Posted April 17, 2008

(Note: This story is from the Spring 2008 issue of APME News, due to reach member newsrooms soon. As the issue was going to press, AP announced on April 14 it would give price reductions of up to $21 million to the cooperative's newspaper members in 2009. The projected reductions will come about if all members agree to become part of a "Digital Cooperative," estimated to save $7 million, and if an unspecified number of members opt to take AP's basic text service and then select articles from five premium categories on an a la carte basis. AP estimated that reduction in revenue at $14 million. Individual newspapers won't know until summer how much their assessments will drop, and the number will be contingent upon the products they buy. Read David Ledford's column on the unrest here.

By MARTIN G. REYNOLDS

Ron Royhab remembers the good old days.

It was the 1970s and he was bureau chief in Columbus, Ohio for Scripps Howard. Now the executive editor of The Blade in Toledo, Ohio, Royhab recalls how The Associated Press used to cover routine stories, such as following bills through the legislative process.

It was a service that allowed smaller papers to get state news for readers and freed up larger papers to do enterprise and investigative reporting, he says.

Ah, the good old days.

Those days are gone, according to Royhab and the editors of the six largest newspapers in Ohio. They've been replaced by a news service they pay $4 million annually but say competes with them and won't give them credit for the stories they do. There are other issues as well, having more to do with good old-fashioned customer service than price.

"The AP has gotten so big, so strong, so rich that the newspapers that created it are now secondary citizens because they only contribute 30 percent of the revenue," Royhab says. "It tells you the mindset of this supposedly non-profit corporation."

Royhab refers to the percentage of overall revenue AP reports it gets from member newspapers. The other 70 percent comes from other media, such as broadcast and international customers, online and photography.

To address their concerns "The Ohio State" group sent AP a letter back in December. In it, the editors laid out their objections to cost, competition, credit and duplicate coverage.

The AP makes no bones about its move away from routine stories toward high quality enterprise. It is an intentional strategy.

The question for paying newspaper members: Is that what we need from the AP?

If you ask Ben Marrison, editor of the Columbus Dispatch, the answer is a resounding "no."

For him, and other editors outside of Ohio, the feeling is that AP is more concerned with evolving its brand and doing its own enterprise than being that good old wire service happy to give editors what they need in a challenging economic environment.

"They're becoming their own brand to the detriment of their member papers," Marrison said.

He refers to his paper's statehouse coverage, which he says The AP duplicates.

"Why are you doing the same story we did, because you're competing?" he asks rhetorically. "They will argue they provide more statewide context. We don't see it."

Royhab has requested for months that the AP follow its own bylaws and eliminate content created by The Blade from competitors within a 30-mile radius of its market, a process known as "opting out." AP granted the wish, not only for The Blade but all Ohio newspapers, in early April. But Royhab did not view it as a victory, and he intends to fight on.

"It's not like they did us a favor," says Royhab. "They had a contractual obligation to do so. If they hadn't done it, they would have found themselves in court, and they would have lost."

Marrison also is exploring the locals-out option, but has yet to make the formal application for the Columbus Dispatch. Meanwhile, he complains that AP regularly takes the work of his reporters, adds a source or two, rewrites it a bit and transmits it to other members with no credit, except maybe a tag at the bottom.

"We've become a wire service to the wire service," Marrison fumes.

Associated Press Executive Editor Kathleen Carroll says she understands why editors want more granular coverage relating to their region, especially in today's hyper-competitive climate.

AP's move away from routine reporting is not intended to hurt member newspapers, she says. Rather, it's aimed at serving a larger pool of readers.

Carroll says there is "a good movement in many newspapers away from the transcriptive, incremental story that takes 500 to 800 words on the turn of the legislative process screw. I'm in the camp of the editor who thinks readers aren't particularly served by those kinds of stories."

AP Board of Directors Chairman William Dean Singleton, vice chairman and CEO of MediaNews Group, one of AP's biggest newspaper clients, says newspaper editors are taking out their economic frustrations on the AP. He dismisses the breadth of the discontent.

"You're talking about a few editors ... a few editors out of many, many newspapers," Singleton says.

Still, "I am always concerned when any member of AP is unhappy. This is an unhappy time for newspaper editors. It's not a happy time for newspaper publishers.

"Editors are under pressure," Singleton adds. They are "trying to find somebody to blame for today's problems and it's not The AP."

Singleton points out that The Associated Press serves many constituencies other than newspapers, reminding the membership – once again – that less than 30 percent of AP's revenue comes from them.

"In order to remain strong the AP must pay close attention to all constituencies, especially those giving us our growth," he says.

Some editors insist that their complaints don't revolve solely around cost, but also on how AP chooses to deploy resources on behalf of members. Those concerns exist in other markets, including the San Francisco-Bay Area.

"I have concerns how AP fills in the gap for regional and state coverage," says Kevin G. Keane, Contra Costa Times executive editor and vice president of news for the Bay Area News Group.

"It doesn't pay attention to its regional audience."

As an example, Keane points to AP's coverage of California Gov. Arnold Schwarzenegger, who he says AP writes about for Japan or New York, ignoring how the governor's policies impact the Bay Area.

The city of San Francisco is one area where the Bay Area News Group does not deploy reporters and could use AP's support. "I don't believe we get it," Keane says.

