The American Press Institute last month released the second report of its investigation into how newspapers can transform their operations.

The 110-page report, “Newspaper Next 2.0: Making the Leap Beyond ‘Newspapers Companies,’” recommends that newspapers diversify their operations and become a “local information and connection utility.”

“If newspaper companies stay on their present path, the future is clear — the core business model will keep shrinking, along with circulation, advertising and profit margins,” said Steve Gray, Newspaper Next’s managing director.

“It’s time to make the leap — a mental leap, a leap of vision and leadership — beyond newspaper companies, to a larger, more diverse kind of company.”

The report also contains case studies of 24 new products launched since the release of the group’s first study in 2006, all by companies using the Newspaper Next, or N2, method.

The third and last section of the report, developed by Borrell and Associates, evaluates how newspapers can make money from their online efforts.

The report can be downloaded free of charge from API’s Web site at www.newspapernext.org.