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The U.S. newspaper industry was already facing numerous challenges before the economy took a nosedive, but the latest data from the Newspaper Association of America shows that the current economic climate has only exacerbated the already dire state of the American newspaper industry. Specifically, total newspaper advertising revenue fell 16.6% in 2008. Classifieds advertising, which is under a lot of pressure from online ventures like Craigslist, fell almost 30%, and real estate classifieds fell 38%.

Nick Bilton from The New York Times R&D Labs was at ETech today, talking about how NYT is preparing for the future of news delivery. His presentation explored how "sensors in every part of our lives [are] helping us aggregate smart content that is relevant to the device we are using". Bilton said that New York Times is building out more real-time analytics, device detection and granular user interaction, in order to deliver this "smart content" to each user and device. They are focused on the "3 screen" experience: web, mobile, and living room. Bilton said that NYT is also exploring "Newspaper 2.0" and next generation e-ink devices (such as flexible displays).

The Guardian just launched a new API which will allow third-party developers to access and reuse the Guardian's content database in their own applications. The new API is part of the Guardian's new Open Platform, which, as of today, consists of the API and a Data Store, but the Guardian also announced that it plans to offer more services in the near future. The Data Store is a collection of high quality data sets which are curated by the Guardian and hosted on Google Docs.

The newspaper business is clearly not doing so well these days. Now, the MediaNews Group, which, among many others, owns the Denver Post, San Jose Mercury News, and Oakland Tribune, is trying to revive its business by going back to an old idea that didn't work in the past and surely won't work in the future: individualized, printed newspapers that users can print out at home with a proprietary printer.

Denver's Rocky Mountain News daily paper is being closed by its owners the Scripps Interactive Newspapers Group. The newspaper had a difficult year economically, was put up for sale for a mere one month and this week was told by its owners that the doors were simply going to shut.

It's a story that we may see more and more often in coming months and years. The newspaper industry is changing radically and in many cases contracting. There are a lot of possible explanations and quite a few likely consequences to consider. Today, instead of discussing those in our blog post - we want to turn the microphone over to the good folks at the Rocky. They've produced a very moving 20 minute video about how it feels and what it means to lose their jobs and newspaper. The staff has put that video on the top of their front page, we've embedded it below.

Hint: They're Using iPhone Apps

The newspaper industry is in a downward death spiral, having been severely impacted by new technologies, the ubiquity of internet access, and a rise in citizen journalism. Here in the U.S., some papers are filing for bankruptcy, others are close to doing the same, and there's even a proposal to give the newspaper industry a bailout plan of its own. Elsewhere in the world, it's more of the same. In Japan though, the country's high population of elderly citizens is keeping the papers afloat...for now, at least. But like everywhere else, they will soon have to face the future: young people don't do newsprint.