ad revenue of the quarter.

“Limited” visibility for 2010, which is what’s upsetting The Street, supposedly. But the paper is still “realigning” its cost base.

CFO Jim Follo’s comments may not interest all readers except for this part: The Times is continuing to reduce headcount, he notes, which dropped by 18 percent in 2009. The company is also looking at the benefit structure for both employees and retirees. It froze that awesome supplemental retirement plan that pays certain retirees a very lucrative pension.

We’ve been benefiting from a drop in newsprint prices last couple years, Follo notes, though suppliers are trying to raise prices again, but there’s a supply glut, so we think they’ll have a tough time doing that.

No big capital spending projects are planned. [Presumably, the pay wall is not that expensive to build.]

[Aside: Interesting that NYT.com GM Denise Warren, who's normally on these calls, isn't on today's.]

Questions and Answers

Question: More color on advertising, please.

Scott Heekin-Canedy: We have some optimism, but advertisers are “guarded,” and ads are still bought–or retracted–at the last minute, as they were last year.

Tech, media, health care, and auto ad categories all look promising. The mix is “definitely different” from last year “when it seemed like every single category was down.” Now, many categories are showing “flat to significant growth.”

Question: Are you still optimistic that you can reach a deal on the Red Sox?

Robinson: “Yes we are.” Lots of due diligence, lots of different properties (stake in team, stadium, network, etc.).

Q: What are incremental costs of setting up a pay wall?

Robinson: “We feel this is an elegant solution,” but we want to wait the year and make sure we’re well prepared, etc. Again, integrating home delivery and digital is crucial.

Nisenholtz: Regarding cost, there will be a “modest operating cost” to deploy the tech. We’re hiring a “handful” of people to do that and deploying “modest” capital, but it’s not material.

[Apology: I missed a question on ad categories, though it seems to reprise the earlier question.]

Q: Can you give us a sense of additional cost-savings you can extract this year?

Follo: Nope.

Q: Will your headcount go down again in 2010?

Follo: Yes.

[Missed another question here.]

Next a question about the tax rate, which I can’t imagine anyone reading this cares about.

Q: Can you tell us more about January ad trends, i.e., how much is national vs. local?

Robinson: We won’t break that out (anymore).

Q: Was it materially better than Q4?

Robinson: She repeats her earlier comments from the release. “Very good performance” on the digital side of business. December was particularly good, but we’re not going to be more specific about January.

Heekin-Canedy: That said, we don’t think January is much of an indicator about the rest of the year, anyway. Different beast, not much connection between December [when people were dumping leftover dollars].

[There's a giant disconnect between analysts and the chattering classes here. If the latter ran the call, this would be about nothing but iPad, iPad, iPad. But we're 48 minutes in, and zilch so far. Which is a good reminder: No matter what launches with the tablet this year, this stuff isn't going to have a big impact on Big Media for quite some time.]

Q: Where is growth coming from at About.com?

Robinson: Both consumer packaged goods and display ads. We’ve upgraded the sales channel to go after display and that’s helped a lot.

Nisenholtz: Strong categories include CPC, travel, education and financial services. There’s also retail strength.

Q: Are CPGs new to About.com?

Nisenholtz: Yeah. Well, not exactly. It’s a big site, lots of reach. But we’ve updgraded the sales team and the increase there is part of the payoff. We reach a lot of moms. The Web site skews female.

Q: You may end up paying $60 million to $80 million back into the pension plan. When could that come? Q4?

Follo: Could be sooner than that. We’re in a good position regarding liquidity.

[The final question is about joint ventures that you don't care about.]

And that’s it for the call.

Liveblog

9:13 am PT: Quite a scene here this morning; the queue for media credentials is nearly as long as some of the iPhone 3G launch lines I saw a few years back. Moments ago, an Apple PR rep slipped through the doors of the Yerba Buena Center to ask that the press waiting outside take two big steps back. The last time that happened to me, I was at a Jesus Lizard show.

9:54 am: The doors open and the press enters the event hall. Initially, at least, the scene is pretty crazy. “This is like the subway in New York,” an attendee behind me jokes. More like the subway in Tokyo, I think to myself.

