We knew that USA Today's early word of a circulation plunge -- 17%, announced by Gannett (GCI) two weeks ago -- would probably be a sick canary in a dark coal mine.

Monday's semi-annual circulation FAS-FAX numbers for U.S. dailies, though, are still breathtaking. On average, down 10.6% daily and 7.4% Sunday. That's on average, and largely twice as bad as the declines have been over the past four-plus years. Look at some of the individual results and you'll understand why the New York Times (NYT) just announced that it is taking another 100 jobs out of its newsroom and why other newsroom (and, of course, wider) cuts may increase -- not decrease -- as Wall Street indicates that an overall economic recovery will be a 2010 reality.

Tired of playing defense and readying itself for offense, the New York Times’ (NYT) formal announcement of its San Francisco “edition” this week shows us how a world is moving and how the Times and Wall Street Journal (NWS) (which also will offer an SF edition soon) is taking their battle to a city near you.

In this case, it’s a new inside-out world.

The Bay Area's online news scene is now popping, waking up from a prolonged period of somnolence, and pointing a way toward an online news renaissance across the country.

Friday, we got the official news that financier Warren Hellman's long-planned independent online news operation would get off the ground soon, with $5 million in initial funding, and partnerships with local public radio powerhouse KQED and the New York Times (NYT). Hellman says he'll be hiring "dozens of journalists." That news followed the huge success of California Watch's maiden voyage. California Watch, an initiative of the Oakland-based Center for Investigative Reporting. It saw more than two dozen news outlets -- including the state's top papers -- pick up its first big story on dubious homeland security spending, reaching almost two million readers in print and many more online.

The sails are up, and news companies feel a little recovery wind at their backs. With the worst of cost-cutting over, they're looking for growth. Here's nine questions as they chart that new path.

1. Is one foot better than two? Newspaper companies are feeling a new vim and vigor, and their share prices reflect that. The last 12 months have felt as if someone was standing on their chests with both legs, one leg's is the challenge of the web for readers and advertisers. The other's been the recession. Now the recession leg is applying less pressure, and may be removed completely soon. In other words: Back to the challenges of 2007.

Fast Flip, Google's (GOOG) hardly secret visual news search product, just made its debut yesterday. It's a premiere that tells us lots about the swirling winds in which the company now finds itself. It also marks two important milestones, one about the slow replacement of news search 1.0 and one about Google's willingness to share its ad revenues with news publishers.

First off, Google search, web search and news search, has been good enough to become and remain the standard for almost a decade. That decade's almost over, though, and we can see news search 1.0 about to fade into history. Cooler than cool was the ability to bring together 4300 or so global news sources into a single interface, with reasonable relevance. The 1.0 experience though has been so list-like, so redundant and duplicative and so lacking clarity as to original source. It's ready to pass on, but needs a few pushes. Bing, with its mouse-over capabilities, provides on push. The news visualization of Newser provides another. Politico's mobile app operates smartly on the same principle. Overall, give credit to Apple's cover-flow presentation, which is now flowing from music to the rest of the online world, as Apple (AAPL) itself made it part of the new Safari.

Late midsummer brings hugely cautious optimism, and lots of identity guessing games -- who has Journalism Online signed? What's Rupert really up to? -- worthy of William Shakespeare. Here's nine questions for the time:

1) Who are the 330 non-dailies in the Journalism Online semi-announcement? That's a big part of the guessing game, as reporters find out that McClatchy (MNI), Dow Jones (NWS) and Tribune are all saying they're not participating. Speculation focuses on Gannett with its 850 non-daily (weekly, niche+) publications in the US and its increasing online niche orientation, using its Ripple6 engine. Or on Gatehouse (GHS), with its several hundred weeklies. Even MediaNews counts about a hundred weeklies. Or maybe the only announced partner -- marketing-oriented Itz Publishing of Portland -- is bringing some companies into the action. Far easier to get to "330" through a couple of bigger companies than by one-offs.

On Monday, Advance Internet is announcing its new partnership with Microsoft (MSFT), an agreement that tells us a few things about the emerging, post-recession marketplace.

Advance Publications, Inc., isn't a well-known name outside the industry. Yet, it's one of the major media companies in the country, encompassing through Conde Nast more than 20 top-drawer magazines (The New Yorker, Wired, Vanity Fair, Gourmet+), the apparently immortal Sunday Parade, the 42-city strong American City Business Journals group and cable interests, in addition to its 30 newspapers. A very private company, Forbes ranks it 41st among private companies in the country, taking in more than $7.5 billion.

