During its annual meeting today, the Associated Press board conducted the usual business—adding Washington Post Publisher Katharine Weymouth and New York Times Co. Vice Chairman Michael Golden to the board, agreeing to a July rollout of its News Registry, approving a new college football vertical with member rev share. It also took an unusual step: it authorized management to negotiate business models and develop platforms with content distributors, search engines, device manufacturers and others on behalf of members and the news industry. That mandate does not include pricing.
That’s a major shift from the AP negotiating only for the use of its content and services, and speaking primarily on behalf of its own members. AP Chairman Dean Singleton, chairman and CEO of MediaNews Group, explained the decision to paidContent in an interview following the meeting: “AP and the AP board have concluded that it’s important for somebody to speak for the industry as we enter into business relationships on mobile and other wireless applications, including the iPad and others. The analogy that was used is you wouldn’t have 32 NFL teams individually negotiating for a broadcast agreements, you’d work together.” (Yes, he does know the teams negotiate for local rights.)
The idea isn’t limited to mobile but, with all of the movement in that space and the potential for new revenue, that is the primary focus. Publishers have been outspoken about frustration with device-driven deals, high revenue share and lack of control over customer relationships. Many also lack the resources to develop their own apps or negotiate broader deals.
Why AP? Singleton said the news co-op is “uniquely qualified” to speak for the news industry given its 24/7 content sharing agreements, its customer base and its business/technology relationships, unlike trade associations lacking a commercial mission. “We need one voice, not only to work on business relationships but also new products that we might do together and also application frameworks so we decided AP should speak for the industry and work for the industry.”
That doesn’t mean members have to participate in whatever the AP negotiates or use any of its templates. “Obviously, any member can decide whether to participate or not but my sense is most will.” What about his own MediaNews? “For new applications going forward, I think we will very much depend on AP to help set the table for us. It does not in any way keep us from doing our own deals if that’s advantageous.
He added, “As we figure out how to format new applications, to the extent we can have an industry standard probably makes it easier to do. To the extent we can share technologies, that makes sense for many of us. Certainly there will be those companies that will do their own thing and they can but for the vast majority of the industry, we need to speak and plan and develop with one voice.”
Asked about Amazon (NSDQ: AMZN) and Kindle or Hearst-backed Skiff as examples, Singleton explained: “We will want AP to negotiate the business terms for an industry relationship. We may want AP to develop a format that we can all follow or you can choose not to. It makes more sense if you’re putting together a business model for new applications. it’s much easier to have AP negotiate a model for the industry than it is for 1,400 newspapers to do 1,400 models. AP can then say, hey, we’ve worked out a very good plan for this particular function for all who want to work with us on it, let’s do it.”
Singleton said the vote was unanimous. “We need the board’s total support, not only agreeing that we will begin speaking with one voice but also to fund the cost of doing this. There’s technology costs, software costs, power costs.” He wouldn’t provide details but said the investment will be “sizable.”
This investment comes after 10 percent job cuts and revenue losses due to AP’s decision to give back more than $85 million in assessment fees to members during the tough economy. The AP annual report released Thursday showing a drop in revenue to $676 million, down nearly 10 percent from 2008 and a significant drop in profit, down nearly 68 percent to $8.1 million from $25 million in 2008.
At the same time, the board approved the development of shared services and capabilities that could be used by members and others, along with the creation of white-label mobile apps for members to develop local products.
Would AP deal with paywall vendors like Journalism Online? “We could. One of the things we might do is negotiate with one or two or three vendors and negotiate a model for the industry for certain vendors, then let newspaper companies choose what they use based on the business rules we negotiate. We certainly won’t do any exclusive deals with anybody.”
When I brought up last year’s efforts by fellow publisher Walter Hussman and NAA to form some industry-wide approaches to paywalls, Singleton replied: “I love Walter, but the discussions that were had a year ago didn’t really have any portfolio or muscle behind it. It was ‘let’s sit around and get in a circle and look at our navels’ together.” AP is the only organization. he added, that has content, business or technology agreements with most of the newspapers in the world. “The NAA or an ad hoc group can’t do that.”
Here’s the AP release on the vote and on the board election.
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