A Bob Dylan soundtrack plays as media and guests file in. It’s momentarily interrupted by a “please take your seats, our event is about to begin” announcement.

10:00 am: Interesting stage set-up today: Instead of an empty stage or a simple table, there are a black leather chair and side-table. Lights are dimming….

And Steve Jobs takes the stage to a standing ovation.

“We want to kick off 2010 by introducing a truly magical product, but first a few updates….A few weeks ago we sold our 250 millionth iPod…I didn’t want to let that moment pass without recognizing it.”

10:05 am: Jobs offers a quick overview of Apple’s retail operations and some of the new stores it has opened recently before moving on to the iTunes App Store. “A few weeks ago we announced that three billion applications had been downloaded from the App Store–that’s in 18 months…amazing.”
He notes, as he did in the company’s earnings release the other day, that Apple is now a $50 billion company.

Apple is a mobile devices company, says Jobs, “the largest mobile devices company in the world now. Larger than Sony’s mobile device business, larger than Samsung’s and, astonishingly, Nokia’s as well.”

10:07 am: A quick historical overview now. Jobs touches on the first PowerBook, introduced in 1991. He moves on to the MacBook and then the iPhone.

“All of us use laptops and smartphones, now. And the question has arisen lately: Is there room for a device in the middle?…We’ve pondered this question as well.”

This “middle” device, says Jobs, must be better at doing certain tasks than either the laptop or smartphone. If there’s going to be a third-device category, it must be better at browsing the Web, video, photos, music, etc.

“Some folks say this device is a netbook…. The problem is, netbooks aren’t better at anything.”

10:10 am: But we have something that is, says Jobs, “and it’s called the iPad.”

Photos of the device appear on the giant screens. Very thin. Very slick. “IPad offers the best Web browsing experience there is–way better than laptops.” There is no camera that I can see. That’s not going to go over well with folks hoping for a device that supports video iChat.

10:13 am: Further details: The “iPad is a dream to type on,” Jobs says, pointing out its life-sized onscreen keyboard. It’s also an awesome way to enjoy media. iTunes, iTunes University and YouTube HD support are built in.

10:14 am: Jobs sits down to demo the device: “Using this thing is remarkable. It’s so much more intimate and capable than the laptop.” He loads Safari and surfs over to the New York Times (NYT). The iPad loads quickly and Jobs is able to easily navigate the page, loading stories and zooming in on articles.

10:15 am: Demonstrating landscape and portrait now. “This device adapts to the way I want to use it.”

Definitely an impressive browsing experience. Fast and elegant.

Now, an overview of Mail. Also elegant. Nice split-screen presentation. Hit compose, and a nice onscreen keyboard pops up. Jobs types out a message to his colleagues at Apple. Seems relatively easy.

10:19 am: Moving on to iPad’s photo capabilities. It supports iPhoto’s Events, Faces and Places features. It also offers built-in slideshows complete with soundtracks and transitions.

Running a slideshow demo, Jobs pauses and looks out at the audience with a Chesire Cat-wide grin. He’s clearly relishing this moment.

10:22 am:: The iTunes experience on iPad is much as you would expect. Similar, if not identical, to what the software currently offers. Calendar and Contacts apps are also nice and, again, similar to what you’d find on a MacBook or iPhone.

10:24 am: Demoing Google Maps now. The iPad supports Google Street View and the implementation is very slick.

10:25 am: Moving on to video. Jobs calls up an HD clip from Google’s (GOOG) YouTube and displays it in both portrait and landscape. That finished, he fires up iTunes and loads “Star Trek” to demo the device’s video features, scrubbing, etc. Then he shows us a clip from Pixar’s “Up.” Tap to go full-screen. “Isn’t that wonderful?”

10:27 am: Watching that is nothing like actually having one in your hands, says Jobs.

• iPad is one-half-inch thick, weighs 1.5 pounds, and comes with 9.7 inch IPS display–“very high-quality display”
• Full capacitive multitouch
• 16GB-64GB flash storage
• iPad is powered by our Apple’s custom silicon–“We did it inhouse and it just screams,” says Jobs.
• Wi-Fi, Bluetooth, accelerometer, compass.
• Battery life: 10 hours.

