About Me

  • I'm CEO of Newspeg.com, a social news-sharing platform. I've spent 20 years at the intersection of traditional and digital journalism. I've helped to invent ways to read and interact with the news and advertising on computer screens and iPads, and before that, I wrote news stories on typewriters and six-ply paper. I co-founded WashingtonPost.com and hyperlocal pioneers Backfence.com and GrowthSpur; served as editor of Philly.com; taught media entrepreneurship at the University of Maryland; and have done product-development and strategy consulting for all sorts of media and Internet companies. You can read more about me here.

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August 13, 2008

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edward

Potts said: That suggests that newspapers need to find ways to move their brands onto TV (what is this, 1955?).
No, I think the reference is to that old nirvana, convergence of local TV and local newspapers, which many execs have already positioned their properties to undertake. Merging news operations of local papers, TV makes great economic sense, except the FCC refuses to go along and Congress threatens to erupt in opposition to creating new monopolies everytime a leading commissioner speaks favorably about the idea.
I think the political opposition to this will gradually erode as politicians realize they can't control the new Internet media as much as they can local TV, radio and newspapers. If they don't like a local story, they knew who to call at the newspaper or the local station to protest. But who do you call if a Web site posts a derogatory story and doesn't post a phone number, or respond to a flaming e-mail? The Internet is providing so many sources of information that it's impossible to keep up with it, and the sites can be easily and misleadingly cloaked or disguised. I believe we will see a hint of the big negative consequences in this election, which will give bruised politicians a reason why they need to engage on this issue.
On the broader issue addressed by AP, I have about given up on the MSM being the source of information in the future. The DrudgeReport is now more than a decade old and while the MSM had the opportunity to bury Drudge and put out a superior headline report that appeals to multi-tasking younger news readers, the MSM hasn't even made an overture. My daughters like many in the young generation get their news from the Comedy Channel's Daily Show, which I actually also like, but neither traditional TV or newspapers know how to handle Jon Stewart.
Frankly, it is as if newspapers are surrendering on all fronts. Look at the recent decisions putting sold and lucrative monopoly papers in Austin and San Diego on the market, and the lack of interest in buying the papers that dominate Maine. I think the execs are in the process of writing off newspapers as yesterday's news, instead of trying to bring them into the 21st Century. The WPO and NYT are showing how it can be done, but there is a massive lack of imagination elsewhere.

Working Reporter

With all due respect, I think you're overlooking the crux of the AP problem in a way that's key: it's not about the journalism. It's about the money.

It's great that the AP is experimenting with new models of delivering news, and many of the ideas you explore here have merit. But, as with newspapers, these experiments are more or less irrelevant unless they contribute to preserving the overall health of the organization. It's not very helpful to develop a great new form of journalism if you then go bankrupt.

The problem with the AP's embrace of online is the way in which it magnifies that economic problem. In the past, the AP shared its own and newspapers' content with other newspapers. Since they shared an economic model and all were both contributing to and drawing from the AP news pool, this business model made sense.

Today, however, the AP is selling content to aggregators like HuffPost and Yahoo. These companies have a very different business model that is in competition with newspapers -- they produce no content, so their overhead is low, and their ad rates are extremely cheap. Their content is from the AP or republished with or without permission from newspapers (depending on the site).

When the AP delivers to these aggregators, it is doing two things: helping them become established as a source of news - helping them economically - and blowing a hole in the existing business model. These non-content-creating sites aren't part of the old content sharing model, so newspapers get nothing out of the deal. And because their ad rates are so low, they then compete fiercely with the very newspapers that created their content.

The AP's embrace of these new competitors, in other words, is siphoning content out of the pool of value without replacing it. Obviously this isn't the whole problem with newspapers, but it obviously isn't part of the solution.

Unfortunately, most media observers are more interested in the admittedly exciting prospects of reinventing journalism than they are with grappling with these hard economic truths. Even as newspapers have embraced some of the changes the online gurus have espoused over the years -- user commenting, blogs, instant gratification news -- online revenue as a percentage of total has remained in single digits, and growth is slowing.

These techniques -- along with allowing aggregators and blogs to use newspaper content for free and without limitations -- were supposed to drive traffic to newspaper Web sites. But the growth in that online audience has slowed, as has the growth in time spent on page. Something isn't working as planned.

It's fine to say newspapers just haven't evolved enough. But at some point, the people pushing this evolution need to step back and honestly answer the question: Why isn't this working? Fail to answer that question soon, and it will become moot.

Wenalway

You are so off-base on this one that it's difficult to figure out where to begin.

