A Costly Mistake? When the Associated Press Decided a Decade Ago to Sell Its News Content to Online Portals, It May Have Hastened the Decline of the Daily Newspapers That Own the Wire Service

Article excerpt

When Jim Brady went to work as America Online's news director a decade ago, he knew he was joining one of the most important and powerful news organizations in the world. It's not that Brady was commanding an army of journalists and a network of news bureaus. Far from it. AOL's news staff consisted of fewer than 20 people. At the time, the online service generated almost no original news.

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But AOL did have something else: access to the Associated Press--and that may have been plenty. Throughout the 1990s, millions of AOL subscribers got their daily news fix from its package of wire copy. In time, AOL touted its massive news audience to attract other providers, including ABC News and CBS News, to provide content. But its success was built off of the AP.

AOL wasn't the only online service that was generating giant traffic flows on the diverse news offerings of the AP. For many of the early portals and mass-market hubs of the Web--CompuServe, Prodigy, Excite--the AP was the go-to news source. Later, it would become a primary news provider for many of today's biggest online "news" giants, such as Yahoo!, MSN.com and Huffingtonpost.com. Even Google, the world's foremost aggregator of Web content, pays for the AP's work and hosts it on its site, instead of merely providing links that send readers to other sites. Hundreds of sites, most of which have no substantial internal newsgathering capability, are in the news business because of the Associated Press.

What's wrong with that picture? Possibly this: All of these sites compete for traffic and ad revenue with Web sites run by the nation's newspapers. Those newspapers, in turn, have owned the Associated Press as a nonprofit news cooperative since 1846. In fact, some of the stories the AP sends out to its digital customers each day are rewritten from newspapers. All of which means that, for years, newspapers have effectively been handing their online competitors one of their chief weapons in the fight for the news audience, the AP wire.

As the financially battered newspaper industry considers various schemes for charging for its digital content (see Prime Time, February/March), some look back ruefully on what news industry blogger Alan Mutter refers to as "the Original Sin"-- the more or less collective decision to offer free access to news online. The obvious difficulty in all of these newspaper pay proposals is that news has become a commodity, widely and freely available just about everywhere on the Web. The simplest and most persuasive argument against charging for news is this: If you won't offer it to me for free, another site surely will.

Some of this transformation--certainly by no means all-- has been facilitated by the AP's highly successful marketing efforts over the years. No news organization on earth is as extensive or as extensively positioned on the Web. With some 3,000 journalists in 243 bureaus around the world, and thousands of clients, the sun never sets on the Associated Press' newsgathering machine. The organization's own boilerplate description of itself says its text, video, photos and graphics reach more than half of the world's population in a given day.

The implications of the AP's reach in the debate over free content are fairly obvious. Why buy a copy of the New York Times, or bother going to its Web site, when the AP's versions of the same national and international events are available just about everywhere? Who needs the Washington Post's take on politics when the AP's generally comprehensive and thorough reporting suffices? For that matter, why bother with your local paper, or its Web site, when it contains the same generic AP content available in thousands of other places? This thought has already occurred to some newspapers; the recent rash of intent-to-cancel notices submitted by newspapers to the AP has been driven both by displeasure with the cost of AP service and by frustration with the ubiquity of its content. …