WSJ on the AP ...

WSJ's Russell Adams wrote this think piece on the Associated Press on June 26th and I thought it was interesting. Click on the headline above to link to the WSJ (if you have an account):

NEW MEDIA FOCUS SPLITS AP MEMBERS:

As the economic pressure on newspapers intensifies, the Associated Press, a 162-year-old news gathering cooperative for the industry, is beginning to fracture.

Long a newspaper-centric organization, the AP has shifted its focus in recent years. With readers and advertisers migrating away from news on printed paper and toward cable TV and the Web, the AP is devoting more of its resources to producing content for other news outlets. These include the very Web portals that pose the greatest competition for newspapers, such as Yahoo and Google, which are now among the AP's biggest customers.

For some editors, the AP's strategy, coupled with its high prices, amounts to a betrayal at a time when the industry is under threat. In recent months such frustrations have sparked a bitter war of words. The editor of the Pittsburgh Post-Gazette, for example, likened AP President and Chief Executive Tom Curley to the secretary-general of the Politburo at a convention in April.

Some newspapers have attempted to reduce their reliance on the AP. This past spring, prompted by unhappiness with the AP's fees and reduced coverage of state and local news, the eight largest newspapers in Ohio created a cooperative called the Ohio News Organization, or OHNO, which allows its members to sidestep the AP by sharing stories. Five Montana newspapers owned by the newspaper concern Lee Enterprises Inc. have also begun sharing more content. And editors in Texas, Pennsylvania and Indiana have quietly inquired about how the Ohio cooperative works.

In some cases, newspaper editors are going up against their owners, many of whom are represented on AP's board and support the organization's initiatives. "There is a chill in the air that this is something that we can't engage our corporate owners on because they're conflicted," an editor says.

Dean Singleton, chairman of the AP's board and chief executive of newspaper publisher MediaNews Group, says that he welcomes a healthy debate about the AP's role in reporting and delivering the news but that the editors' complaints are misguided. "When you're faced with downsizing your news operations and making dramatic changes in how you operate, you always look for someone to blame," he says. "And AP has been a handy entity to complain about."

Rupert Murdoch, chief executive of News Corp., which owns Dow Jones & Co., publisher of The Wall Street Journal, was appointed to AP's board of directors in April. In March, Dow Jones announced it wouldn't renew the news partnership between Dow Jones Newswires and the AP and had entered into a new agreement with Agence France-Presse. Dow Jones said the switch reflected its strategy to invest in global financial news.

The AP was founded in 1846 by a group of New York newspapers seeking to chronicle the U.S.-Mexican War more efficiently. Its members pay annual fees and provide their own stories to other members alongside AP-produced content. For most of its life, the organization mainly served newspapers. But that began to change in the mid-1990s, when the AP began to pump money into photo- and video-journalism operations and package the products for sale to broadcasters.

More recently, as Web portals emerged as big paying customers, the AP deepened its coverage in areas like sports, entertainment and business. Today, U.S. broadcasters and Internet companies together account for more of the AP's revenue than U.S. newspapers do. While the AP's 1,500 member newspapers still own the organization -- other media outlets are associate members or have no membership stakes at all -- they account for only 27% of AP revenue, down from more than 50% in the mid-1980s. The new customers have also helped nearly triple the AP's revenue over the past two decades, from about $250 million in 1987 to more than $710 million last year.

The diversification of its customer base has allowed the AP to bolster its newsgathering resources in areas like international news and finance at a time when the newspaper industry is downsizing. Over the past four years, for example, the AP has added 64 editorial positions to provide in-depth coverage of large companies and financial markets.

But for many of the AP's newspaper members, this type of expansion is of little value. Most of the stories generated by the financial group wind up on sites like Yahoo Finance, MSN Money and CNNMoney.com.

Ohio is ground zero for the widening rift between the AP and its member newspapers. Ben Marrison, editor of the Columbus Dispatch, says a recent trial in Akron involving the theft of state money epitomizes members' frustrations. Before the trial Mr. Marrison placed a call to the AP Ohio bureau to find out if it would be sending a reporter.

In the past, Mr. Marrison 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."

Many member newspapers say they support the AP's new-media initiatives and, particularly, its recent efforts to push members' content to mobile devices. The problem, some say, is the organization's perceived insensitivity to newspapers' financial hardship. The AP requires a seven-figure annual payment from most large newspapers, and it makes it very difficult to opt out of certain services. The New York Daily News has given notice that it will terminate its AP membership largely to protest a rule that requires two years' notice to drop AP services.

The AP recently announced price cuts it says will slash $21 million from newspaper members' fees starting next year, and it began unveiling estimated savings by paper this week. It expects the new plan to reduce fees for about 80% of members, leave costs unchanged for about 10% and raise them for about 10%. Whether that will mollify an already prickly group of editors is unclear.

"If they're our partners, they're going to help us find ways to reduce costs," says Robert Rivard, editor of the San Antonio Express-News. "If they're not our partners, they're just vendors."