“And in addition to 10 hours of battery life, iPad offers a full month of standby time,” Jobs notes. “It’s also a good environmental citizen,” he adds, noting that it’s a very green device.

10:31 am: Jobs invites Scott Forestall to the stage to talk about apps on the device.

“We built the iPad to run virtually every app in the App Store right out of the box,” Forestall says.

Evidently, a built-in pixel-doubling feature automatically scales iPhone apps to full-screen iPad apps.

10:35 am: Forestall runs an unmodified racing game from the App Store. He first demos it in the screen size of an iPhone. Then, using the pixel-doubling feature, he blows it out to full screen. Very slick.

“So you can buy the iPad, take it home, hook it up and download all your iPhone apps and run them with no problem at all,” he says.

Forestall announces a new iPhone software development kit specifically geared to the iPad. He notes that iPad-specific applications will be featured “front and center” in the App Store.
He then invites Gameloft’s Mark Hickey to the stage to demo some new games the company has developed using the new SDK.

Hickey notes that the iPad’s additional screen space is a boon for developers, particularly those building games. He demos a first-person shooter that showcases this. “We’re now able to interact with the game world in ways that we weren’t able to before.”

10:40 am: Next up, the New York Times. Martin Nisenholtz takes the stage to talk about its iPad effort.

After talking up the Times iPhone app, Nisenholtz segues to the the paper’s new iPad app: “We think we’ve captured the experience and essence of reading the newspaper.”

The app is largely what you’d expect. Tap to resize text, zoom, breaking news updates, video. “This is everything you love about the paper and everything you love about the Web.”

10:44 am: Now, a painting application called Brushes that was famously used to create a New Yorker cover.
The app is impressive enough on iPhone; it’s even more so on the iPad. It supports “playback” of paintings, and as the presenter notes, brings us one step closer to a real virtual painting studio.

10:46 am: EA’s Travis Boatman take’s the stage. The topic of his presentation: Need For Speed.

“Building for the iPad is a little bit like holding a high-def TV screen a few inches from your face,” he says.

The iPad version of Need for Speed boasts a number of touch-activated enhancements: Tap on the car to view its interior, tap on the rear-view mirror to look behind you.

10:52 am: Up next: MLB.com’s Chad Evans. He demos the outfit’s iPad-optimized app, which uses the device’s additional screen space to display video excerpts and MLB TV.

MLB TV can be streamed like and enhanced with onscreen stats and data. “This big display really allows us to create a much more immersive experience,” Evans says.

10:52 am: Forestall returns to the stage to make another brief plug for the SDK before Jobs takes over for him.
“Let me show you another one of our apps that we’re very excited about,” Jobs says. “An e-book reader.”

Behind him a photo of Amazon’s (AMZN) Kindle appears. “Amazon did a great job with their reader and we’re standing on their shoulders here….Today we’re announcing the iBooks store,” says Jobs, adding that it will be supported initially by Penguin, Simon & Schuster and a number of other big publishers.

The iBooks Store interface begins with a simple bookshelf view. Tap the screen and it loads a more iTunes-like view. Purchase a book and it’s added to your bookshelf with a slick little animation.

The reading experience seems very appealing. Much more book-like. From where I sit, the pages look like they’re written on paper.

“We use the e-pub format, the most popular open-book format in the world,” says Jobs. “We think iPad is going to be a very popular e-reader not just for bestsellers, but for textbooks as well.”

10:58 am: And here’s another new product announcement: A new version of iWork tweaked for use on the iPad. Jobs invites Phil Schiller on stage to demo it.

“We have a completely new version of Keynote, a completely new version of Pages and a completely new version of Numbers–all optimized for multitouch.

Schiller demos Keynote first. Creating presentations appears intuitive and simple–a slide navigator on the left, tap to load individual slides in the main window, drag to rearrange.

Nice use of multitouch gestures to enhance the app. Pinch to resize photos, tap to insert animations and transitions. These are all fairly advanced techniques and the device seems to handle them well.

