Newspapers in Northeast Pursue a Content-Sharing 'Consortium' (E&P)

Newspapers in Northeast Pursue a Content-Sharing 'Consortium'

By Shawn Moynihan (E&P)

Published: October 27, 2008 11:50 AM ET
NEW YORK Top executives and editors from several major dailies in the Northeast, dissatisfied with The Associated Press, met recently to discuss the formation of a content-sharing agreement that in several cases would serve in place of their AP agreements, E&P has learned from top executives at three of the papers.

A "Northeast Consortium" of newspapers, which will include New York's Daily News and -- at least at the present time -- is said to include Newsday, The Buffalo News, the Times-Union of Albany, N.Y., and the Star Ledger of Newark, N.J., among others, is weeks away from announcing a content-sharing arrangement that will include both stories and photos.

The Daily News refused comment to E&P.

One executive who spoke on condition of anonymity and who attended the "summit" of New York-area papers, held in Manhattan within the past two weeks, cited cost savings, more timely exchange of content, and what that executive called "a new spirit of cooperation" as the primary motivations for such an undertaking. This source referred to the "Draconian terms" of the AP, which last Thursday responded to newspapers' concerns by announcing further rate cuts and restructuring.

During the New York "summit" meeting, there was a desire to make the proposed content-sharing arrangement happen "very quickly," the source added."It's fair to say that newspapers across America are upset with the treatment they get from the AP," the executive said. "Newspapers are now taking the view that they want to take events into their own hands. The truth of it is, there is a real desire to get better content, shared among people in non-competitive markets.

"The concept is similar to a content-sharing arrangement currently in place among seven top newspapers in Ohio, including The Plain Dealer of Cleveland and the Akron Beacon Journal, in which the papers trade stories and photographs. That agreement was forged out of editors' frustrations with AP's rates and news practices.

The full details of the arrangement are still being finalized. Another executive commented that each of the participating newspapers "needs to define what the value would be for us."Once the Northeast Consortium's content-sharing deal is finalized, one of the executives added, "Quite frankly, AP is eventually not going to be the only game in town. ... What's happening is, newspapers are going to reinvent the Associated Press."

Last Thursday, AP stated that by the middle of 2009, it will complete a review of its pricing and governance structure, re-examining all current policies and rules -- such as the two-year notice now required for leaving the news cooperative -- and will consider other potential changes, including the creation of different classes of membership and services.

The AP's Board of Directors voted last Thursday at its quarterly meeting in New York to provide all member newspapers complete access to all AP text content, at no extra cost. In addition, it voted to approve a moratorium on the rate increases that a minority of newspapers were expected to see in 2009 under the current AP pricing structure.Paul Colford, AP's director of media relations, released this statement to E&P this morning: "We are aware of content-sharing initiatives, including the sharing of stories among AP member newspapers using our innovative AP Exchange browser."

We also understand that a lot of newspapers are reexamining their strategies in this challenging economic climate. The AP has been working closely with its member newspapers to ensure that we continue to offer them an efficient and essential news service."

Last Thursday the AP Board of Directors took another step in that direction, agreeing to provide all member newspapers complete access to all AP text content, at no extra cost. This decision came as the board also reduced U.S. member newspapers’ assessments by an additional $9 million, on top of the previous reduction of $21 million."

A number of dailies (though a small minority) throughout the U.S. have announced their intentions to not renew their AP agreements, often citing insensitivity by the news conglomerate to their specific news needs. (McClatchy's CEO Gary Pruitt said last week, however, that his company would be sticking with AP.) Among them is The Hartford (Conn.) Courant, which also may become part of the Northeast content-sharing group.

One executive close to the Northeast consortium added that several Midwest newspapers learned of their plans and the Manhattan summit, and have expressed interest in joining.

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AP Backs Further Rate Deductions -- To Review Membership Structure (E&P)

By E&P Staff

Published: October 23, 2008 5:30 PM ET
NEW YORK For months, several top newspapers and chains have voice concerns about Associated Press rates and services, so going so far as giving two-year notice that may pull out of the news co-operative altogether. AP has continued a dialogue with these papers, and late this afternoon, with the U.S. economy sinking, it announced that it "will reduce U.S. newspaper member assessments by another $9 million next year and immediately begin a re-examination of the AP membership structure."

Staci D. Kramer of PaidContent.org quickly interviewed two top AP executives. AP Chief Revenue Officer Tom Brettingen says the newspaper protests did not "per se" lead to the changes, adding, "Putting in a cancellation notice to give the paper a chance to leave has always been a way to get our attention." The illuminating report with plenty of quotes is at: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303647.html

The rest of AP's press release follows.

"By the middle of 2009, AP will complete a review of its pricing and governance structure, re-examining all current policies and rules, such as the two-year notice now required for leaving the news cooperative, and considering other potential changes, including the creation of different classes of membership and services.

