The Associated Press Declares War on the Online World

My beloved, eternally bumbling Chicago Cubs swept the even lowlier Washington Nationals in a three-game mid-July series. I read that in an Associated Press report headlined “Big 4th inning gives Cubs sweep of Nationals.”

Will reporting this result to readers get me in trouble someday soon?

That result isn’t as far-fetched as you might think.

On July 23, the AP, that empire of alleged journalism that characterizes itself as “The Essential Global News Network,” signaled its intention to fundamentally change its relationship with the rest of the online world:

As part of a strategy approved Thursday by the AP’s board, the cooperative will start by bundling its text stories in an “informational wrapper” that will include a built-in beacon to monitor where stories go on the Internet.

The beacon is meant to be a policing device aimed at deterring websites from posting AP content without paying licensing fees. The AP and its member newspapers contend unlicensed use of their material is costing them tens of millions of dollars in potential ad revenue. …

“This is a pivotal step in the fight to ensure that quality journalism can be funded in the digital era,” Tom Curley, AP’s chief executive, said in an interview. “We have stood by too long and watched other people make money off the hard work of our journalists. We have decided to draw a line in concrete.”

The wire service expects to roll out the “informational wrapper” in stages beginning in November.

AP’s press release is troubling enough, but in a related New York Times interview that day with Richard Perez-Peña, AP’s Curley added this:

The company’s position was that even minimal use of a news article online required a licensing agreement with the news organization that produced it. … He specifically cited references that include a headline and a link to an article, a standard practice of search engines like Google, Bing, and Yahoo, news aggregators, and blogs.

Asked if that stance went further than the AP had gone before, he said, “That’s right.”

While AP’s aggressive posture is of course largely about money, it is also about control, accountability, and thin-skinned resistance to criticism. The only thing up for debate is the relative importance of each factor.

Of course, the money involved is a big deal. In its press release, AP cites a roughly 6.5% drop in revenue in 2008 from $748 million to $700 million. It expects another drop in 2009 because of reductions in fees charged to newspapers and broadcasters.

The wire service should consider itself lucky, because it is. While AP’s revenue declines are only a bit less than those seen at larger subscribing outlets such as the New York Times (down 7.6% in 2008) and Gannett (down 9%), problems further down the newspaper food chain are clearly much more serious. Click on the “Quarterly” tab at this Newspaper Association of America link (HT: Newsosaur), and you’ll see that total print advertising revenues in the first quarter of 2009 ($5.923 billion) were 36% lower than 1Q08 ($9.296 billion) and a shocking 55% lower than 1Q06 ($13.245 billion). In that context, it would seem that AP’s price breaks are nowhere near what its subscribers need to survive.

In fact, AP’s relative strength, and its ability to limit its fee reductions to far less than the revenue hits its subscribers are taking, are a result of its dominant, near-monopoly market position. Because of the steep decline in available resources and a worse crash in credibility during the past decade at the New York Times, AP reports now probably form the basis for the vast majority of most newspapers’ national news and a high plurality of their international news. AP reports very often serve as the starting point for top- and bottom-of-hour radio newscasts, and more than likely drive a large portion of the content of television news shows and newscasts. For breaking daily business news, the nation, heaven help us, is largely at AP’s mercy, where the economic narrative shaped by its fundamentally weak and insufferably biased reporters seems to insinuate itself everywhere.