Even top dogs at FT feel chill of the media downturn

It says much about the confidence and wit of the pink paper of business that it not only published the letter but also headlined it "How FT leads from the front". That rise was the third since June 2007, when the FT was selling for £1, yet the increases appear to have had no deleterious effect on the paper's British circulation, which has run at about 125,000 copies throughout the past year. Newsprint sales revenue is only one side of a newspaper's income equation.

Advertising, as with every title, national or regional, big or small, has fallen away during the economic downturn.

The FT's chief executive, John Ridding, hinted as much in a memo to staff saying that "with our customers and advertisers being affected, we need to prepare for difficult times".

I would guess that the Financial Times Group is going to report that it has traded profitably over the course of 2008, and it may even show some improvement on its performance the previous year. It was ahead of the game after the first three quarters but the final quarter proved to be a dramatic wake-up call for every publisher.

In the face of that reality, and the likelihood of a slow recovery at best, the FT's management knew well enough from its own reporting of the knock-on effects of the credit crisis that it could not avoid the need to cut costs.

The first initiative, in early December, was to offer its staff the opportunity to work a three- or four-day week. It also announced a pay freeze for anyone earning more than £30,000 and the opportunity to apply for voluntary redundancy.

Then, on Monday, came news that 80 jobs are to go at the paper. This includes 20 journalists, 11 of whom have agreed to go voluntarily. The nine who are being required to leave were given the bad news yesterday. Given that the FT boasts a total editorial staff of 550, the cut represents a reduction of less than 4%. Compared with cutbacks imposed on many other papers, it is small beer.

Many experienced business journalists outside the FT are amazed at the paper's staffing levels and believe managers have been too timid. Surely, said one, there is much more fat to slice away?

I don't think the FT's management see it that way. If I read them right, their view is that good journalism remains a labour-intensive activity. Though they would certainly not agree that quantity equals quality, they do believe that there is no substitute for maintaining a large editorial staff if they wish to carry out their task properly.

As a journalist, I applaud that approach, naturally enough. It is also noticeable that the papers which have best coped with the overall decline in sales in recent years are those that have continued to invest in editorial resources. The problem for every paper, and this is particularly true at the FT, is the need to provide both newsprint and online content.

Much of the FT's restructuring is clearly aimed at improving its digital product in the belief that the post-recession media landscape will be very different from the one that has previously existed. Its website now has a million registered users globally, with about a third of those in Britain. To add to that total, and to ensure it doesn't lose those subscribers, the FT is preparing to ramp up its website, adding new blogs and extra video material, and even creating an online version of its glitzy How To Spend It magazine.

Next month the paper plans to boost its Chinese coverage with the digital launch of a China business report. Meanwhile, for its core market of business news junkies, the FT's major innovation is the building of a website for mobile phones. It features a touch-screen interface, and includes a facility for users to customise the stocks they follow. They can also store their preferences and information against their FT.com profile.

These initiatives suggest that what the FT is trying to do is to focus on "content revenues", on experimenting with ways of monetising its online material. As all publishers know, this is important work because the old method, in which national and international brands straightforwardly sought audiences through display adverts, will never work on digital platforms.

Some of these experiments will fail, of course. Predicting the course of an online future for news outlets is just as difficult as predicting the next cataclysmic event in the global financial crisis. Ironically, the fact that the major story of our times is central to the FT's output may be to the paper's benefit.

Business journalism is now required reading, neatly exemplified by the FT's latest promotional advertisement, showing a St Bernard dog amid a mountain-top blizzard, offering an FT rather than a brandy barrel.

The paper may conceivably help some people to understand the nature of the storm, but will its own cuts really do enough for it to survive that storm?