11:05 am: Moving on to Pages now. Also impressive, though creating a written document on a tablet device like the iPad seems like it might be a drag. A nice tool for editing, though. Simple controls.

11:07 am: Moving on to Numbers. This application also makes good use of multitouch gestures and boasts a data-entry keyboard along with some 250 built-in functions. The software’s gesture capabilities makes Excel look antediluvian.
Powerful and fast.

So what’s Apple going to charge for iWork? $9.99 each, says Schiller, who notes that all three applications are compatible with their Mac versions.

Jobs returns to the stage, grinning. “Isn’t that great?” he asks for what’s easily the 10th time. iPad, he says, will synch to Mac or PC via USB.

11:14 am: Evidently, there will be two iPad models–one with Wi-Fi-only and one with Wi-Fi and 3G. The 3G device will come with two plans: 250 MB per month for $14.99, unlimited data for $29.99.

And who’s the carrier? AT&T.

A small groan ripples through the audience.

Jobs allows that AT&T is also throwing in free Wi-Fi at its hotspots. He follows that up by noting that there are no contracts for the iPad. You can cancel at anytime.

All iPad 3G models are unlocked and they use new GSM micro SIMS, so chances are they will just work, Jobs says, after noting that Apple hasn’t yet worked out international carrier deals.

11:16 am: Now a quick overview as a wrap-up. Jobs touts the overall tablet experience along with the new iBook app and iBook Store. “This is an amazing product with tremendous breadth. What should we charge for it?…When we set out to develop the iPad we not only had aggressive UI goals, we had aggressive price goals, because we wanted to put this in the hands of as many people as possible….IPad pricing starts not at $999, but $499,” Jobs says to a huge round of applause.

$499 for 16GB base model.
32GB for $599.
64GB for $699.
Adding 3G requires an additional fee.

Apple will ship Wi-Fi models in 60 days and 3G models in 90.

11:20 am: Apple has created new accessories for the iPad: A standard dock and a second dock with a keyboard attached to it. “Keep one of these in your den and you can write the next “War and Peace” on it.” The final accessory, a new case that doubles as a stand.

Running a video now. It features a number of Apple execs enthusiastically talking up the iPad.

11:25 am: Let me circle back here for a moment to pricing. Adding 3G to iPad requires an additional $130. So we’re talking $629 for the 16GB model, $729 for the 32GB and $829 for the 64GB version.

Designer Jon Ives on the iPad: “In many ways iPad defines our vision, our sense of what’s next.”

11:32 am: Jobs returns to the stage and recalls the “middle device” scenario he mentioned earlier today. “Can we create this new category? The bar is set pretty high, but we think we’ve got the goods.”

“This is our most advanced technology in a magical and revolutionary device at an unbelievable price,” he adds. “The reason the iPad is going to be so great is because Apple has always strived to be at the junction of technology and liberal arts.”

And with that he concludes. Lights go up and Dylan begins playing over the speakers again.

View the slideshow

PREVIOUSLY:

• Apple’s Tablet: A $2.8 Billion Business?
• Apple’s Tablet: MacBook Airbus?
• Apple Announces Jan. 27 Special Event: “Come See Our Latest Creation”
• Major Apple Product Announcement Set for Wednesday, Jan. 27
• Apple Pitching Tablet to Publishing Industry; Spring Launch Expected
• Time (Finally) for the Tablet? Apple Developers Supersizing Their Apps for January Event.
• The Apple Tablet Is Delayed? So What?
• $1.9 Billion in Capex? What’s Apple Planning?
• Apple’s Tablet: Read Different?
• Imaginary Demand for Mythical Apple Tablet Exceeds All Estimates
• Apple Tablet Coming to AT&T?
• New From Piper Jaffray Analyst Gene Munster: The Apple iPad
• Rumored Apple Netbook Actually an E-Book?
• iTablet: Apple’s Killer App for Higher Ed
• iFugly

There are lots of media companies anticipating the tablet–the entire magazine industry, for instance–and Apple (AAPL) will eventually want all of them on board. The wondertablet is supposed to be a showcase for media, after all.

But very few media companies seem to have any kind of real information about the device. And only a small number will have new stuff to show off at next week’s unveiling.