The previous commenter seems to have nailed the high points, though.

Mark Potts

Any profit the AP makes selling content to third parties goes back to its owners: The newspapers. If the AP's owners want to raise those third-party rates, that's their choice. And believe me, if AP decided to cut those third parties off dead, Reuters, Agence France-Presse, Dow Jones and countless others would be happy to take over that revenue stream--further crippling the newspapers.

If the newspaper industry announced tomorrow a plan to create a consortium to sell third-party news feeds to Google, these AP-bashers would doubtless be overjoyed. Well, guess what: It already exists. It's the AP. And thank God the newspapers own it, not somebody else.

Working Reporter

"Any profit the AP makes selling content to third parties goes back to its owners: The newspapers."

OK. How does that profit compare with what newspapers are losing to sites that reprint their content -- purchased by the AP -- and feature it with their own ads? I'd be very interested in seeing this number -- as far as I know, nobody has ever looked into it. I can't imagine the balance is positive, otherwise newspapers in Ohio and elsewhere wouldn't be walking away from the AP.

If the papers are making as much or more from the AP selling their content to online sites, I'll cheerfully buy into the model. But if the newspapers are losing more than they are gaining, they should order the AP to get out of those agreements immediately.

It's simple economics. If you're building widgets and selling them through a wholesale clearinghouse, you expect that wholesaler to be selling your widgets at a high enough price to cover your expenses and profit. If the wholesaler isn't doing that, you tell your wholesaler to raise the price -- or get out of that business.

As for the possibility that Reuters et al would happily fill the chasm -- let them. And if they can make money off the deal, good on them. This isn't about not wanting the aggregators to be able to buy news from a willing seller, nor is it about preventing new models from springing up to compete with newspapers. It's about protecting the value of created journalistic content. It's about finding models wherein people who create news can make enough money to continue creating news.

You, among others, have advocated that newspapers emphasize local content as a means of capturing an audience. But under the current AP system, that local content, once shared with the AP, can be resold to a cut-rate competitor, who then competes for the same local audience. Unless the sale price of that content is more than the cost of creation -- which I doubt -- how does that make any kind of business sense?

jtd

This report is flawed.

--The test group had only 18 people.
--The age range was the typical 18-34 marketing demographic, with emphasis on 18-24 year-olds. The age range should have been expanded.
--There's no mention in the 71-page report, that I could see, of the AP's failed ASAP multimedia endeavor, which was squarely aimed at the 18-34 demographic. ASAP folded in 2007. I heard newspapers didn't subscribe to it because the packages were too expensive.

Mark Potts

AP doesn't sell newspaper content to Google, etc., for the most part. That's a common fallacy. The state wires, where the vast bulk of newspaper content is carried by the AP, aren't available to third parties. What AP sells is the content it creates with its own reporting staff (the largest news staff in the world, I believe). So it's not undercutting its newspaper owners by reselling their content.

Working Reporter

At the risk of sounding snarky, if you think all that AP content is being created without the use of content from its member newspapers, you haven't spent much time in an AP bureau lately.

I'm sure you saw this WSJ piece: http://online.wsj.com/public/article/SB121444598979205887.html?mod=blog

Here's a relevant excerpt:

In the past, (Ben Marrison, editor of the Columbus Dispatch) says, he could usually count on the AP to cover such a trial if he wanted to commit more reporters to a bigger story. When he was told the AP wouldn't have a reporter there, he sent one of his own to Akron. Shortly after the story was posted on the Dispatch's Web site, an AP staffer rewrote it for a broader audience and put the new version on the state wire. "So it was important enough for them to move, but not important enough for them to cover," Mr. Marrison said. "What has happened is we've become the wire service for the wire service.""

Working Reporter

A quick example of what I'm talking about, from Yahoo News:

http://news.yahoo.com/s/ap/20080814/ap_on_re_us/apartment_fire;_ylt=AjEsylJf5newwx3mjWfwf_ys0NUE

Relevant paragraph:

T.J. Dougherty, 25, who lives in a fourth-floor apartment in one of the buildings, watched his home burn. "My whole life is in there," he told The Philadelphia Inquirer. "I have nothing left."

The remainder of the article is a recap of facts that, I suspect, also came from Philadelphia newspapers. This isn't a new phenomenon; it's the way the AP has long worked, as any newspaper reporter knows. And it wasn't really a problem when the AP was just sharing news between newspapers -- why would the Inquirer mind if the Miami Herald ran its article on the fire?

But when that article appears on Yahoo News -- with Yahoo's ads for Southwest Airlines and Blockbuster Videos -- the Inquirer had better pay attention.