Keane understands that AP is attempting to expand its brand, but in doing so neglects its roots.

"AP is supposed to be a collection of all of us," he says. "When it puts on national and international hats, do they lose sight of their original mission?"

Tom Brettingen, recently promoted from senior vice president for global newspaper markets to AP's chief revenue officer and senior vice president for sales and marketing, recalls his days as a bureau chief and says the complaints are nothing new.

"There is always a dialogue about should AP be covering more of this or less of that?"

Brettingen acknowledges the move away from less routine coverage toward an emphasis on "larger stories with greater impact."

AP President and CEO Tom Curley says the company has "always done enterprise. We are going to be doing more enterprise because that's what people want. I have letters from editors and publishers demanding we do more enterprise."

The last thing newspapers want, Curley adds, is a "sleepy wire service."

AP understands the difficult situations newsrooms find themselves in, says Brettingen. "We know every dollar counts."

But based on the studies AP conducts regarding use of its content in newspapers big and small, "we're kind of hard-pressed to make the connection we're not worth what we charge."

Cost is only part of the concern. Most editors interviewed for this story are upset at what they consider unwillingness by AP to adjust coverage to offset areas where a member paper might be lacking.

"We've certainly heard that," Brettingen says. However, that chorus of concern has been sung as far back as he can remember.

With tight economics leading to fewer reporters available to cover routine stories, has AP's bold growth strategy caused it to neglect specific needs of its members?

"I think that's a fair debate for The AP and its membership to discuss," says Brettingen, who had been in charge of AP's business relationship with newspapers but now will also oversee sales to commercial clients such as Yahoo! Inc. and broadcasters.

A decade ago, when revenue wasn't the issue, discussions about coverage were equally robust among newspaper editors, Brettingen says. What's different today is that the conversations are being held in the context of nationwide job losses and budget cuts.

"The fact is, we listen as much as we ever did, (and) try to do as best we can for the entire membership and consider the rest of our customers," Brettingen says.

"Times are hard so people are upset. That blows back on us. If papers have fewer resources, we become an easier target. Do we do everything everybody asks for? We do a lot, and are interested to know what editors collectively want and what they would take less of in exchange."

In addition to the Ohio letter, another epistle was sent to AP from a bevy of editors – including the Boston Globe, Orange County Register, Philadelphia Inquirer and the San Diego Tribune – calling for a rate reduction.

The response from The AP has been, "We hear you." But there's only so much we can do. AP's management says it has measures in place to address some of these concerns, including:

■ A new easy-to-use database will enable local editors to search content relevant to their markets. State and regional content, not as widely available under the old program, will be accessible and easy to find when the new Member Choice plan launches in 2009.

■ Ninety percent of what AP provides will be under a "breaking news" designation and available with the basic pricing plan. Specialty content, such as features, analysis and certain kids of esoteric sports stats will likely be under a premium services sold through a set of "verticals." Exactly where those lines will be drawn is being hashed out now. But AP will have all the details available in July for editors to choose from on The AP Exchange platform.

■ A new pricing plan perk will loosen the rules around licensing of AP content. Under the previous agreements, a member with an entertainment tab, Web site or weekly was not allowed to use AP content in those niche publications. That will be allowed under the new plan.

■ AP has designed a new metadata and search program to better tag and direct online readers back to the member sites where content originated, with the intent of boosting member site traffic.

AP executives have been on the road explaining the new pricing plan. Editors say they have come away appreciative of the visits but unsure of how effective the savings plan will ultimately be. Some want relief now.

"We (newspapers) pay more to AP then anybody else," says Martin Baron, editor of the Boston Globe. "And (the rates) haven't gone down at all while there has been more financial pressure" felt by AP's membership.

As an example, Baron cited upcoming Summer Olympic and election coverage, which he says is double in price what it was four years ago.

"Prices for that have gone up, no question about it," Curley says of Olympic and election coverage, noting that he personally reviewed those assessments. "AP easily undercharged for what it provided in 2004, and 2008's price is fairer given the amount of service.

"We really spend a fortune (on this coverage) and other people are paying the freight here," Curley says, referring – once again – to that 30 percent.

It seems anyone you talk to at the AP will remind you they're only getting so much money out of the Gray Old Lady.

Another sore point for editors is the amount of time a client must give to cancel a particular AP service – as much as a year – while for other news services it may only be 60 or 90 days.

Brettingen says there really isn't much debate around the two-year cancellation notice of AP's basic contract. "The complaints are more about the supplemental (services) - like photos, stock markets tables ... we are reducing those to one year."

Why the two-year cancellation notice for basic service? "It's a bit of an historical artifact" from the days when AP relied heavily on newspaper revenue, Brettingen explains. "The reason the two-year existed was in large part due to AP not having any real collateral to borrow against."

It's ironic the contracts of member papers, some of whom are now unhappy with AP's service and cost, have traditionally been the collateral it has used to borrow against.

"The most we can do is what we are doing now which is stay in really close touch with the memberships as they are changing their strategies to deal with the realities of the industry" Carroll says. "They're making choices of where to focus their staff energies."

So, too, is The AP.

— Reynolds is editor of the Oakland Tribune, which is a member of the Bay Area Media Group and is operated by Singleton's MediaNews Group.