Like who? Here’s a starter list of likely and unlikely suspects:

• The New York Times is a good bet. Executive Editor Bill Keller riled up the Web with a passing reference to an “impending Apple slate” in October, but wouldn’t say more. Last week, I asked Keller again about his paper’s Apple plans, and he stayed mum again. So did Martin Nisenholtz, the paper’s digital boss. “No comment” doesn’t equal “we’re cooking something up,” of course. And I’m not convinced that an Apple demo would be directly tied to an announcement about a new pay wall strategy, as New York Magazine speculated Sunday. But I do expect to see something from the New York Times (NYT) at next week’s launch.
• Don’t expect much from the big music labels. Jobs courted Big Music when he opened up the iTunes store in 2003. But label sources I talked to this month said the company had only recently begun briefing them about the tablet, primarily as a “courtesy.” Recall that Apple already has the labels on board with the “iTunes LP” format, which would lend itself quite nicely to a tablet. One label official told me Apple has expressed an interest in selling higher-quality audio files via iTunes, and I’m sure the labels would be happy to do so if they can charge a premium for them. But that discussion doesn’t seem to be tethered to the tablet.
• Do expect to hear about “enhanced e-books.” In the past, Jobs has been dismissive about dedicated e-readers like the Kindle from Amazon (AMZN) and reading in general–“people don’t read anymore.” He has apparently changed his mind about the latter opinion: The Wall Street Journal confirmed earlier stories yesterday with a report that News Corp.’s (NWS) HarperCollins is negotiating to bring some of its titles to the platform. Presumably other publishers–all of which are eager for viable Kindle competitors–want in, too.
• Video? Duh. But who? The most obvious suspect here for an initial launch would be Disney (DIS) and its affiliates. In part because Jobs is both the company’s largest individual shareholder and a board member. But also because Disney CEO Bob Iger has made a point of trying out new digital distribution strategies. Here’s a nonstretch: Disney’s ESPN is already negotiating with Microsoft (MSFT) to bring some of its programming and games to the Xbox 360. What about something similar for the tablet? UPDATE: ESPN won’t be announcing anything in conjunction with Apple next week, says someone who knows.
• Time Inc. won’t be there, according to people familiar with Time Warner’s publishing unit. The same likely applies to rival Conde Nast.

A crucial point here is that if the tablet works with the iTunes store–and it should–it is most likely that all of the Apple’s existing iTunes media partners will automatically be on the new device from the start whether Jobs showcases them next week or not. That is: If you can buy “Cars” and watch it on your Mac, iPhone or iPod, then you should be able to watch it on your tablet, too.

But we’re in pre-Apple announcement mode now, and simply porting old media to a new device just won’t sate our needs! So consider this report a work in progress, and a speculative one at that. I’ll be updating if and when anything new comes to light.

Just ask the New York Times (NYT), which says Twitter is about to become one of the top 10 referral sources to the paper’s site.

Impressive. But what exactly does this mean?

There was a flurry of excitement this afternoon on Twitter–of course–when Simulmedia CEO Dave Morgan threw out a much more exciting data point: Reporting/Tweeting from an industry conference, Morgan said Times digital boss Martin Nisenholtz had announced that “Twitter now drives 10% of NYT digital distribution, up from 0 a year ago.”

Other attendees report hearing the same thing. But whether they were participating in a mass hallucination or Nisenholtz misspoke, here’s the Times’s official line, via spokeswoman Diane McNulty: “At its current growth rate, Twitter is, or will soon move into, the top 10 in terms of referrals to NYTimes.com.”

If that’s the case, then Twitter likely accounts for much less than 10 percent of the Times’s traffic. If you assume that Google (GOOG) is the paper’s largest external referral source and that it likely accounts for a third of the site’s traffic (these are semi-educated guesses, but I’m happy to adjust), then Twitter and other sources at the bottom of the top 10 are going to be in the low single digits.

Still! It is a lot of traffic, and a year ago it either didn’t exist or someone else was directing it to the Times. Now the trick for Twitter (and its investors) is to figure out a way to capitalize on this phenomenon.

