Sunday, September 02, 2007

AP and Google

It had to happen. AP and other wire services eventually had to hook up with Google News as they announced they would Friday. They need the increased revenue and know that chances of getting it from the beleaguered newspaper business are about nil.

One take on this is that it will put some big hurt on other publishers' sites to which Google now sends traffic to look at wire service stories. The official spin, on the other hand, is that it will enable those other sites' local news copy to get better placement on Google now that all these duplicate links won't show up pointing to the same wire-service story on multiple sites. And, of course, Yahoo has taken AP for years without the sky falling in.

From the AP story:

Under its new approach, Google reasons readers won't have to pore through search results listing the same story posted on different sites. That should in turn make it easier to discover other news stories at other Web sites that might previously have been buried, said Josh Cohen, the business product manager for Google News.

"This may result in certain publishers losing traffic for their news wire stories, but it will allow more room for their original content," Cohen said.

Vlae Kershner, news director for the San Francisco Chronicle's Web site, backed up that theory, saying Google News mostly refers readers interested in the newspaper's staff-written stories. "This is going to have a very minimal impact on our traffic," he said.

Referrals from Google News accounted for 2.2 percent of the traffic at newspaper Web sites during the week ending Aug. 25, according to the research firm Hitwise.

I tend to think there's some validity in this, but it's going to irritate some publishers for sure. If I were one of them, why wouldn't I consider dropping the wire service from my site? Which then poses an interesting question for AP Video. If publishers drop the words, can the video stand on its own on those Web sites? Will those newsrooms even want it to? (My prediction -- yes, because it's an easy, cheap way for a lot of newsrooms to make it seem like they are "doing" video.)

Bottom line: Is there any way AP cannot cut off its nose to spite its face? It's getting harder for the world's largest news service to escape the reality that once it sells its national and international wire to a couple of Web wholesalers, no one else really needs it.

The state and local wires are a different matter. But it takes a lot of resources to keep state bureaus properly staffed and generating new material. Bureaus still rely heavily on "shared" news from members (newspapers and broadcasters, mostly). But as papers go to the Web quickly and directly -- or as in South Carolina when a chain like McClatchy starts sharing among all the papers it owns in the state, displacing AP copy -- why will their stories need to be "shared" through AP?

Until publishers figure out easier ways to license their material, AP serves as a sanitizing service for those items, providing copy to print members without the hassle of their having to negotiate multiple license agreements. But as newspaper ad revenues keep dropping sharply, space for wire copy diminishes (or the paper becomes so wire-laden that the readership can be affected) and the need for fresh, enterprised copy becomes more acute. But then AP runs up against the cost issues its "news cooperative" structure has ameliorated all these years.

It's a tough juggling act.
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Update and additional thoughts

I forgot in the original post to put this in the larger context -- that of AP's overall moves away from being a news cooperative. Last January, for instance, was the word that AP would supply news to Nintendo's Wii game system.

At the time, an editor asked what do you do when your supplier becomes your competitor. And I responded that I didn't think AP saw it as competition, but that it essentially had written newspapers off as a viable channel to reach that market segment. I think that is more evident with this

But this also needs to be seen in context of a potentially greater shift. The AP is now a "nonprofit" news cooperative. The "alternative revenues," as AP liked to call them, from deals like this used to be used primarily to keep yearly increases in members' assessments down to the low single digits in most cases. But now these alternative revenues are starting to become critical to the AP's overall operating ability. Though traditional media continue to make up the vast source of AP's revenue, how receptive do we expect they will be to price increases, even just to match inflation, when the word continues to be that ad revenue is dropping and profits are following suit?

For now, AP is contracting internally through moves such as consolidating several state bureaus under one bureau chief (where before each had its own COB). I understand some positions are going unfilled a lot longer than before, too.

But at some point, AP is going to have to examine the efficacy of continuing as a nonprofit cooperative. I've been told that the idea already has been kicked around with some seriousness (what I don't know is whether it was a bunch of execs just having a bull session or seriously starting to look at the alternatives). But if the current trajectories in the news business hold, I expect that at some point soon it will be on the table -- likely under current CEO Tom Curley, but definitely under his successor.

The key will be the state reports and the photo report. AP faces a dichotomy: Its national and international news is largely a commodity now, and one that it self-produces so that if it sells it to Google or Yahoo or whatever fewer toes are stepped on (leaving out, for the moment, the smaller percentage of stories picked up daily from the state wires and reworked by New York for the national and international lines).

Its state reports retain a different kind of value, and to be economically viable in most states (with relatively small state bureau staffs) they require the news sharing from members that comes with being a cooperative. But that limits how those can be sold. Sell those to Yahoo or Google and you make lots of enemies because you have effectively cut some of the guts out of the local papers. The news sharing will largely stop (although under established legal principles the AP probably won't be prohibited from reporting that xxx or yyy paper said this and that on its Web site or in the latest edition).

The tipping point will come when AP decides it can effectively cover the state and regional stuff with existing staffs and without the need for news sharing. It would have to produce a report that it can sell to the Googles of the world but that still provides a modicum of content that retains some attractiveness for the local print and broadcast outlets, which do rely on AP to help keep their overall costs down. Of course, that then makes it more attractive for those local news outlets to set up their own sharing arrangements.

Its photos probably can be split off into a stand-alone service in today's multimedia environment. Whether that generates enough revenue on its own to support a decent-size photo corps, and keeping in mind that a fair amount of photos also are shared from members, remains problematic.

Howard Weaver, McClatchy's VP of news, gives some support to my overall assessment with his blog post on the AP's move.

That will cost us a little traffic – but not much, and not very valuable. That kind of random, out-of-market traffic in search of generic wire news isn't at the heart of what we do.

I'm not yet fully informed about this – and I do fault the AP for failure to communicate with us adequately about the deal. ...

AP doesn't sell Google its "state wire" with local news that originates from our papers, so that traffic isn't affected. Neither is organic search at google.com.
But a comment to that post from Andy Perdue, interactive media director at the Tri-City Herald in Kennewick, Wash., also has some truth -- and a warning -- to it:

AP seems to conveniently forget that it was founded by newspapers and many of its sources of information are those same newspapers.

The only thing that keeps many newspapers from dropping AP is the photo service. We can get our regional news from most other papers and national news from any of the other half-dozen wire services to which we subscribe. The majority of news we print is local. What we can't quite replicate is the photography.

AP has strayed far from its newspaper roots. The more it pulls crap like this, the less I respect it. At some point, respect does pay the bills.
Further update Sept. 5

Alan Mutter has one of his usual insightful posts on the whole thing, extending the discussion to consider whether this will hasten the death of already-flagging banner ads.

And Tim McGuire, former senior vice president and publisher at the Minneapolis Star-Tribune, has some sharp words for AP (and a look from the "other" side of AP's standard line on being a news cooperative). Along with calling AP's state reports "shadows of what they once were" is this:

Let’s start with the basic fact of life that was force-fed to me by countless AP bureau chiefs in the sober confines of my office and the not-so-sober late afternoon meetings in the pub: “Hey, we’re in this together. You own us! These rate increases aren’t really rate increases, they’re your part of the partnership fee!”

That AP-as-cooperative stuff was part of the AP mantra from the time the bureau chief stepped out of his car until the time he called to yell at you about your failure to file a dandy photo the AP wanted to distribute to your competition. You “owed” AP the big rate increase and you “owed” AP that news scoop, or the great photo because we were all one big happy family.

I think there’s some domestic abuse going on here.

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