Thursday, October 23, 2008

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.



At 10/24/08, 1:16 AM, Anonymous Anonymous said...

The "AP goes after a blogger" story was largely a myth promoted by (surprise!) bloggers.

Some useful back story from a firsthand observer:

At 10/24/08, 1:45 AM, Anonymous Anonymous said...

I don’t see why the newspapers would resist broadening the membership. I think they’d pretty much accept anything that held out the prospect for greater reductions in their rates.

As far as complete access to text content, your example is misplaced. Under the changes offered previously by AP, ALL newspaper members had access to ALL state wires, breaking news, etc. The “story of the Indiana man killed in Hawaii” was already available to the Indiana member under the new structure, as was news about Indiana-based companies in other states. It was one of the selling points the bureau chiefs used for the new plan. The second tier, “AP Complete,” was what the newspaper members did not have access to and would have to pay extra for.

AP Complete was envisioned as a way to offer analysis, enterprise etc. separately to members who were willing to pay extra for it. Those who didn’t want it – and some of the rate complainers said they had no use for AP enterprise, foreign news, etc – had the option of taking only the one tier of service, at a lower price, and passing up use of AP enterprise work.

I agree that the direction this is going will see the hollowing out of most state bureaus, especially those in small states – Nebraska, Kansas, the Dakotas, Wyoming, Idaho, New Mexico, New Hampshire, Vermont – you get the idea. This is already happening. Vacancies in small bureaus, and even some large-state bureaus that were deemed to be overstaffed, have not been filled. Instead, the positions have gone to pay for more overseas jobs, video shooters, entertainment reporters and the like.

This will have an interesting effect in small states where members rely quite a bit on AP for everything – grunt work, enterprise, legislative and political coverage, coverage of notorious trials and accidents, and the like. States that have been whittled down to fewer than a half-dozen staffers already have to bust ass to put out a daily state report. When those ranks are thinned even more, a daily report will become impossible.

There will be one or maybe two AP staffers in flyover states who will keep an eye out for enterprise stories of national interest and be relied on to cover the occasional train wreck, toxic chemical leak or plane crash. Meat-and-potatoes daily stories from the Legislature or the Capitol will mostly disappear.

Then the members will have the rock-bottom rates they crave.

Just one more thing -- Imagine being an AP bureau chief who has spent months explaining the differences between AP Complete and AP Breaking News to newspaper editors. Congratulations! Your work has been a waste of everyone's time.

At 10/24/08, 7:47 AM, Blogger Doug said...

My pointing out the blogger story was not a judgment on its veracity. I agree, large parts of it were overblown, especially the "per word licensing fee" part that was completely misinterpreted.

My point was that AP was not thinking clearly in picking the fight to start with.

It's like kicking a mound of fire ants. First, you're likely to get bit, and the critters are likely to spread out and create 10 more mounds in your yard.

By stirring up the blogosphere, AP also stirred the types who brought you RSS, FOAF and other technologies and who can -- and are -- working on ways to put the final nail in the AP's coffin. (Now, we can debate the content end of that, but that's another day.)

It was not smart. It smacked of a throwback to the "we not only own the content but the transmission" walled garden days.

A temporary lapse in judgment, yes, but a damaging one both in image and reality. Image because those foaming blog postings are still the ones that float to the top of a search engine.

At 10/24/08, 8:06 AM, Blogger Doug said...

Good point about the Indiana/Hawaii content situation. I knew that. Duh. Will correct it.

I wonder about the hollowing out of state bureaus as such. For instance, if you take the remaining eople and keep two at the statehouse and put two or maybe three others around the state because they no longer have to mess with a desk, is that perhaps an overall improvement?

That, of course, has to be balanced against having a desk far removed that can screw things up royally, as UPI's experiment with this in the 1980s did (at least from what my UPI brethren told me at the time).

And, of course, if you are right and AP cuts back to just a couple of people in a state, all bets are off (give us some examples of where staffing statewide has fallen below six, will you? I can guess some places like Wyoming and Vermont that were always correspondencies, but there aren't that many of those, as I remember.

Good point about the CoBs -- but they're probably on their way out as we've known them, too. You'll probably end up with 10 or so regional news manager types. As the whole thing becomes more detached and impersonal, the CoBs aren't as needed anyhow. They were on the ground as much to keep the members happy (and sell them things like the election wire) as to oversee the bureaus.

Part of it is the shift to chain ownership. As that happened, less decision and budget-making power was at the local level. Just as important was that the local editor who before might have complained to the CoB (whose job was to keep the fools from running to NY) now was just as likely to funnel them to the corporate VP whose point of contact was NY.

I think the two most endangered spots in the AP right now are the CoBs and the state news editors.


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