AP Content For Dollars

Members of the Associated Press who make a dollar using AP content online will soon have to pay for that right.

Earlier this week the news cooperative’s board of directors announced it would begin charging an online licensing fee to its newspaper, television and radio-station members for AP content that shows up on their Web sites.

The online licensing fee goes into effect Jan. 1, 2006. The new fee structure doesn’t affect commercial customers, such as Yahoo and Microsoft’s MSN, who pay to use AP content on their sites.

To date, the organization allows its members to re-purpose AP content used for print or broadcast news on their Web sites for free. For nearly 10 years, AP has refrained from charging its members for its stories used online.

“Since the dawn of the commercial Internet age, AP has encouraged its members to use AP content in their online operations,” Burl Osborne, AP chairman of the board, said in a statement. “AP’s philosophy was to promote member efforts to develop this new medium, and to give those fledgling online efforts time to grow,” he said.

With AP stories appearing online, however, the cooperative is finding it’s missing out on a lot of online revenue that’s going straight into the pockets of its members. According to research aggregator eMarketer, online ad spending in the U.S. hit $9.5 billion in 2004, a number that’s expected to reach $17.6 billion in 2008.

Jane Seagrave, director of new media markets at the AP, said the organization has been debating the idea of an online licensing fee for several years, but officials felt now was a good time to institute the new fee.

“The shift from print to online has accelerated over the past couple of years and we’re all seeing it,” she said. “This is an effort to begin to transition our business model to one that is more in keeping with the way content is moving.”

The new fee won’t result in a windfall for the organization, Seagrave said. The current fee charged to AP members is based on market size in the broadcast world and circulation numbers in the print industry; a similar model is expected to track online use of AP content by members, she said. So as traditional media reach decreases and online reach increases, it will have a relatively small net effect overall.

“We’re just trying to shift some of the revenue,” she said.

News rival Reuters has been adapting content distribution to meet the demands of the Internet age, though it’s going through some growing pains.

The company has been reducing the amount of text, video, graphics and photos it distributes to online news aggregators and instead distributing more content through its own Web site with its own advertising spots. Revenues dropped two percent in 2004 because of the change, however, according to officials.

The AP’s decision to move into charging an online fee is overdue, said John Blossom, president and senior analyst at research company Shore Communications.

“It’s certainly overdue given that news organizations are using AP content aggressively online to track clicks to their advertising,” he said. “At the same time news organizations are recognizing that online traffic increasingly is going to be the core of their revenue strategies moving forward.”

The AP doesn’t have the luxury to experiment with a change similar to Reuters’ grab for online advertising monies. Where Reuters is a publicly traded entity on the London Stock Exchange beholden only to its shareholders, the AP is a cooperative owned by the member newspapers and broadcasters that both contribute to and use the news it distributes.

Blossom said the AP needs to maintain a delicate balance when it seeks to charge its members more money. While Reuters is free to make a move that monetizes its content, he said, it’s difficult, if not impossible, for the AP to move beyond the model of an organization serving its membership.

“They try to service their members and to some degree it’s not to their whole advantage to get too far out in front of that membership,” Blossom said.

“At the same time I think they’re recognizing that the nature of news aggregation is such that in the long run the AP may have certain advantages over their member news organizations in being able to place rich streams of content contextually in many places that go beyond the membership news.”

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