Curley: Newspapers Now Provide Only 20 Percent of AP Revenue (Dinosaur Media DeathWatch™)

Poynter Online ^ | October 27, 2010 | Rick Edmonds

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Revenues from newspapers have fallen by about one-third at the Associated Press since 2008, from $220 million a year to about $140 million in 2010, and now make up just over 20 percent of the organization's total revenue.

CEO and President Tom Curley revealed the decline when I asked him last week about the cooperative's business relationship with its member-owners. He added two more financial nuggets:

* "We expect it will continue to drop another $5 to $7 million a year" in 2011 and beyond. * The AP loses money on services to newspapers and effectively subsidizes those offerings with more profitable lines of business. But Curley said he was uncomfortable with continuing that imbalance indefinitely.

Though Curley and AP spokesman Paul Colford did not provide numbers for other business segments, Curley said growth areas include commercial photos, software businesses and AP's international television news feeds, about to receive a $30 million upgrade to digital.

Online news has been a positive, he added and broadcast is stable. Besides covering news abroad, the AP has also has a large international client base.

The 160-year-old collective remains fully owned by its 1,500 newspaper members. Its board is dominated by top newspaper executives (including Poynter chairman and St. Petersburg Times CEO Paul Tash) with a couple of broadcast representatives.

That may seem incongruous given the industry's declining importance to AP's business fortunes, but Curley said he and other AP leaders are "absolutely not" interested in changes in ownership or control.

I asked Curley (and in a separate interview Executive Editor Kathleen Carroll) how AP had defused a hostile faceoff with metro-paper editors in early 2008. In an angry meeting with Curley during that year's American Society of Newspaper Editors conference, editors variously compared AP and its policies to a cable company that charges extra for the best channels, a game of three-card monte and the Politburo.

There were threats of defections, and a number of papers gave a two-year notice of cancellation. In the end, though, none of any size actually left.

Curley and Carroll both pointed to three factors quelling the revolt. First, there were rate cuts in 2008, 2009 and again this year. Second, AP began offering a "choice" plan. While not exactly cafeteria pricing, it allows papers to choose among "bands" of service, including a less expensive basic level.

Third, both Curley and Carroll hit the road with numerous visits to state press associations and individual newspapers. At the end of that process, Carroll said, "they felt they had been heard."

I checked the AP executives' account in an e-mail exchange with Martin Baron, editor of The Boston Globe and one of the most outspoken of the 2008 critics. He confirmed that the Globe's relationship with AP is now on an even keel and said he sees little sign of continuing dissatisfaction.

Curley added one footnote to the controversy. "Our business model trails the industry -- we're about two years behind," he said. So just as editors were getting orders to make draconian newsroom cuts, AP "had a $90 million cash flow that year. That certainly prompted a legitimate conversation, but I won't apologize -- we needed the money for pensions and updating equipment."

Carroll said at the time that the news-sharing arrangements among papers, starting in Ohio and quickly spreading to other states, would not work as replacements for AP. Indeed, the content sharing deals are thriving, but newspapers continue to find AP "essential," as the service brands itself, for state, national and international news, photos and video.

At last week's AP Managing Editors conference at Poynter, Carroll announced a sweetener -- a big state-by-state data base and investigative project that will allow members to expand and tailor coverage of the severe budget crunch in most states.

While AP has made peace with its newspaper members, conflict has opened on another front. CNN dropped its AP contract in June. "CNN no longer pays us anything," Curley told me, "but they continue to make extensive use of AP material."

While neither suing nor directly threatening a suit, AP has criticized CNN for picking up the substance of AP news breaks (usually with attribution) minutes after they have been posted online by paying clients.

That's the same principle behind AP's expansion of its current content registry to an independently run copyright clearinghouse. Curley said the wire service has been studying how other forms of intellectual property are protected, especially musical composition.

"If you write a great song and 19 people record it, you get paid for it," he said, and even widely dispersed bars and nightclubs typically pay a licensing fee for music they play. Why, he asks, should enterprise reporting not have similar protections?

In both our interview and a presentation to editors, Curley underscored that the registry and clearinghouse are about more than just enforcement. The "data analytics" of tracking where content gets used, for instance, could be a profitable business in itself for AP, he said.