Face it. We're in a time that seriously lacks oracles. So, apparently, Rupert Murdoch passes for one, given his well-chiseled mien and occasional wont to make pronouncements.

Now he's making a bit of midsummer news, with still another comment on charging for news:

The biggest story of the Microsoft (MSFT) - Yahoo (YHOO) search deal for newspaper companies: What the deal doesn't include.

In a full-blown merger of the companies or even a broader partnership, the more than 30 U.S. newspaper companies in the Yahoo Newspaper Consortium -- more than half of the country's press by Sunday circulation -- might have seen some major impacts. With the deal, finally announced this morning, limited largely to search, that impact is minimized.

With financial pundits increasingly calling for the recession's end and newspaper companies' having cut their way back to operation profitability, it's time to move forward.

Doing that, I suggested in my last post ("Can You Feel the Bottom"), includes damage assessment. While some companies have cut more prudently than others, we've seen major damage inflicted on once-robust news operations across the nation. The ASNE census told us we've lost something less than 8500 journalists in daily newspaper newsrooms in the last two years alone. Newsprint usage is down more than 40% in five years; we can figure at least half of that once ran news.

Can you feel it? It might just be a bottom. Wall Street valuations of newspaper companies certainly indicate it might be. Those valuations have mainly been based on the earnings reports of the last week.

What sense do we make of the slew of newspaper earnings reports that "surprised" financial analysts, one after the other, Gannett (GCI), McClatchy (MNI), Media General (MEG), New York Times (NYT)? Equally, what sense are publishers making of the results, as they spend this midsummer week deep in meetings, at today's AP board meeting, and at more NAA "Paid Content" sessions?

It turns out that newspaper sales forces weren't the only child in the Yahoo (YHOO) APT family. Yahoo Newspaper Consortium members now have a brother, and he's fairly full grown.

Today, Yahoo and AT&T (T) announced a deal to enable AT&T's 5,000 local salespeople to sell display advertising, based on Yahoo's behaviorally targeted (BT) ad engine.

Think of it as updated Geritol, a tonic for an industry with tired blood.

Its founders call it Circulate, and it's the latest "solution" to address the woes of newspapers. It aims to get the blood flowing -- online -- by re-directing readers to more like content, newspaper content, by and large. If you haven't heard much about it yet, it might be because we're experiencing some early summer media fatigue. In addition, we've lately heard an alphabet soup of "paid content" solutions. Much publicized was the NAA Chicago fly-in for publishers. There, Journalism Online, Attributor and ViewPass all participated in a Q and A, the better to keep anti-trust concerns away. Since then, the principals of each of those companies have been kept busy, pitching individual publishers; call it Newspaper Roadshow.

Ah, even the name is a rebuke: Detroit Daily Press.

Things are turning ugly. Globe staffers up the ante in Boston. John Carroll calls Sam Zell an idiot. Online ads on newspaper sites drop to double-digit negatives. Which leaves me, as we approach this summer of our discontent, with more questions than answers. Here's Nine:

1. Down the road, will the Globe Guild members like their new owners better than the New York Times (NYT) Company? Certainly, the Globe's sense of loss is understandable -- and real. Still, it's intriguing to compare the Globe Guild's rejection of the Times' offer to the Portland Guild's recent partnering with venture capitalists to take Maine Newspapers down a new road. The Maine Guild accepted givebacks to get the deal done, and to get a share of the company. My sense: It's always easier to be enthusiastic about the new, unknown guys than the management you've dealt with for years, even if it is the New York Times.

Now, the nation's youth are, in their idealism, fleeing to farms, organic ones of course, as a way to make their mark on the new world. They are willing to shovel manure before dawn, in the belief that they are making a difference.

The organic farm internship movement -- which had a good run near the top of the New York Times' most e-mailed stories list Sunday -- joins education in capturing youthful enthusiasm.

Just when you thought it couldn't get worse, it did. Yesterday's FAS-FAX report tells us that print is dying off more quickly. The basics:

bloodletting from coast to shaking coast. Staff cuts, furloughs everywhere.

Amid the doom, gloom and cutting, let's keep our eye on what is turning into ground zero for what's next. Michigan.

Two newspapers on the block, about as far away from each as they can be.

One in San Diego, the Union-Tribune, finally sold after nine months on the market. The other, or really others, Blethen Maine Newspapers, still sits on the market after a year, but is being pitched to all kinds of would-be buyers.