Associated Press to incorporate ads, enhance web content

Staggered by the downturn in the media industry, the venerable wire agency Associated Press plans to finally include ads in its profile. The non-profit organisation announced this at a media event in New York on Thursday, along with other measures to boost its revenues.

Traditionally, the 163-year-old AP has depended entirely on newspaper and news agency subscriptions for its viability. It has also allowed newspapers to use its content for free, helping smaller newspapers expand their coverage and making AP one of the most utilised newsfeeds in the world.

But this year the news association has already forfeited 10 per cent of its revenue due to lost newspaper fees, as budget cuts have caused many publications to consider forgoing content rather than paying to use AP matter. So if the consortium hopes to retrieve any of that money online, its best bet is advertising.

While it has been lowering its subscription price for some time now, AP now plans to experiment with new forms of digital media and an ad-supported model in hopes of being innovative. For 2009, the consortium has lowered its fees by $30 million. Next year it plans to pull back fees by another $45 million.

The new content available for media purchase includes branded multimedia content such as slideshows for events like the Olympics or the Oscars. The branded content can travel across a publisher's network to various sites, while keeping the same advertisements even as the consumer navigates to other content. There is also an online video network built in conjunction with Microsoft.

At the 'Associated Press interactive media summit' in New York last Thursday, AP staffers were in full sales mode to display all the new offerings that the AP has - and there's good reason for it. The cooperative owned by the newspaper industry saw revenue rise 5 per cent last year to nearly $748 million, but fee cuts mean that AP predicts a revenue fall both this year and next.

In addition, the consortium's licensing deal with Google expires at the end of this year. AP had finally negotiated in 2006 after long alleging that Google links leech revenue from publications and encourage pirating of content. Apart from Google, AP's other important online clients include Yahoo Inc, Microsoft Corp and AOL.

But re-negotiating the important Google contract could be tricky, as AP and the newspapers that own the cooperative have often asserted that Google's practice of displaying headlines and snippets of stories primarily benefits Google.

AP's efforts to bring in additional revenue have not gone over smoothly online either. Last week the company sued the aggregation site Drudge Report for using its content unlawfully, which caused many bloggers to threaten boycotting AP content. This week, the press service released a fee structure for websites that use any of its content, for quoting as little as five words.

No more free lunches
Other options under consideration include charging a fee to readers, which would be a large shift for a service that has traditionally got paid behind the scenes. But the AP is now geared to change its approach.

Speaking to potential advertisers at the New York summit, AP chief executive officer Tom Curley said, "This is a very important moment for the AP. For years we've been happily behind the scenes, but in the digital media shift, we are more on the frontlines ... we decided we needed to tell people more about what we do and how we do it."

With its new advertising options coming out in July, AP is hoping that advertising revenues along with ease of use will help it recoup some money lost to reduced fees this year.

The company's new ad platform AP Custom News is set to launch in mid-July. Custom News builds on AP's current ad options, but makes it easier for publishers to integrate AP content directly into their website.

To counteract the variable fee that AP charges publishers (details of which the company will not disclose), it will split 50 per cent of ad revenue with partners. Premium partners can license AP content for a larger fee upfront and keep 100 per cent of the revenue earned from advertising on AP content.

AP is relying on its track record to sway advertisers, as smaller niche sites like Politico are splitting ad revenue with no charge upfront. But analysts feel that with CNN, Reuters and Dow Jones all fighting to grow their presence in the newswire space, unless AP can grow its share of the ad market, it will be fighting for increasingly smaller pieces of the ad pie.

AP also plans to eliminate about 10 per cent of its payroll costs by the end of this year. Management is trying to hit the target through attrition and early retirement offers, but hasn't ruled out layoffs among its work force of 4,100 people.

Curley identified new licensing contracts with the AP's largest Internet customers as his top priority. Yahoo, one of the AP's oldest internet customers, has said it expects to work with the agency for "years to come."

Besides hammering out new Internet licensing contracts, the AP also plans to review more effective ways to capture revenue from advertising tied to its stories, photography, audio and video, Curley said.

One way could be through a new system that will bundle some of the AP's top stories with those of newspapers and broadcasters on certain topics. The system, which is still under development, would rely on so-called "landing pages" that could compete with the news sections run by Google, Yahoo and Microsoft's MSN.

Readers also might be asked to pay to read and see some of the AP's content, either on mobile devices or on computers, Curley said.