In the meantime, the AP Board of Directors voted at its quarterly meeting in New York on Thursday to provide all member newspapers complete access to all AP text content, at no extra cost. In addition, it voted to approve a moratorium on the rate increases that a minority of newspapers were expected to see in 2009 under the current AP pricing structure.

AP estimates these steps will save newspapers another $9 million, on top of the nearly $21 million in savings previously announced in rate assessment reductions. In addition, AP will study the potential for rate adjustments for AP Broadcast members as well."

“Our industry is in the midst of an unprecedented confluence of fast-moving and extraordinary events. Challenges to newspapers and to the economy as a whole keep changing the equation for AP and its members,” said William Dean Singleton, chairman of the AP Board of Directors and vice chairman and CEO of MediaNews Group, Inc. “It is time to consider fundamental change to address members’ rapidly changing needs and to assure that AP remains the world’s leading news organization.”

“We fully understand the pain and the challenges of our members, and we have worked to address these concerns,” said Tom Curley, president and CEO of AP. “For two years, we held rates flat, with no increases. This year we rolled out plans to reduce assessments by up to 10 percent, while providing a far greater range of content. Because of the downturn in the global economy, we are at a point where we must now examine more than just what content costs – but also how AP deals with all of its members and customers.”

This year, AP has been rolling out to members a new pricing and services packaging plan, called Member Choice. Under Member Choice, newspapers were eligible to receive nearly $14 million in assessment reductions. In addition, they would get up to another 5 percent – up to total of $7.5 million - in reductions by enlisting in the AP’s Content Enrichment program. About 10 percent of AP newspaper members saw an increase in rates under this plan, although most of them were part of groups getting overall rate reductions. Those increases will now be put on hold until AP completes the review of its structure.

Two levels of service were available under Member Choice: AP Complete and a core service, AP Breaking News. All members will now receive AP Complete, with full access to all of AP’s English language text content, including analysis and enterprise.AP will immediately launch the study of the cooperative structure and of service options, with plans to report back to the Board of Directors by AP’s annual meeting in April of 2009 with suggestions on how it might be reorganized. The AP Board of Directors oversees and approves all changes regarding structure, pricing and governance of the cooperative.

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AP's reading of the NYT Q3 results

AP
NY Times 3Q profits down 51 pct, beats estimates
Thursday October 23, 11:21 am ET By Anick Jesdanun, AP Business Writer
NY Times says 3Q profits down 51 percent as ad revenue drops, but beats Wall Street estimates
NEW YORK (AP) -- The New York Times Co. reported Thursday that its third-quarter profit dropped 51 percent but still beat Wall Street estimates as the newspaper industry continues to suffer from advertising reductions accelerated by a worsening economy.
Early numbers from the current quarter indicate that slow ad sales at the Times newspaper and other properties are likely to continue into the normally lucrative holiday period, especially in digital advertising -- the industry's hope for the future.
The Times said that preliminary net income in the July-September quarter was $6.53 million, or 5 cents a share, compared with $13.4 million, or 9 cents a share, in the same period last year.
Profits will be reduced, though, once the Times takes an accounting charge estimated at $100 million to $150 million to reflect the declining value of its New England newspapers as revenue prospects remain weak because of the ongoing migration to the Internet.
Excluding severance costs and broadcast operations sold last year, the Times earned 6 cents a share. Analysts polled by Thomson Reuters, who generally exclude such one-time charges, were expecting 4 cents a share.
Revenue dropped 9 percent to $687 million, from $754 million, roughly in line with analyst expectations of $692 million.
Advertising sales fell 16 percent at the Times' news media properties, which include print and online operations for the Times, The Boston Globe, the International Herald Tribune and 16 other daily newspapers.
That's steeper than the 11 percent reduction seen in the first six months of the year as the declining economy resulted in fewer retailers, auto dealers, real-estate brokers and employers willing to place ads.
But the Times bucked industry trends in reporting that ad sales fell 14 percent in September compared with last year, its lowest monthly drop since May. Other newspaper publishers have been reporting a sharper drop in September than in August.
Circulation revenue rose 1 percent in the third quarter, reflecting price increases at the flagship Times newspaper. Last year's decision to cease a paid online subscription product called TimesSelect contributed to a 5.4 percent drop in other revenue. Overall, revenue in the news media group fell 9.8 percent to $658 million.
The company's About.com Web sites saw a revenue gain of 16 percent to $28.7 million. Combined with the newspapers' Web sites, online revenue grew 6.7 percent to $85.1 million. But because Internet businesses accounted for just 12 percent of all revenue, the online gains were not enough to offset sharp declines in the print businesses.
Online advertising eased in the third quarter, and the company said the digital business was slowing so far in the fourth quarter as well, primarily because of less display advertising.
The growth rate for online advertising across the industry already has been slowing as the size of the pie gets larger, even when growth is steady in terms of dollars. But the weak economy has been adding pressure on growth.
In the third quarter, advertising and other online revenue at the company's digital operations grew just $5.4 million compared with a year ago, the lowest growth amount all year. The 6.7 percent growth rate is also lower than the 12.8 percent in the second quarter and the 11.6 percent in the first quarter.
On a month-to-month basis, the Times showed improvement in September. Its online revenue growth of 11.7 percent that month compares with 6 percent in August and 2.6 percent in July. But the Internet's share of all revenue fell to 12 percent in September, from 13.4 percent in June.
The Times said it reduced third-quarter operating costs across the company by 6.8 percent over last year, despite seeing newsprint prices rise 22 percent. Overall newsprint costs rose just 2.1 percent as the company reduced usage.
Job cuts earlier in the year helped reduce payroll costs, though the Times took an after-tax charge of $10.3 million, or 7 cents per share, for severance costs, about half of which related to the planned shutdown of a division that distributes newspapers and magazines to retail outlets in the New York area.
The company said it had debt of about $1.1 billion.
For the first nine months of the year, the company had net income of $27.3 million, or 19 cents a share, down 82 percent from $156 million, or $1.08 a share, in a year-ago period boosted by the sale of its broadcast unit. The company had $2.18 billion in revenue, down 6.5 percent from $2.33 billion last year.
Times shares rose 9 cents to $10.77 in late morning trading after sinking to a 52-week low of $10.39 earlier in the sesion.
http://biz.yahoo.com/ap/081023/earns_new_york_times.html?.v=3

