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Last year Fast Future asked me to come up with three pieces of advice for how to get out of the recession for a book they were “writing” on Twitter. In case you’re interested, they were:

1.       Mass appeal or niche. Nothing middle of the road but a white line.

2.       Housing got us into this. Housing will get us out.

3.       When all else fails, listen to Warren Buffett.

I was reminded of this given that Buffett is hosting his annual shareholder meeting in Omaha. In usual Oracle of Omaha style, he is bullish on the economic recovery.  But he is also dismayed by the prospects for the newspaper business.

This is bad news. If Warren Buffett doesn’t know what to do, probably no one does. Buffett owns the Buffalo News and holds stock in the Washington Post. He famously advised the Post’s late owner, Katherine Graham, and helped underpin that paper’s financial stability. I’ve even heard people say that he should just buy up failing newspapers and turn them around because only he would know how to build a business model that will work.

But Buffett doesn’t buy things because they’re cheap. He buys them because they have a future. He bought Burlington Northern, the railroad, last year for $26.3 billion and everyone said, “A railroad! So early 20^th century.” But what he sees is a green means of moving freight and people across long distances at a time when energy costs are going to eat us alive. At that, everyone said, “Brilliant! Why didn’t I think of that?”

No such prospects for newspapers. The “recalibration” that the industry is undertaking to try to bring the per-copy price in line with the cost is still fighting a losing battle with the ubiquity of free digital news. The paid online model is a non-starter.

Even the Wall Street Journal, a newspaper last time I looked, says that “Caution is in order” for investors even as “plenty of old-media stocks are trading at or above the broader market on an earnings basis.”  Circulation continues to decline.  Advertising is still off. Things haven’t quit falling but they’re not falling as fast—that constitutes all the good news there is.

So what’s to become of the newspaper industry? I should probably say that I have no idea because lots of extremely smart people are out there scratching their heads about it. But let’s look at my first piece of advice for recession recovery:

Mass appeal or niche. Nothing middle of the road but a white line.

Mass media—some of it anyway—will survive. Looking at a newsstand the other day, I doubt that we need 50 women’s fashion magazines and I doubt we can support (or want) several national newspapers. But the Wall Street Journal is going to give the New York Times a run for its money and, with two very high quality contenders, the battle is going to be fun to watch.

I grew up in the back of a small town newspaper office where all my uncles worked. That paper is now part of the Gannett Company and still struggles to take as much advertising as local businesses will buy because there’s just not enough news that needs covering on a weekly basis. But where else are people going to read about the high school football game and the upcoming American Legion picnic? Weddings, funerals, the city council meeting, the school board election, the news that people in any tight-knit community care about, still needs an outlet.

The losers are the ones in the middle: the mediocre city papers that are neither compelling to read nor covering news people really care about. The Milwaukee Journal Sentinel won this year’s Pulitzer Prize for local reporting. The Chicago Tribune has been a finalist every year of the last decade and won three times but none for local reporting. Not to single them out; I’m sure there are plenty of similar examples. But there’s a reason that there’s only one paper that hits my front porch every morning and it’s the national one, not the local one.

Buffett says that the newspaper business no longer has a “moat” around it, i.e., it is not protected from competition. High quality is a hard moat to maintain but it is a significant competitive advantage. Niche coverage is a moat as long as you’re faithful to your readers and what they really want to know. The newspaper industry can’t pull up the draw bridge and control content but it can still be the only place that delivers those two things.