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News agencies content leaks

January 31, 2010

It’s the craziest thing. Why would any reader pay for a magazine or newspaper when he can get his news for free?

Currently, news agencies, like AP, AFP and Reuters, still charge for the rights to republish —while… they give away their news content to readers for free!

Associated Press Chairman of the Board
William Dean Singleton

It’s easy to see how this is directly related and hurts the dwingling circulation of magazines and newspapers.

Of course, some of you might argue that broadcasts from television and radio have always aired for free. But, there’s a huge and priceless difference: the web allows us to get what we want instantly, with the razor sharp granularity of a search or a link.

With the advent of the web, news agencies saw an opportunity to add a new advertising revenue stream by publishing directly to readers. In doing so, they foolishly sabotaged their wholesale business model, by undermining their traditional newspaper and magazine customers.

To simplify, I will only continue reviewing AP.

Few visit AP to browse for their daily news, mostly, their visits are search and link originated. News aggregators, —like  Google News, Yahoo News, Newser, Digg, Stumblr and others—, provide AP with a publisher shell, feeding visits to AP and other news agencies.

Has AP arrived at the final decision to go retail, with publishing shells from Google, Yahoo and others?

The recent layoffs at AP show that it’s not doing too well. Apparently, their publishing venture is not working for them. Or, they’re destroying more revenue from their wholesale business, than what they’ve been able to realize by building their retail publishing ad supported venture.

Dean Singleton, MediaNews Group vice-chairman and Associated Press’ chairman, made the following remarks four years ago:

The big challenge, he says, is figuring out how to make money from the Web, where most news is free and ads are cheap. “If we don’t start getting paid for news, we can’t continue to afford to produce it,” he said.

Mr. Singleton wants to help steer the industry collectively toward a solution; no one paper, he says, can do it alone.

Apparently, –either getting a consensus hasn’t been easy, or AP hasn’t been trying that hard.

AP made public in 2009 its efforts (April, July, September) to police and enforce their content copyrights, meeting much ridicule from the IT community, whom stated that there was no technical teeth in the enforcement method.

But incredibly, no word from AP on keeping their content behind a pay-wall.

I’m surprised. Why aren’t Mr. Singleton and the newspaper members of AP, watching over their interests?

Is “Fair Use” law testing in court holding them back? No, a healthy fair use of content in other publications should send readers back to content originators for more.

Is it the search engines’ almighty control of the ad networks, making originators yield their content to them? Yes, –if it quacks like a duck… it must be a duck. The evidence is in the contracts between Google and publishers, –the search engine’s commission is nowhere to be found. Google determines on its own, the 70 to 75% commission it charges, and mails an arbitrary check to the publisher at the end of each month.

It’s also noticeable in a few other publishers’ mistakes, –not worth mentioning.

Publishers are leaving at least an alarming 65% of their advertising revenue on the table. If we take something from this discussion, it should be that if publishers can agree to something, it must be to have their own ad placement platform, by building or buying an existing system, their take could increase to 95% of the price of an ad (5% would cover the expense of running a client order entry system).

Under these improved conditions, I’d still consider necessary to charge an agreeable monthly subscription to further improve online and print advertising revenue: under $3 for newspapers, more for magazines. It would compensate the inevitable thinning of advertising revenue throughout the ever growing number of publishing venues.

Will publishers ever agree to these two improvements?

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