While AP is a lot bigger and more diversified than its member papers, its developing business model echoes that of newspapers. As traditional revenues wane, it will take many new income streams, mostly digital, to pick up the slack.

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Of interest to our group.

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ping

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http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=138384
Media Buyers: Tribune Co. Is A Disaster

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=138381
Internet, Mobile Use Triples Among Young Demos

http://www.editorandpublisher.com/Headlines/ap-proposes-to-freeze-employee-pensions-63072-.aspx
AP Proposes to Freeze Employee Pensions

http://www.editorandpublisher.com/Headlines/times-and-sunday-times-paywall-content-has-362000-monthly-users-63069-.aspx
Nielsen estimates traffic to News International sites’ front pages has declined 43% and number viewing stories by 88%

[PGalt]

The 160-year-old collective...

GRRRRRREAT post! Thanks.

ping

[SanFranDan]

The first page of our rag (which I never buy) is usually written by staff writers. All the rest is AP cut and pastes, along with a smattering of the other usual suspects the NY Times and WA Compost.

But instead of using the AP, like GMA or any left leaning media who takes their marching orders directly from a White House Blackberry, why don’t the Lean Forward AP sucking newspapers do the same thing?

Like GMA they could simply print faxes directly from Gibbs’ feeble spin machine? It’s the same as the AP, substantially cheaper, has the same creditability, and their shrinking readership won’t even notice the difference. Kind of like switching from Pravda to Isvestia.

[SanFranDan]

“in early 2008. In an angry meeting with Curley during that year’s American Society of Newspaper Editors conference, editors variously compared AP and its policies to a cable company that charges extra for the best channels, a game of three-card monte and the Politburo.”

They had them pegged in 2008 and then let them off the hook.

[Zakeet]

Revenues from newspapers have fallen by about one-third at the Associated Press since 2008, from $220 million a year to about $140 million in 2010, and now make up just over 20 percent of the organization's total revenue.

I question the statement that newspaper revenue of $120 million per year comprises 20 percent of the co-op's total sales. This indicates total revenues of about $600 million. Considering that their other business lines consist of news feeds to radios (who are in the toilet), photographs (never very lucrative), and software (I'm not aware of any killer app's), it is unlikely they could come up with $480 million through these sources.

On the other hand, I find their statement that sales to newspapers has tanked to the tune of 33 percent in less than two years very plausible. Newsers are cutting back everywhere as ad sales and circulations plummet.

Considering the state of the industry, their assertion that, "Online news has been a positive and broadcast is stable" seems unlikely unless both AP segments are extremely small niche segments.

[SandRat]

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http://newsafternewspapers.blogspot.com/2010/10/aps-ascap-for-news-new-ecosystem-new.html
AP’s “ASCAP for news” — new ecosystem, new revenue streams, new enterprise opportunities

http://newsosaur.blogspot.com/
Ice cream shop out-‘fans’ S.F. Chronicle

[Zakeet]

Re. Ice cream shop out-‘fans’ S.F. Chronicle

A priceless excerpt from the article:

The folks following the tweets of my favorite ice cream shop in San Francisco – a quirky place called Humphry Slocombe – now vastly outnumber [by about 50 percent] those who buy the San Francisco Chronicle on any given day of the week.

Think about it: A barely two-year-old business with no marketing budget in a modest storefront in a less-than-fashionable part of town now has a larger and arguably more passionate audience than a once-mighty metro daily that traces its history back to 1865.

How did it happen and what does it portend for what’s left of the Chronicle and the newspaper business?

Interesting questions, indeed.

[ken5050]

The article about the decline of traffic to News International sites remind me of the old joke about Amazon, when it first started, and was losing money hand over fist:

Their business model, lose money on every sale, but make it up on volume..

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http://www.poynter.org/column.asp?id=134&aid=193460
Broadcasters want FM radios in all cell phones

[conservatism_IS_compassion]

The Associated Press homogenizes journalism. With the result that it magnifies the biases which inhere in journalism.

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Note how the AP is in direct competition to the agencies that actually OWN it!

[Ken H]

Curley: Newspapers Now Provide Only 20 Percent of AP Revenue

'Nyuk! Nyuk! Nyuk!'