AP hoists the white flag, looks at reorganization

The battered wire service that is under seige from all corners, it seems, of its core newspaper membership (just follow the AP tag at the end) effectively proposed terms of surrender today and in the process said it would look at possibly reorganizing the news cooperative.

I doubt the money -- $9 million additional in lowered assessments -- is going to mollify most editors facing budget black holes, but there are a lot more key points

• AP will look at reorganizing its membership structure, with possibly more classes of membership. Take your pick: This could be a way to broaden the membership, which could be a tough sell for Curley & Co. to the current newspaper members; it could be a way to let some of the squeaky wheels wheedle a lower membership class (and lower rates); or it could be the start of dissolving the cooperative nature of the wire service. I suspect a little of all three.
• Re-examination of the two-year notice rule, long argued for as providing needed stability but now seen as draconian in these fast-moving times.
• Complete access to all text content. This isn't quite throwing open the vault to the family jewels -- in fact, text has probably become the least valuable of AP's assets compared with its photos and, perhaps, video. But it speaks volumes. It is an even sharper break than previously proposed implemented from the old system where you got your state, a couple of neighboring states and the national report. Now, that webmaster who needs the story of the Indiana man killed in Hawaii won't have to wait for an AP relay; he'll be able to program the filters to lift it right off the stream and put it on the Web site. (My example was misplaced as noted in the comments below. I had forgotten that AP had done that and was remembering a conversation I had with a disgruntled webmaster about a year and a half ago.)
  

Here's the money quote, in my mind, from AP Preisdent Tom Curley: "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.”

Put another way: Uncle! So what if our execs keep reminding you, dear newspapers, that you're now just 25 percent of our revenue (but, really, you're still important). The initiatives in Ohio and elsewhere to come up with alternatives, not to mention the ill-advised assault earlier this year on a blogger that riled up the kinds of people who can make those initiatives succeed technologically, are taking their toll. Twenty-five percent of something is still better than nothing of nuthin'.

The text of the release:

AP Board approves further rate reductions; AP to undertake review of membership structure

NEW YORK -- The Associated Press will reduce U.S. newspaper member assessments by another $9 million next year and immediately begin a re-examination of the AP membership structure.

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.