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More on AP, newsroom cuts and outsourcing

Is the current economic crisis a game-changer for the media landscape? (I thought I'd just try and throw in that much over used media term to see how it reads: ghastly. I think I might start playing 'game-changer' bingo.)

With some newspapers struggling to meet their commercial paper obligations, certainly in 2009, and certainly when 2009 ad forecasts are revealed, some may go under. To prevent this, all issues are on the table, including the heavy usage of wire services such as AP.

I've blogged extensively on wires, and personally have my own thoughts as to what their future is and how in-house resources could and should be better allocated.

Here's more on the AP story. (Previous posts from E&P, then typically MSM behind the story, in a NYT piece that managed to catch up, but not even mention E.W. Scripps!), then more from E&P today.

Are we reaching a tipping point on the viability of many American newspapers, the viability of AP being the symptomatic tip of exactly that point but not the point itself (if I may be allowed to mix my metaphors)?

The more worrying picture for all these newspapers who attempt to devalue paid content from AP is that they devalue their own paid content in so doing. Why should consumer readers pay for content if newspapers won't. Equally, if the AP won't hold the line, or starts a panicky pricing slash in a short-term recession, they may live to regret it, if they live that is.

I'll come back to price cutting in a recession in a minute, but broadly speaking, in media, once you cut prices, it's a long slog to get those revenue figures back-up.

Time for steady hands and steadier nerves.

Will Scripps Follow Tribune In Dropping AP?

By Joe Strupp

Published: October 20, 2008 12:50 PM ET
NEW YORK Just days after Tribune Co. revealed it had given its two-year notice to possibly drop the Associated Press following a recent new rate structure, another major newspaper chain indicated it is considering the same move and is negotiating with AP over rates.

E.W. Scripps, which owns 17 daily papers including the Rocky Mountain News in Denver and The Commercial Appeal in Memphis, Tenn., declined to say if it already had or had not given notice to AP.

But in an e-mail to E&P, Tim King, Scripps vice president for corporate communications and investor relations, stated: "At this point, all I'd be comfortable saying is that we are a member in good standing of the AP, but we have been engaged in discussions concerning pricing so the future is uncertain."

Rocky Mountain News Editor and Publisher John Temple declined to comment on the situation when asked if notice had been given or if the chain would drop its AP membership. But he said he did believe his paper could operate without AP content.“I think we are very close to being able to do so,” Temple told E&P. “I think there are different papers that could put out a paper without AP in different ways. I believe you can do it and satisfy the needs of your readers.”

AP Spokesman Paul Colford declined to comment on Scripps' situation. The news cooperative just recently received the required two-year notice from Tribune, which owns nine daily papers, that could result in that chain dropping AP in 2010.

Several editors at a handful of Scripps papers declined to talk about the AP on the record, although several said changes could be in the offing. Don Kausler, editor of the Anderson (S.C.) Independent-Mail, said he did not know exactly when or if notice had been given, but said papers are ready to do without AP if needed.“It’s much like what Tribune is doing, leaving options open,” Kausler said. “When AP requires two-year’s notice, we see no harm in exercising that option. That doesn’t mean that in two years we won’t be running AP stories, but by giving notice, that can happen.”

Kausler said for a small paper like his, which often runs no more than one page a day of national and international news, AP can be expensive.