Jason Preston

Wow, my head hurts.

I read "A new model for news" when it came out it June, and I think the AP is more or less right on the mark.

They're being very smart, which doesn't mean that newspapers shouldn't be giving them flack. The AP is taking newspaper money (pay for AP content) and using it to fund a complete flip: they are positioning themselves to own the distribution channels.

@Working reporter - you're right that the business model is what matters, but you're wrong in assuming that the AP doesn't have one.

Online ads are a volume business, not a margin business. The AP is getting in place (see mobile news network) to serve content to people WHERE THEY WANT IT and on their terms, which is how it's going to be going forward.

I'm calling it now (& I have a post on the way): The AP is flipping the relationship --- newspapers will be reselling their content through the AP inside 10 years for a major portion of their business.

Working Reporter

Jason:

I don't assume the AP doesn't have a business model. I just think it has a bad one.

Unless I'm mistaken -- and tell me if I'm wrong -- the AP doesn't see any revenue from online ads because it doesn't HAVE ads. It sells its content to other entities, who in turn display that content with ads, in print or online.

That's the crux of my concern with the AP model as it embraces online aggregators. It's taking content that somebody else paid to create and selling it to parties who have dramatically lower overhead -- and therefore lower ad rates. I don't have the math to prove it, but common sense suggests that model depresses the whole industry.

Now, if AP were taking newspaper content and distributing it with ads the AP itself sold, or that its member newspapers were selling, or some variation on those models, I'd be excited. Because newspapers DO need a better distribution model. But they need one where there is a correlation between the money they are spending to create content and the money they charge for ads; not a model where expensive-to-produce content is resold at a loss, which I suspect is the status quo.

By the way, just to prove I'm not an AP basher, I do think the AP is forward thinking on a number of points. Some of the new forms of journalism it is exploring are very exciting, and its use of attributor.com to track content and challenge unauthorized use of its material is one more newspapers should explore.

Jason Preston

@Working reporter - don't worry, I don't think you're an AP-basher ;)

You're not alone in thinking that the AP doesn't serve ads against its content, but it does. It's here:

http://hosted.ap.org/dynamic/fronts/HOME?SITE=AP&SECTION=HOME

The site is not well publicized and I'm *guessing* that it's actually a trial run to warm up the guns at AP to start that ad network that you'd be excited about.

The only thing to keep in mind, again, is that the ad model is based on SCALE. Selling content to lower-paying outlets and serving against lower-cost ads is not necessarily a step backwards. I'd rather have 200,000 pennies than 20 dollars.

Wenalway

"Online ads are a volume business, not a margin business. The AP is getting in place (see mobile news network) to serve content to people WHERE THEY WANT IT and on their terms, which is how it's going to be going forward."

Newspapers could be doing this themselves if they had a clue. This does not have to be done through AP.

"I'm calling it now (& I have a post on the way): The AP is flipping the relationship --- newspapers will be reselling their content through the AP inside 10 years for a major portion of their business."

Or newspapers could do it themselves without going through AP. This won't happen tomorrow, as papers have contracts with AP. But if they start working toward developing their own networks, they could do this themselves.

Joe Bullard

You can directly tie the downfall of metro newspapers to the day the AP decided to sell content to on-line news sources. Because the AP is a cooperative, it's tough to figure out who should take the blame – the AP executives or the board of directors that is made up of newspaper publishers. How ironic.

Eyewitness

"You can directly tie the downfall of metro newspapers to the day the AP decided to sell content to on-line news sources."

Yeah, it had nothing to do with newspaper management sloth in moving to and taking advantage of the Web and new media, their inability and unwillingness to invest in new products, and stubbornly sticking to a product and business model that's been obsolete for years. No, it's that demon AP that's wrecking the newspaper business.

You really need to start paying more attention to what's going on, Joe.

Vail Beach

Wenalway,

It's unclear who you're calling off-base. Working Reporter, or Mark Potts? And who is the "previous commenter" you are extolling, Working Reporter or edward?

Vail Beach

Never mind. I had the post up on my screen and hadn't refreshed for awhile.

Great discussion.

I tend to be on the side that blames the editors and publishers for refusing to "compromise" with an audience no longer interested in the kind of product they prefer to put out. Rather than thinking of their content as a product, they prefer to think of it as a public trust, with all the attendant mystique associated with that.

The AP study shows the news market is not static, it's growing, but it's changing, changing radically. Lots of competition moving in to address the new market but unfortunately newspapers aren't really in the race, yet.

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