Hot topic this year is paid content. I seem to recall it being a hot topic last year, along with plummeting stock prices, however in the interim the paper has been making some fairly serious noises about what their paid content model might look like and hinting that it is not far off. But not imminent either!

The Observer caught up with managing editor Bill Keller, who is clearly a man hoping that if he puts off the unsavory paid content decision for just a leetle while longer there is a small chance some other solution will suddenly present itself and save the day!

“In the end, I think it will come down to a gut call about what we think the audience will accept and how we think the market will evolve…There’s no clear evidence that a pay model will save newspapers from the flight of advertisers, it might, but that’s a matter of faith; nothing in previous experience (including the experience of the Journal and FT) and nothing in the reams of spread sheets proves that it will.”

All true. But it also sounds like the initial panic that followed the great newspaper collapse of the last 12 months has subsided and now become the norm. Perhaps the new theory is, better the bad system you know than the bad system you don’t know! Either way Keller speculates now that a decision will be reached by the end of the year “if only so we can stop going to pay-model meetings.” But really, what’s the rush.

Newspapers’ financial woes worsened in the second quarter as advertising sales shrank by 29 percent, leaving publishers with $2.8 billion less revenue than they had at the same time last year.

It’s the deepest downturn yet during a three-year free fall in advertising revenue — newspapers’ main source of income. The magnitude of the industry’s advertising losses have intensified in each of the last 12 quarters.

The numbers released Thursday by the Newspaper Association of America weren’t a shock, given the dramatic erosion mirrored the advertising losses that the largest U.S. newspaper publishers already had reported for the April-June period.

Still, the statistics served as a stark reminder of the crisis facing newspapers as they try to cope with a brutal recession and advertising trends that have shifted more marketing dollars to the Internet.