“Sports is probably the area where papers are more dependent on it,” he adds. “But in the next two years, you will see more alternatives.”

Shane Fitzgerald, editor and vice president of Scripps' Corpus Christi (Tex.) Caller-Times, agrees: "We will just wait and see what happens. We have other wire services, too. We use AP and others."The recent decisions to drop AP service follow the planned AP rate structure change, which was announced in 2007 and takes effect in 2009. The rate change initially prompted complaints from numerous newspapers, including two groups of editors who wrote angry letters to AP to complain in late 2007 and early 2008.Under current AP policy, each newspaper buys a package of general news created by AP based on that paper's location and circulation. The package usually includes breaking news, sports, business, and other national, international, and regional news relevant to the client's market, including its state AP wire. ((Under the new structure, AP member newspapers will receive all breaking news worldwide (including items from other state wires), as well as breaking sports, business, and entertainment stories. In addition, a package of premium content — made up of five types of non-breaking stories including sports, entertainment, business, lifestyle and analysis — will be available at an additional cost. ((When the new structure was announced in 2007, AP promised a combined savings of $5.6 million across newspaper member budgets, which increased to $14 million —and, finally, $21 million just days before the April annual AP meeting. AP also recently instituted a hiring freeze.

In recent months, other papers have given the required two-year's notice to drop AP. Those include: The Star Tribune of Minneapolis, The Bakersfield Californian, The Post Register of Idaho Falls, and The Yakima Herald-Republic and Wenatchee World, both of Washington.

The Spokesman-Review of Spokane, Wash., is trying to cut ties without a two-year notice, planning to discontinue AP content at the end of 2008. At least one newspaper, The Star-Ledger of Newark, N.J., tested the approach by publishing an entire newspaper for one day last month without AP content. So far, that paper has not given notice to cut the service.

Joe Strupp (jstrupp@editorandpublisher.com) is a senior editor at E&P.

Meanwhile, over at AP, in the middle of consumer rebellion, the Chairman of the Board of AP thinks it's a good idea to announce that he personally thinks it's a good idea to outsource editorial offerings. Sex on the beach in the UAE, here we go. The AP CEO must be thrilled at his Chairman's fantastic sense of timing.

Personally, until I know a lot more about what's on offer in Bangalore et al., I'm with Bernard Lunzer, president of The Newspaper Guild-CWA. "It may in the short run save costs. In the long run, what does it do to the quality of the product?"

Production and other back office outsourcing to Bangalore is one thing, editorial content, quite another.

APMediaNews CEO: Outsourcing could help save money

Monday October 20, 7:24 pm ET By Matt Sedensky, Associated Press Writer
MediaNews CEO says consolidation, outsourcing could help newspapers survive
AVENTURA, Fla. (AP) -- Consolidating and outsourcing news operations -- even overseas -- could help newspapers survive as their revenues continue to shrink, the head of a major U.S. newspaper company said Monday.
MediaNews Group Inc. CEO Dean Singleton, who also serves as chairman of the board of The Associated Press, told the Southern Newspaper Publishers Association that his company was exploring outsourcing in nearly every aspect of their operations.
"In today's world, whether your desk is down the hall or around the world, from a computer standpoint, it doesn't matter," Singleton said after his speech.
MediaNews publishes The Denver Post, The Detroit News and 52 other daily newspapers and is well known for cost-cutting efforts, including combining many operations of its papers near San Francisco.
Singleton said sending copyediting and design jobs overseas may even be called for.
"One thing we're exploring is having one news desk for all of our newspapers in MediaNews ... maybe even offshore," he said during the speech.
Other publishers also have consolidated newsroom functions this year. Two Florida papers owned by The New York Times Co. said in August they were merging news and copy desk functions, design, layout and pagination. The McClatchy Co. papers in Raleigh and Charlotte, N.C., are sharing sports and political reporting staff.
But few have sent newsroom functions overseas, limiting off-shoring mostly to ad production and other non-editorial functions, said Ken Doctor, a media analyst with Outsell Inc.
Notable exceptions are Thomson Reuters, which has been using journalists in Bangalore, India, to handle some basic news such as corporate earnings reports, and a Web site called pasadenanow.com, which has five regular contributors overseas who write about Pasadena, Calif., using webcasts of council meetings and information provided by citizen volunteers.
"We used to have on-the-ground reporters, but the expense was prohibitive," said James Macpherson, editor and publisher of the site. "Regretfully, we had to lay them all off."
Macpherson said he saw no reason a larger publication couldn't adopt similar techniques to save costs.
"You might miss the nuance of a sneer on a councilman's face but you know how he voted and what he said," he said. "That's factual and can be reported on from anywhere."
In a statement, Thomson Reuters spokesman Joe Christinat said that "by reporting some of the more commoditized news from Bangalore, our reporters are freed up to add greater value to the file with more insight, analysis, interviews, exclusives and market-moving, in-depth stories."
Despite this year's dismal drumbeat of layoffs and revenue drops, Singleton said newspapers still have incredible reach in the country, calling them cornerstones of democracy. But he said they must change in order to survive.
"Fond memories of dead newspapers will do nothing for our communities," he said.
Singleton praised electronic versions of newspapers because they eliminate printing and delivery expenses. He also said newspapers could heal their bottom lines by building up their ad sales forces and producing more niche publications like wedding magazines to attract more advertising.
Singleton said no decision has been made to outsource editorial functions overseas at any MediaNews publications, though it was recommended by consultants. He said publishers were trying to consolidate editing and design domestically, whether in one place or several, and see if they could match the savings they would see by going overseas.
Editors and reporters have intensely questioned newsroom outsourcing. Long-distance editors might miss locally relevant nuances or fail to fill in context based on a knowledge of the region, said Bernard Lunzer, president of The Newspaper Guild-CWA.
"It may in the short run save costs. In the long run, what does it do to the quality of the product?" he said.
But Singleton said Monday that local editors would always maintain final control and that no page would go to press without their approval.
Singleton talked about outsourcing delivery of newspapers, relying more intensely on syndicates for non-local news, and moving circulation call centers offshore.
He mentioned outsourcing printing to competitors and centralizing ad production and said that may be as cheap as going overseas. But he said most of the preproduction work for MediaNews' papers in California is being done in India, a move he said cut costs by 65 percent.
"If you need to offshore it, offshore it," he said.
AP Business Writer Anick Jesdanun contributed to this report from New York.

