Posted in: Media Industry

Will wire services fall first as newspapers decline?

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As print revenues rapidly fall, cost cutting must follow as newspapers struggle to stay alive. We’ve already seen cuts to traditional services such as foreign bureaus, where as once newspapers had reporters in foreign cities, today only the top papers have a local presence, and even then with a lesser presence that in the past (for example, allowing a reporter in London to cover all of Europe). That vacuum should be a boost to wire services such as AP and Reuters, who can fill the gaps left. And yet, as margins become tighter, the concept of a middle-man offering syndicated news is under threat.

Jeff Jarvis notes today that the New Jersey’s Star-Ledger has published a full edition without using anything from AP, instead running lots of local stories and content from the Washington Post, LA Times, McClatchy, the Glouceseter County Times and Sportsticker. Jarvis notes that the issue isn’t that AP isn’t providing a great service, the issue is cost, with small papers like the Cleveland Plain Dealer having to pay $1 million a year for the right to publish AP stories.

Jarvis suggests that what we are seeing is the start of reverse syndication, where newspapers will enter into revenue sharing deals based on traffic pushed to their sites, bypassing the need for a wire service.

It’s an interesting idea, and you can read Jarvis’ full explanation in this post. It is possible that one day a model some what like what Jarvis is suggesting will come to the fore, but I don’t believe we are anywhere close just yet. The New Jersey’s Star-Ledger isn’t pushing people to other sites, it is taking content from other papers for its print edition. The relationship is still content based, presumably with a financial exchange involved, but one that is significantly less than access fees for AP.

What we are seeing is newspapers willing to work with one and other collectively to reduce costs by cutting out the middleman. A small start perhaps, but if it’s embraced, and newspapers realize that other papers aren’t their main threat, declining readership and subsequently revenues are, it’s the start of something bigger, and AP and Reuters are about to take a serious hit.

It would be wrong to presume though that AP is completely stupid. PaidContent reports that AP is to begin sharing advertising and syndication revenue with more of its subscribers, through an extension of a program that turns its clients in to online sales affiliates. The short version: you run an AP story, you include an ad, and you share in the revenue. This is one example I found, complete with what I presume is the AP resource box in the footer. Not exactly inspiring, but it’s start. If AP opens the program up further, and drops the need to subscribe to play, things start to get interesting as demand for AP content will grow at a time newspaper users drop. Reuters and AP already attract a large amount of traffic to their own sites, imagine that this content goes out with ads, driving new revenue streams. It’s not impossible that both could end up standing alone as online news powerhouses that don’t rely on traditional syndication deals.

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4 Responses to “Will wire services fall first as newspapers decline?”

  1. Nigel Eccles

    I agree with the argument but Reuters and AP are quire different in this area. A large part of what AP does is pick up local stories, rewrite them and then syndicate them to other papers. That is what is under threat from local newspapers sharing with each other. Reuters doesn't compete so much in that business.