Yesterday, the publisher said that overall ad revenue had dropped 30 percent in the last quarter, which wasn’t surprising. But Internet ad revenue dropped 15.5 percent, which was a surprise, since it’s an acceleration from the previous quarter’s loss. What gives?

Times officials have multiple explanations:

1. A lot of the loss comes from our classified ads, which have been vaporized.
2. This year’s numbers don’t look good because last year’s numbers were so great.
3. At least we’re not Yahoo (YHOO)!

Check out this exchange from yesterday’s earnings call between analyst John Janedis, New York Times (NYT) digital boss Martin Nisenholtz and ad boss Denise Warren. Seeking Alpha:

John Janedis–Wells Fargo Securities: Martin, can you just talk a bit more about where you’re seeing on the display side with the news media, did any major customers pull out? And do you think you’re losing share relative to the total industry?

Martin A. Nisenholtz: No, I mean I’ll ask Denise to comment on this specific to The New York Times, but I don’t think we can point to any major losses. I think that her comments about overall volume on the side, on the businesses, is true of the digital side as well. I would point out that, to point to Janet’s [Robinson, NYT CEO] comment about most of the hit, a disproportion of the hit coming in the classifieds area.

Denise Warren: Can I just jump in and remind you again that we had a really, really, really robust quarter overall for nytimes.com last year, but really in the display area? So we are up against really significant comps. That’s just some context that I think is important that you have.

And just based upon what we’ve been seeing in the marketplace comparing to other sites there, we do believe we are taking share in the display marketplace, and we do believe we are performing better than most of our competitors in the display marketplace.

Martin A. Nisenholtz: I mean Yahoo just announced a 14% decline in display. I think, while we’re not breaking out the numbers, I think our display performance overall at nytimes.com and across the News Media Groups was better than that.

All of this sounds right to me (for the record, last year the Times’s Web ads grew 18.3 percent in Q2). But if the Times wants to keep investors optimistic about the company’s prospects, it’s going to need a better pitch than “we’re doing better than Yahoo.”

UPDATE: For a pretty good roadmap of where the Times is headed–more dollars from customers, fewer from advertisers–check out this smart piece from the Columbia Journalism Review. It notes, for instance, that the Times is now making nearly as much from subscribers as from advertisers.

Remember last week, when Google was forced to explain why it wasn’t single-handedly destroying American newspapers?

Turns out the company is in talks with some of the country’s biggest newspapers to…well, save them.

But, that isn’t exactly the right phrase. In fact, it’s not clear how to describe the talks. But we do know that Google (GOOG) is chatting with both the Washington Post (WPO) and the New York Times (NYT), because that’s what employees of the Washington Post and the New York Times are reporting today.

Here’s the Post’s Howard Kurtz, in a column this morning castigating newspapers for being too slow to react to the Web:

“Post Co. chief executive Donald Graham and Google chief executive Eric Schmidt and their lieutenants have been holding talks about a possible collaboration. This could range from creating new Web pages to technological tools for journalists or readers. Hanging over the talks is the reality that the search giant, while funneling vital traffic to news sites, vacuums up their content without paying a dime.

Post executive Philip Bennett confirmed the discussions, saying: ‘We’re talking to each other about improved ways of creating and presenting news online.’ He calls it ‘an informal collaboration’ that ‘has produced some interesting ideas already. I’d say that on the journalism side of the conversation we’ve learned a lot.’”

Here’s a Google spokesperson’s description of the meeting, for what it’s worth: “This was an informal meeting, and we’re always talking with publishers to find new and creative ways to help them make money from compelling online content.”

I assume that the unnamed spokesperson will also describe meetings with the New York Times, which the Times’s Brian Stelter reported on today–via Twitter–from an internal presentation that the paper’s Web site put on for its newsroom.

Here’s the Tweet: “At a digital strategy meeting at the Times. News nugget: Wash Post isn’t the only paper in talks w/ Google. NYT is, too.”

I’m following up with Times folks about said talks, but it’s no surprise to hear about them. That’s because contrary to what you may have heard during Senate hearings about the state of the newspaper business last week, every sentient Web publisher realizes that Google can be a huge boon, directing a firehose of traffic to their content.