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Some papers in financial trouble are leaving the AP to cut costs (IHT)

I blogged on this too yesterday:

Some papers in financial trouble are leaving the AP to cut costs
By Richard Pérez-Peña
Monday, October 20, 2008
For most of its 137-year history, The Columbus Dispatch has carried articles and images from The Associated Press. Like most big American newspapers, it supplements the work of its own staff with dozens of items daily from The AP.
That may end soon.
Unhappy with both the AP service and its price — more than $800,000 a year at a time when The Dispatch's finances are severely pinched — the paper on Friday took the once-unthinkable step of saying it would drop the service.
What had been a minor newspaper rebellion against The AP suddenly grew much more serious last week, when the Tribune Company, one of the largest newspaper chains, said on Thursday that it would drop out of the association, followed by The Dispatch's announcement. A handful of papers have made the same move over the last few months, but with the exception of The Star Tribune of Minneapolis, they were relatively small.
Tribune, in disclosing the plan to sever its ties with The AP, voiced no complaints about the service, saying only that it needed to cut costs. The move raised the prospect of major Tribune papers like The Los Angeles Times and The Chicago Tribune publishing without the aid of a wire service that has been an essential part of American journalism since the cooperative was established more than a century and a half ago.
But editors and publishers at some other papers have become vocal critics of the way The AP operates, saying that it charges more than they can afford, delivers too little of what they need and — particularly galling to them — is sometimes acting as their competitor on the Internet.
"They seem to have forgotten that they are there to serve us," said Benjamin Marrison, editor of The Dispatch.
That anger spilled into public view in April at a meeting in Washington when the president and chief executive of The AP, Tom Curley, discussed his plans to cut prices and add new services — and then watched as editor after editor stood to scold him.
The AP says it is trying to save money for its more than 1,400 member newspapers, and all the changes under way will benefit them. Kathleen Carroll, executive editor of The AP, said the protests came from a small number of papers and stem from "some element of misunderstanding about what AP is trying to do" and frustration over the papers' finances.
"I don't think any of us can ignore the economic circumstances newspapers are in now," Carroll said. "Being the editor of a newspaper in the United States right now is really hard."
Contractually, newspapers must give two years' notice to drop the service, so those that recently opted out have until 2010 to change their minds. AP executives say they suspect that some papers are using that notice as leverage to bargain for lower rates.
In addition to the papers that said they would leave the wire, others are considering it, and still others have set up regional cooperatives meant to supplant part of their relationship with The AP — a trial run for life after the wire service.
Newspapers are going through their most wrenching time since the Depression, with advertising revenue falling about 25 percent over the last two years. But the balance sheet of The AP, a nonprofit company, is healthy; last year its profit rose 81 percent, to $24 million, on revenue of $710 million, according to a financial statement issued to its members.
It remains to be seen whether defections become a major problem for The AP, the world's largest news-gathering organization with more than 3,000 journalists in about 100 countries. Without the rich diet of articles, photographs, audio and video it feeds its clients, most American newspapers would be much slimmer and their coverage less expansive.
Newspapers banded together 162 years ago to create The Associated Press. Only daily papers in the United States can be members, giving them ownership and a vote in elections for the board. The company has more than 5,000 other domestic clients — broadcasters, Web sites, weekly papers and magazines — and roughly 8,500 abroad.
In addition to the news that AP reporters produce, the wire also takes breaking news articles from its members and distributes them to other clients.
For many members, The AP is one of their biggest expenses.
"We pay in excess of $1 million a year to The AP, which is equal to 10 to 12 reporters in the newsroom," said Nancy Barnes, editor of The Star Tribune.
Several editors interviewed for this article said they could find other sources for written material — wire services like Reuters or Bloomberg News, or the news services sold by major newspaper companies. But other AP products, especially photography, would be harder to replace, they said.
"We thought, 'We have two years to try and figure this out,' " Barnes said. Her paper is one of the industry's most troubled; it recently stopped making payments on its debt.
