My issue with the AP

The associated press is an institution as venerable as the newspapers themselves. Founded as a non-profit collective, it functions to reduce the expenses of news gathering by centralizing some functions and cross-publishing others. The ability to republish member journalism goes beyond the cash contributed by members and helps further defray costs. They set the standards for basic professional journalism in more ways than one. In short, it enables an easy way to limit the number of reporters covering a given story, thus reducing costs for the entire industry. Newspapers would be in even worse shape if it weren't for the AP.

However, I personally believe that the AP is as responsible for newspaper demise as it is keeping them alive. It comes down to the focus of cost reduction. Take this press release as an exhibit. There are two key points there. Cost reduction and a new technology platform. The reduction of member fees is mentioned several times.

The AP is a non-profit and a well run one at that. It has been pretty forward looking in signing deals with Google and other platforms for distribution of content. My guess, however, is that these deals aren't as lucrative as a "for profit" would demand, thanks to the focus on expense reduction. Even if they are, there's a solid chance that ala carte distribution may not be in anyone's long term best interests.

Here are three potential deal structures:

1. Pay per read - This could either be through a revenue split or just via a flat fee. Either way it will only be a portion of the value created by the content purchaser.
2. Subscription basis - Could be a full feed or a partial feed. Again, a purchaser is only likely to pay a portion of the value created, and usually less in this case since the purchase is of uncorrelated value to actual usage
3. Pay per article - While unlikely for automated systems like Google, this would allow a content acquirer to cherry pick only the most relevant articles.

All three deal structures come down to one question - who can monetize the content the best? Is a link to a member site more lucrative than the entire article published on a third party site? For the local information that most newspapers publish, and given the high rates and ad volume on most NP sites, the answer would seem to be the member newspaper site rather than a third party, even the almighty Google. If that's the case, then giving it up to a less efficient monetization channel for only a portion of the value is a VERY bad long term decision.

The second factor is allowing the aggregator additional power. Much like search has become dominated by habit and a single brand, it is easy to imagine the same thing occurring on portals for news. In the long term this runs the risk of cutting out the "discovery" on an individual newspaper site and moving it to the content acquirer. In essence, newspapers might be giving up considerable web audience as a result.

I don't want to pretend that the decision is this clear cut. Search engines and content portals have created a wedge between monetization and content creation. Content is becoming more and more a la carte, and consumers need numerous ways to find relevant content. Search and content portals are great at this. Some revenue is far better than no revenue, as the record industry is finding out, but struggling with as well.

If I were to make a change, it would be to turn the AP into a for profit entity. Let them run with the notion of value maximization rather than cost minimization. Convert members from financial backers into equity partners. At least then there is a chance that the AP could one day actually return dividends to content producers, rather than merely worrying about reducing its member's subscription price.