Indeed, a lot of the gripes you’re hearing about from publishers are really just pleas for Google to please direct more traffic to their sites. That’s the gist, for instance, of NYT digital boss Martin Nisenholtz’s anecdote about typing “Gaza” into the search engine and getting Wikipedia and Twitter messages, before he sees a Times story.

Google’s argument is that it is a neutral arbiter when it comes to this stuff and simply provides links based on the results of its black-box algorithm. So, it will be difficult for it start giving newspapers–no matter how august and important–a leg up when it comes to search results, because everyone else will want in too.

Then again, Google is facing the increasingly likely prospect of antitrust charges over the next few years. Some of the pressure is coming from Microsoft (MSFT), which is working as hard as it can to beat that drum. But the search giant is certain to face suits from the struggling newspaper business as well.

Thus, cutting some deals in advance may not be the worst idea.

Side note: Kudos the Times’s Web-savvy Jennifer 8. Lee for providing a comprehensive Twitter stream from her company’s meeting. Well worth checking out.

UPDATE: Here’s a guess–perhaps Google has been talking the papers about a new, automated filter that will fetch news for users without asking them what they want.

Google does have plans for a solution. In about six months, the company will roll out a system that will bring high-quality news content to users without them actively looking for it. That’s what TheWrap.com’s Sharon Waxman says Schmidt told her he was working on last month:

“Under this latest iteration of advanced search, users will be automatically served the kind of news that interests them just by calling up Google’s page. The latest algorithms apply ever more sophisticated filtering–based on search words, user choices, purchases, a whole host of cues–to determine what the reader is looking for without knowing they’re looking for it.

And on this basis, Google believes it will be able to sell premium ads against premium content.

The first two news organizations to get this treatment, Schmidt said, will be the New York Times and the Washington Post.

Does the New York Times make more money from this arrangement, I asked? No, Schmidt confirmed, it won’t. But by targeting the stories that readers will want to read, it will get more hits out of the stories it has, which will drive its traffic and ultimately support higher advertising rates beside the stories.”

It’s worth noting that a “source close to Google”–who might possibly be someone on Google’s public relations staff–dismissed Waxman’s report, without saying which part was inaccurate, according to VentureBeat: “A source close to Google has raised serious questions about the veracity of Waxman’s claims about Schmidt’s comments. The company has not confirmed any of her post’s content.”

Here’s a novel approach from a coterie of big media brands, including the New York Times (NYT) and Disney’s (DIS) ESPN: Complain loudly that the search engine isn’t treating you fairly.

Ad Age’s Nat Ives reports that digital publishing executives, including John Kosner, who runs digital media for ESPN, and Martin Nisenholtz, who oversees digital at the Times, have been grousing that their stuff doesn’t show up high enough in Google’s (GOOG) search results.

That’s the same complaint that just about every Web site in the world has, because everyone knows the value of Google juice.

But Ives quotes publishers–all of whom are anonymous except for the two I’ve mentioned–who feel that their stuff deserves special treatment because their content is inherently more valuable, and because so much of the Web riffs off/rips off their work. In fact they’d probably point to this very post as an example of a derivative work that should show up lower on Google’s results than the original story.

But it’s unclear what the big guys think Google can actually do about this.

“Publishers said they’re not asking for a leg up over amateurs and link-happy bloggers. ‘This would in no way mean that only professional content publishers would get an advantage,’ one said. ‘It really just says that the original source, and the source with real access, should somehow be recognized as the most important in the delivery of results.’

Google says it’s trying but can’t just flip a switch to deliver pro publishers’ dreams. ‘There’s absolutely value to original content,’ a spokesman said. ‘There’s value to derivative content, too. We look at this in many ways from the point of view of the user. But the truth is there are so many shades of gray even within, quote, original content.’”

I’d also warn publishers to be careful of getting what they wish for. If Google was somehow able to train its bots and spiders to suss out material that was truly original, it’s entirely possible that many of the big guys wouldn’t be happy with those results, either.