This summer, dissatisfied with the way The AP handles local news, eight papers in Ohio formed a cooperative to share articles, and some of those papers say they might drop the wire service. Newspapers in Pennsylvania are exploring a similar arrangement.
"We're facing terrible economic challenges, so naturally we're looking at one of our biggest costs," said David Shribman, executive editor of The Pittsburgh Post-Gazette.
The editors in Ohio, in particular, say The AP has retreated from one of its traditional roles: producing a lot of routine, breaking-news articles.
The AP wants to make its work more engaging, with more enterprise journalism like features, investigations and analyses — but that is also the direction many papers are going.
Marrison of The Columbus Dispatch said that course had forced newspapers to devote more resources to small stories that used to be covered by The AP "Then The AP rewrites our story and sends it out," he said. "So we're sacrificing our enterprise so that AP can do its enterprise? No, no, no. We're the owners."
Carroll of The AP said it had only "trimmed back on things that weren't getting much use."
"We're not trying to absolve ourselves from nuts-and-bolts news, but we cannot survive if we are spending our day doing the mark-up of some legislative measure that is of interest to one part of the state but not another," she said.
The AP does not release details about what clients pay, but newspapers' fees vary based on their circulation and the services they receive. For the last three years, the company has held those fees flat. The AP says the fees are partly subsidized by the higher prices it charges to nonmember clients, which account for about three-quarters of its revenue.
The AP says that a new price structure, set to go into effect in January, will give papers a 10 percent price cut on average. But even that plan caused complaints, leading to multiple revisions since it was first announced last year.
Papers object to a requirement that they allow The AP to apply its electronic tags to the articles they publish in order for the papers to qualify for the discounted fees.
The tags are bits of computer code, invisible to readers, that are intended to make Web pages rank high in Internet searches. While The AP says that most member papers have signed up for the tagging program, the largest newspapers, including The New York Times, have developed their own tagging systems and so far have not switched to The AP's.
The AP recently introduced an ad-supported mobile Internet service, fed by its own work and that of newspapers in the tagging program. To some newspaper executives, the mobile service looks like a bid by The AP to make money from their work — and to compete with the papers' own mobile services.
"If you want our content, you should have to come to us for it," said Barnes of The Star Tribune.
Similarly, some editors and publishers dislike The AP's practice of selling a news service to aggregators like Google and Yahoo; they want their own articles on those sites instead.
Jim Kennedy, an AP vice president and its director for strategic planning, said that papers should not see The AP as a competitor. He said the mobile network would share ad revenue with participating papers — many of which do not have the resources to develop such services — and drive Internet traffic to those papers.
"We're trying to be the portal, linking back to the contributors," he said. "We know there are members who would rather we didn't license our content to Google," he said, "but the money The AP gets from that helps defray the costs that members don't pay."

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The future of AP

Who thinks they could do without AP?

Certainly the IHT has subscriptions to Bloomberg (which it uses occassionaly since the demise of Business Asia with Bloomberg and the new deal with Reuters, for which Reuters actually pays to be co-branded in the IHT in the Business with Reuters section).

Reuters is also used heavily for briefs and www.iht.com.

One has the feeling that the IHT could live without AP, in these days of big cost cuts resulting from horrible 2009 advertising budgets, it wouldn't surprise me if even the NYTMG cut them. If they could, if Tribune Company has, many others will follow.

Shocker: Tribune Co. Gives Notice To Drop AP

By Joe StruppPublished: October 16, 2008 12:40 PM ET
NEW YORK

Tribune Company has given a two-year notice to the Associated Press that its daily newspapers plan to drop the news service, becoming the first major newspaper chain to do so since the recent controversy over new rates began.

Tribune, which owns nine daily papers including the Los Angeles Times and Chicago Tribune, joins a growing list of newspapers that have sought to end AP contracts, or given notice of that, following plans to introduce a new controversial rate structure in 2009. The notice was given earlier this week.

AP Spokesman Paul Colford confirmed the cancellation notice, but said he had no more specifics. He issued the following statement about it:"We understand that in this climate a lot of newspapers are re-examining their strategies. The Associated Press will continue to work with all members of the cooperative to ensure that we are providing the most efficient, valued and essential news service for them."

