Editorial: Think Twice About Biting AP Hand That Feeds You

By: E&P Staff

(Editorial from May print edition) The newspaper industry’s talent for self-destruction in recent years never fails to astonish. Handed a virtual monopoly on newsgathering and a head start on online content distribution, newspapers managed to squander both. Racking up huge profit margins and amassing so much cash that Wall Street’s biggest complaint was about their supposedly bloated reserves, newspaper companies either sold themselves off looking for even bigger paydays, or ran up huge markers to buy papers whose value they are now writing down.

Having proven so wrong at such critical junctures, many newspapers are now taking another wrong turn. They’ve decided that one of their most inspired creations, The Associated Press cooperative, is now one of their biggest problems. Newspapers ranging from the Star Tribune in Minneapolis to New York’s Daily News have given their two-year notice to withdraw from the cooperative. Newspapers are trying to recreate mini-APs with nearby publishers, or they’re flirting with CNN ? which might one day actually detail its thus-far vague AP alternative.

The case against AP turns out to be an assortment of rationalizations that seem to change with each passing month.

Take the cost issue. AP no doubt stumbled in structuring and pricing its original content menus. The more recent Member Choice program increases options on content and delivery. At the same time, AP cut member assessments by $30 million this year, and will reduce them another $30 million to $35 million next year.

AP is a big number in the newsroom budget, to be sure. But its value proposition is undeniable. You would expect MediaNews Group CEO Dean Singleton to defend AP as its current chairman ?but you can’t rebut his observation that AP accounts for just 6% of the chain’s total newsroom expenses, while providing 35% of its content. It’s the same story with many other newspapers.

How is it that newspapers, especially big-city dailies, that are so eager to opt out of AP cannot see that their need is just beginning for its network of state, regional, national and international journalists? Metros busy shutting down bureaus at home and abroad simply are not generating that journalism.

AP is chasing down the rogue aggregators that steal newspaper content far more effectively than individual papers could ever do. And it’s a good bet AP will be paid for the real value of its content in its upcoming new contract with Google. AP’s successful pursuit of non-newspaper income streams amounts to a great subsidy for newspapers ? which get access to all its resources while contributing just 25% of its total revenue. And unlike its newspaper critics, AP has no debt weighing it down.

A less self-destructive industry with a cooperative of this kind would realize its hard-earned value, and would not weaken it as a player in the marketplace for content.

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Published: May 14, 2009

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