AP to impose online licensing fees
4/19/2005, 1:40 a.m. ET By MICHAEL LIEDTKE The Associated Press
SAN FRANCISCO (AP)  The Associated Press will begin charging newspapers and broadcasters to post its stories, photos and other content online, a pricing shift that reflects the growing power of the Internet to lure audiences and advertisers from more established media.
The new pricing policy, effective Jan. 1, begins to shift some of the funding of AP to the growing online market, anticipating that technological advances and digital devices will continue to make it ever-easier for people to get their news whenever and however they want it.
"The need for online licensing is clear," AP President and CEO Tom Curley said Monday as he announced the change at the annual meeting of the 156-year-old news cooperative. "For The Associated Press to endure during this digital transition, we must be able to preserve the value and enforce the rights of our intellectual property across the media spectrum."
Most of the 15,000 news outlets that buy AP's news, sports, business and entertainment coverage have been allowed to "re-purpose" the same material online at no extra cost since 1995. At that time, graphical Web browsers were just beginning to transform the Internet from an esoteric computer network to a mass medium.
But price increases are often a prickly issue for the AP because it's a not-for-profit cooperative, owned by its customers  the traditional media that form its membership.
The AP expects to offset the costs of the new online licensing fees by temporarily reducing its annual membership rate increases, Chairman Burl Osborne told the gathered publishers, editors and broadcasters.
These rates  known within the AP as "assessments"  have climbed by an average of 2.75 percent annually during the past decade.
A formula for calculating the AP's online licensing fees still hasn't been set, making it difficult to predict how the pricing change will affect individual news outlets. Currently, the AP bases its rates on the circulation of newspapers and audiences of broadcasters, with the largest paying more than their smaller counterparts.
A digital advisory committee will be set up to ease the transition, holding its first meeting by fall, Osborne said.
The AP already does significant business online  about 300 commercial Web sites, including popular destinations such as Yahoo, AOL and MSN, have been buying AP content, said Jane Seagrave, the news cooperative's director of new media markets.
Curley, the former publisher of the Gannett-owned USA Today, has been looking for new sources of revenue since he became AP's chief executive officer in mid-2003. AP's 2004 revenue totaled $630.1 million, up 6 percent from the previous year, and losses narrowed to $728,000 after a $11.1 million loss in 2003.
AP products currently under development include a computer database of stories, photos, graphics, audio and video, designed to make it easier for newspapers and broadcasters to find the content that best suits their local market.
The AP also plans to introduce a new multimedia package designed to appeal to young adults, a prized advertising demographic deeply immersed in the Internet and other digital media.
"As the audience turns to new platforms and adopts new habits, the news must follow," Curley said.
Several of the newspaper publishers said AP's new online licensing policy makes sense, as long as it doesn't significantly increase their expenses. "I'd like to see what the total bill is going to be," said David Bradley, publisher of the St. Joseph News-Press in Missouri. "I hope it doesn't turn into an onerous burden."
Five AP reporters also spoke, including religion writer Rachel Zoll, who addressed the crowd via video link from the Vatican, where she is covering the papal conclave. As Zoll spoke, the crowd in St. Peter's Square erupted in the background. "It's black smoke," she confirmed, signaling that the gathered cardinals had not selected a pope during the conclave's first day.
Sally Buzbee, chief of Middle East services, spoke about the rise of China and the influence of Shiites in the Middle East; technology writer Brian Bergstein addressed the increasing capacity to archive digital information; science writer Malcolm Ritter warned of the prospects of a global pandemic; and political writer Ron Fournier discussed the emergence of new American "hometowns" centered on churches and social groups.
New Mexico Gov. Bill Richardson was the luncheon speaker at AP's meeting, which was held in conjunction with the annual convention of the Newspaper Association of America. A potential Democratic presidential candidate, Richardson said Democrats should watch what states are doing in response to the issues voters really care about.
"We can't just attack the president," Richardson said. "We need to be a party that is clear about what our core values are. We should not be afraid to talk about moral values, religion."
The AP also announced changes to its board: Re-elected to three-year terms were Burl Osborne, publisher emeritus of The Dallas Morning News; Michael E. Reed, president and chief executive officer of Community Newspaper Holdings Inc.; William Dean Singleton, vice chairman and CEO of MediaNews Group Inc.; and H. Graham Woodlief, vice president of Media General Inc. Dennis J. FitzSimons, chairman of Tribune Co., also was elected to a three-year term.
Incumbent Joe Hladky, chairman and publisher of the Gazette Co. of Cedar Rapids, Iowa, and new member David R. Lord, president of Pioneer Newspapers Inc., were appointed to two-year terms.
The growing power of the Internet is clearly reflected in the decision, announced Tuesday, for the Associated Press to begin charging newspapers and broadcasters to post wire stories, photos, and other content on their online editions. The changes go into effect January 1, 2006. An advisory committee meeting will be held in the fall to ease the transition.

As the Internet draws more news consumers from traditional repositories of data, increasing numbers are demanding the stories on the Internet reflect the quick updating and coverage of a large wire network such as the Associated Press.

The rates the AP charges, known within as “assessments”, have risen by about 2.75 percent annually during the 90’s. Since the service is supposed to be not-for-profit and is owned by its customers, price increases are a tough sell. 

The formula for the new calculations still has not been set, making it difficult to determine how the changes will affect what the outlets charge for their online  news coverage. Currently the AP bases rates on newspaper circulation or broadcast audience with the large ones footing the major part of the bill.

The AP is creating a computer database of news paraphernalia which includes stories, photos, graphics, audio and video. It is all designed to make it easier for news rooms to create usable content.