The notice, of course, does not mean Tribune is cutting AP immediately. The news cooperative requires the two-year notice as part of its current contracts. Negotiations may lead to the termination not moving forward.

Tribune Spokesman Gary Weitman did not immediately respond to requests for comment Thursday as he is traveling. The notice comes less than a year after Sam Zell, an AP board member, took control of Tribune.Tribune daily papers besids the flagship in Chicago affected include The Sun Sentinel of Fort Lauderdale, Fla.; The Orlando Sentinel; Red Eye of Chicago; the Hartford Courant; The Baltimore Sun; The Morning Call of Allentown, Pa.; and The Daily Press of Newport News, Va.

"I think many editors are concerned about the new financial rate model that AP has rolled out," Earl Maucker, editor of the Sun Sentinel, said about the notice. "It is a natural approach for us to take a hard look at that. Are there other alternatives out there that would provide the depth and breadth of coverage we need?"

In recent months, other non-Tribune papers have also given the required two-year's notice to drop AP. Those include: The Star Tribune of Minneapolis, The Bakersfield Californian, The Post Register of Idaho Falls, and The Yakima Herald-Republic and Wenatchee World, both of Washington.The Spokesman-Review of Spokane, Wash., is trying to cut ties without the required two-year notice, planning to discontinue AP content at the end of 2008. At least one newspaper, The Star-Ledger of Newark, N.J., tested the approach by publishing an entire newspaper for one day last month without AP content. So far, that paper has not given notice to cut the service.Maucker said publishing without AP would be difficult, but not impossible: "We would have to take a look at what other options might be available."

The recent decisions to drop AP service follow the planned AP rate structure change, which was announced in 2007 and takes effect in 2009. The rate change initially prompted complaints from numerous newspapers, including two groups of editors who wrote angry letters to AP to complain in late 2007 and early 2008.

Under current AP policy, each newspaper buys a package of general news created by AP based on that paper's location and circulation. The package usually includes breaking news, sports, business, and other national, international, and regional news relevant to the client's market, including its state AP wire.

Under the new structure, AP member newspapers will receive all breaking news worldwide (including items from other state wires), as well as breaking sports, business, and entertainment stories. In addition, a package of premium content — made up of five types of non-breaking stories including sports, entertainment, business, lifestyle and analysis — will be available at an additional cost.When the new structure was announced in 2007, AP promised a combined savings of $5.6 million across newspaper member budgets, which increased to $14 million —and, finally, $21 million just days before the April annual AP meeting.((AP officials said member newspapers would begin to find out in July what their exact fees would be for 2009, which prompted some of the recent decisions and could result in other newspapers cutting their service before the end of the year.

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Wires, wires, wires: too expensive? Paid digital content?

I've been blogging a fair bit about the relative strengths and weaknesses of the wires versus the original news content generated by the NYT/IHT. There is a lot of MSM resentment to their fellow MSM providers - insults over quality and maturity of their writers and now of course, to add to this, we have the sin that they - guess what - CHARGE FOR DIGITAL CONTENT.

That is of course a pretty revolutionary concept for newspapers and one they find impossible to do with the exception of a handful - South China Morning Post, WSJ, the Japanese business newspaper whose name completely escapes me (this is a blog, sorrry) for example.

LexisNexis® is a leading global provider of business information solutions to professionals in law firms, corporations, government, law enforcement, tax, accounting, academic institutions and risk and compliance assessment.

Yet paid content is out there in big numbers: the wires for one, LexisNexis for newspapers and companies, investment banks - whoops, scratch that last term - big financial institutions, law firms etc; your Mum's voice over your mobile phone (yes, that's digital content which you pay for, sorry) and CNN on your cable package. In some cases it's very clear you're paying for content, in others, like your cable package, you probably have a sense its free, but it's not.

So seeing newspapers in a tizz about paying for something they can't monetize themselves is kind of ironic and mildly amusing.

But I'd like to tip my hat to Star Tribune Editor Nancy Barnes, whose remarks are in bold below, and seems to be one of very few newspaper people who kind of get this paid content thing.

Newspapers Weigh Alternatives to AP: But Do They Add Up?By Joe StruppPublished: October 11, 2008 10:21 AM ET
NEW YORK Since the Associated Press announced its controversial rate change last year, many newspapers have started considering other content options. And things are not likely to calm down any time soon.

A handful of dailies — including several who admit their AP rates actually fell — have given notice to drop the service, editors in several states are forging content-sharing alliances, and Politico and PA SportsTicker are quickly positioning themselves to help replace the 160-year-old news cooperative in daily news pages.

But is the latest dispute over AP rates and services a real sign that its relationship with newspapers will be forever changed? Can a mid-sized or major daily really exist without the news cooperative? Or is this just a bluff?