[Image credit: bbaunach]

Yesterday, for instance, the New York Times (NYT) provided a wealth of information about the state of the ad business. Here’s a summary, with an assist from Seeking Alpha, of stuff I found interesting:

What kinds of companies are still buying ads? Corporate advertisers like energy companies and financial companies–those that haven’t gone bust–trying to reassure customers; advocacy groups trying to influence the new administration.

Who’s cutting back? Hollywood: Fewer movies released, and less marketing money put behind each release (though that will change during awards season this spring); telcos, because there’s less growth out there; books, for obvious reasons.

Classified ads are killing us. Above and beyond anything else, the newspaper business is dying because its super-lucrative classified ads business is (still) dying. Technology, in the form of competition like Craigslist, critically wounded classifieds, and now the economy is finishing it off. The dropoff in the help-wanted category accounted for half of the the Times’s digital decline in Q4, said digital exec Martin Nisenholtz.

NewYorkTimes.com is a meaningful brand for display advertisers. Other properties–like About.com–aren’t. Nisenholtz says ad rates at NYT.com actually increased for most of the year. But About.com, which had been the company’s star digital performer, fell apart at the end of the year because of its display ad business–there’s nothing about the site’s brand or audience that commands a premium from display advertisers. The paper is now redesigning About.com to emphasize cost-per-click ads–that would be ads from Google (GOOG), primarily–because there’s still growth there.

Perhaps as much as 50 percent of the company’s digital inventory is sold by ad networks In response to a question, Nisenholtz wouldn’t put out an exact number. But he came close: “I would say that from an industry-wide perspective, you are probably looking today at around 50 percent. Some of our properties are above that, some of them are below that, but that’s about where the industry is at this point.”

The grim details are here, but I’ll save you some time:

• Revenue was down 13.9 percent, an acceleration from October’s 9.4 percent drop.
• Ad revenue was down 20.9 percent, an acceleration from October’s 16.2 percent drop.
• The really awful news: Internet ad revenue and overall Internet revenue actually declined in November, down 3.8 percent and 2.6 percent, respectively.

In the good old days of 2007, the Times could at least say that while print revenue growth was slowing to a halt, Internet ad sales were growing quickly. By last month, the best thing you could say about Internet revenue at the Times was that it was still growing a little bit. Now that’s gone, too.

For the record, the Times says that it was still able to register “moderate” display ad growth at its newspapers, but that its online classifieds and real estate ads had gotten crushed, for obvious reasons. And over at About.com, which until now has been the bright spot on the Times’s financials, display ads shrank, wiping out out “moderate” growth in cost-per click ads.

And expect more of the same in December and in 2009. Martin Nisenholtz, the Times’s digital boss, has already warned investors that the “softness in November” would “accelerate into December” and that “next year is going to be a different year, by a fairly profound margin.”

Per usual, the one bit of good news in the Times’s numbers is that its readers continue to value its publications enough to pay for them: Circulation revenues increased 4.2 percent. But if the Times can’t convince advertisers to pay, too, that’s not going to matter. Happy holidays!

There was just a glimmer of news at the event, though it wasn’t surprising or pleasant: The Times’s Web business is falling away, day by day.

Digital head Martin Nisenholtz said revenue at his unit had been OK until the last two months of the year, but that there had been “softness in November, accelerating into December…next year is going to be a different year, by a fairly profound margin.”

Bear in mind that the Times’s digital performance pre-November was grim to begin with–digital revenue grew just 4.3 percent in October–and it becomes possible to imagine that digital revenue will decrease for at least part of 2009.

Nisenholtz didn’t do anything rash like attach any numbers to his comments, but he did add a little bit of color: His About.com unit, which is boosted by cost-per-click/search ads, is still doing OK-ish. But the business of selling display ads to Times Web sites is getting pummeled, and could be “under great stress” next year, he says.

So if About.com is doing (comparatively) well, why not sell that asset to help the paper escape its cash crunch? I asked CEO Janet Robinson that question after the event. She did everything but insist that the paper would never part with About.com, and praised it up and down–“an extremely important part of our digital future,” etc.

But given a couple chances to do so, she never explicitly ruled out a sale. Given the paper’s position, I don’t think she can.

[Image Credit: 1962 NYC Newspaper Strike photo from Life/Google archive)