Monday, April 6, 2009

AP's chance to reinvent itself

The Associated Press, which today sent a love letter to newspaper publishers everywhere, has a curious business model. The large newspapers that provide the bulk of AP's content pay hundreds of thousands of dollars apiece to participate each year, keeping the service's newsgathering costs low and filling its coffers at the same time. Brilliant.

But the country's major newsrooms are starting to revolt, with some already walking away and others threatening. It seems only a matter of time until many form their own cooperatives or decide they can shed wire copy altogether to focus on local content.

To its credit, AP sees the writing on the wall. Unfortunately, the changes envisioned in today's announcement are too little to stem the tide. Whether it's too late to do anything about that remains to be seen.

So, AP, here goes. I have a starting point for you when it comes to a conversation about the news cooperative of the future. It's startlingly simple, really.

A la carte.

That's it. (I told you it was simple.)

Here's how it would work: News organizations, from The New York Times to a citizen blogger in Topeka, could submit their stories, videos and multimedia to a central aggregation service for a nominal processing fee. The service would then organize it and make it all searchable in a way that allows other news orgs to sift through it.

When a news Web site or newspaper finds something it wants to use, it pays a per-story fee that goes back to the creator of the story -- with another handling fee held out for the cooperative. Organizations or individuals that contribute would be rewarded based on how popular their work turned out to be.

So, to continue with our example above, a New York Times story on financial services regulation might get picked up by 9,000 outlets on a given day. Each buyer pays 50 cents for the right to re-publish the story, 40 cents of which could go to the Times and a dime of which could go back to the cooperative. The Topeka blogger might write something on state politics that gets picked up by 12 news orgs in Kansas, and makes a little less than $5 for the day. The Times, meanwhile, makes $3,600 on that story that day.

News aggregators and search engines would have to work out separate deals. Some smart person would figure out whether and how to charge the Google News and Yahoos of the world. (WSJ editor Robert Thomson, in a story today, called aggregators "parasites or tech tapeworms in the intestines of the Internet," predicting a big fight over content ownership soon. Google counters that it helps, rather than hurts, news sites by sending traffic their way.)

Taking a page from the recording industry, the cooperative would go aggressively after any Web sites or news orgs that try to circumvent the system by stealing content for free.

The primary advantage to such a system is its inherent fairness. News orgs that pay a lot to gather and create content earn more; smart individual analysts stand to make money from their insights; outlets that pay little or nothing for newsgathering would have to pay more to buy it.

It should be noted that newspapers and their behemoth newsrooms wouldn't necessarily dominate this kind of arrangement. The market would essentially decide who survives based on how many outlets pick up work on a given subject. In fact, smaller outfits and startups focused on niches might be able to put together profitable business models right away in this system. Have five reporters focused like a laser on a specific issue, churning out stories and videos nobody else is doing? You might find a profitable niche overnight, if other outlets want to use your work on their Web sites, mobile news feeds or print offerings.

AP is probably best situated to create an egalitarian system like this. But if the service decides to continue more-or-less in its current configuration, there's probably an opportunity for someone else to step into the breach. Startup, anyone?

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