"AP is going to lose newspapers, it is a question of how many," says Editor Dean Miller of the Post Register in Idaho Falls, which several months ago gave its required two years' notice that it plans to drop the news service. "My guess is most of their losses will be in medium and small markets." Since the beginning of the year, when the backlash began against AP's rate change, more than a half-dozen dailies have given notice, including The Bakersfield Californian, the Star Tribune of Minneapolis, and Washington's Yakima Herald-Republic and The Wenatchee World.

"I think the AP regional report has fallen off in quantity, and in some ways, quality," claims Paul Emerson, managing editor at the Lewiston (Idaho) Tribune, which gave notice to AP in September — even though its rates would drop about 17% under the new system. "It is mostly a concern about content." At least one paper, the Spokesman-Review of Spokane, Wash., is challenging AP's two-year-notice requirement and plans to stop using and paying for the wire service by the end of the year. "The legal point here is that we are not canceling a contract, we are declining to sign a new contract," says Editor Steve Smith, who admits a $30,000 expected savings in 2009, but says the remaining $375,000 AP bill is too high.

"More editors are feeling disenfranchised and disregarded by AP."

AP officials declined to comment for this story. But AP Executive Editor Kathleen Carroll, addressing the rate issue during the Associated Press Managing Editors conference in Las Vegas last month, told a group of newspaper editors there, "we certainly hope that the basic fundamentals of the economy and the marketplace will firm up enough so that the pressure is off some of the people who own the AP."

But even with promised AP cuts, editors have been dissatisfied, saying they cannot afford it. Others have claimed the news content is not what they need, particularly with regard to regional and state coverage. "We are exploring our options to see what our outs are," says Ben Marrison, editor of The Columbus (Ohio) Dispatch and one of eight Ohio editors who wrote jointly to AP in late 2007 to complain.

"All of our department heads are exploring what it would mean if we had AP or did not have AP."

The dispute dates back more than a year to mid-2007, when AP announced the rate restructuring (and some new services), which will not even take effect until 2009. When the new approach was announced in 2007, AP promised a combined savings of $5.6 million across newspaper member budgets, which increased to $14 million, and, finally, $21 million just days before the AP's annual meeting in April 2008.

Aside from price, there is growing criticism that AP offers content to newspaper competitors at television and radio stations that directly compete online. Star Tribune Editor Nancy Barnes says that is the key reason she gave notice to dump AP: "We want more control of our content and how it is distributed. It is very difficult for us to do that under the current AP contract."

At least one major daily, The Star-Ledger of Newark, N.J., tested that theory, publishing an entire newspaper on Sept. 10 without AP, using a combination of local staff, non-AP news services, and PA SportsTicker, a growing sports outlet that has already signed on with New York's Daily News to provide sports coverage. "They are in an evaluation period to evaluate all of our content," Jay Imus, PA SportsTicker's director of sales, says of the Star-Ledger. Editor Jim Willse and Publisher George Arwady did not respond to requests for comment.

Imus says that at least five other U.S. dailies are reviewing PA SportsTicker and have indicated interest in signing up. "I think we will be successful in serving hundreds of clients because there are many willing to give it a try," he says. "They are fed up with how intolerable AP has been.

"Another recent newspaper option is Politico, the political Web site nearing its second anniversary. It recently launched a content-sharing arrangement with numerous newspapers in which Politico provides content in exchange for the right to sell ads that are placed with that content. Politico and the paper split the ad revenues.

"There is no doubt that the trend of papers pulling back on Washington coverage is growing, and it will put more of the burden on places like Politico because people want coverage," says Jim VandeHei, Politico's executive editor. "Washington coverage is still absolutely necessary." Newspapers that have signed on include The Atlanta Journal-Constitution, The Philadelphia Inquirer, The Denver Post, and The Plain Dealer in Cleveland.

If enough papers seek to drop AP altogether, Politico could serve as an even more viable alternative, at least in part. VandeHei says, "We think we have a pretty distinctive voice."

Editors say using Politico copy with that of traditional news services such as McClatchy-Tribune, Hearst, or The New York Times News Service could fill the AP void. "I would be interested in cobbling something together," says Rex Rhoades, executive editor of the Sun Journal in Lewiston, Maine. Rhoades says even with what he terms a "small decrease" under the new AP rate structure next year, his annual cost will be about $157,000 for AP, while McClatchy-Tribune charges him $10,000 per year.

There's also the approach of newspapers sharing content among themselves. Statewide sharing has already increased significantly between some papers in Idaho, Washington, Ohio, and Florida. The Ohio group recently decided to co-sponsor campaign polls and publish the results on the same day. Rhoades of the Sun Journal also says he could see the day when newspapers nationwide share content.

Adds Miller in Idaho Falls: "Remember, AP was created by newspapers."
Joe Strupp (letters@editorandpublisher.com) is a senior editor at E&P.

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