The Associated Press has been around for more than 150 years and may look from the outside like a fixed point in the swirling media universe. But when AP began offering an online video service at the beginning of March, it was taking three steps -- not unprecedented, but at least unusual:

  • The product -- each clip, actually -- is advertising-supported.
    Fifteen- or thirty-second spots precede a summary and individual
    stories, running a minute or so each.
  • The videos are a joint venture with a non-news partner, Microsoft.
    The open-platform crowd of techno-bloggers has already weighed in with
    criticism because the videos can only be accessed through Internet
    Explorer and displayed on Microsoft Windows' video player.
  • The service offers something new, timely and essentially free to
    one segment of AP's client base -- online news sites. At the same time,
    it risks annoying broadcast clients, who like to think of
    up-to-the-minute news video as their domain.

Actually, AP
Online Video is entirely representative of what the venerable news
collective is about these days -- a fast, multi-year transition to a
wider array of products, heavy electronic emphasis and new business
models. Like so many of its newspaper and broadcast clients, it is
running hard toward the on-demand, user-controlled future with a
considerable leap of faith that once the right general direction is
set, critical next steps can be filled in on the fly.

The strategy had been gestating awhile but got an official kickoff in an address
that Associated Press CEO Tom Curley gave to the Online News
Association in November 2004, serving notice that the wholesale news
business was about to change drastically. "The Internet has become our
new business environment," he said, "not just another medium for
distribution."

That made two staples of the AP's operation especially dated:

  • The books were being balanced by charging primary clients a use fee
    for content, which was then "repurposed" for international, archival
    and online use. In a world where, as Curley put it, "content will be
    more important than its container," the business was organized around
    containers.
  • While the clattering wire machines, which middle-aged newsies
    remember fondly, had long given way to electronic transmission, there
    was less modernization than met the eye. Really, delivery was just a
    higher-tech version of the telegraph model, dating back to the 19th
    century -- "the fire hose," as it is called derisively in-house -- in
    which a stream of content was pumped at clients, who were left to do
    most of the sorting themselves.

The new AP -- and this part is very much under construction -- will
more closely resemble a huge meta-database in which content is
intricately tagged and retrievable on demand by clients to use as they
like. (Not incidentally, the tags include invisible "watermarks," which
will make it easier to track where content is used -- and if it is
expropriated.)

You could boil the AP business challenge down to
even simpler terms: it has the world's biggest and most expensive
content-gathering operation -- roughly 2,700 journalists worldwide --
and a very turbulent mix of revenue streams to support that work.

Curley
summed it up this way in a phone interview in early March: "We are an
electronic news company, trying to become a digital news company… and
we have some advantages: we don't have presses and trees."

But
some once-lucrative lines of business -- moving ads by satellite or
creating analog stock tables, to take two examples -- are fading fast.
In place of sure-bet new businesses, Curley said, "we have a couple of
commandments" for innovation: "use the technology to create more
content and protect that content; create an AP video network; increase
photos by at least 20 percent."

With the transition come a bunch of challenges. Curley tackled the income question head-on in a second speech last April
at the AP annual meeting in San Francisco. He recalled that a
predecessor, Frank Batten, then AP's chairman, talked about cable TV
and other elements of a "future coming fast" in 1983. "Frank's speech
made a case for a general assessment increase to help modernize AP's
aging infrastructure. The increase was 9.5 percent. Obviously those
were different days."
 
Instead, Curley proposed to "license AP content separately for each
platform on which it is used" -- that is, to charge separately for
online use. The proposal didn't fly. There was plenty of pushback,
including some from AP board members. So online was wrapped into the
general assessment for AP member clients and, in effect, has remained
free for now.  

A smaller but smoother launch was the service's new youth-targeted product, asap,
in September 2005. It carries an extra charge and has been picked up by
about 200 newspapers, alternative weeklies and youth-targeted
publications. It is an example of what Jim Kennedy, AP's director of
strategic planning, calls "a cross-media mindset." Also, while "AP has
traditionally defined the mainstream of news," Kennedy said, "that's
not the full breadth of what people want." Topics like health and
fitness, gadgets and food are on the rise.

A representative story from the asap archives is the saga of a writer's adventure making turducken
-- the alternate holiday entrée featuring a whole chicken stuffed
inside a whole duck, and then stuffed inside a whole turkey. The
tedious and slimy process is described in a longish story, accompanied
by in-kitchen video and separate audio of crunching bones. asap editor
Ted Anthony has contributed an audio report on '60s-era "singing the news," a personal interest of his.

asap
and the online video service may be up-to-the-minute, but, in other
respects, the AP straddles some legacy practices. For instance, it does
not exactly have its own Web site. Open the AP page
and you will find a story list, but no display. The links are to
published versions at various newspaper member sites.  (asap and
the online video service are featured in headlined links to
participating sites.) So, in that respect, AP continues to defer to
clients. "We are still a business-to-business company," said Kennedy.
"That will remain."

But when the business in question is Google, the relationship gets dicey. AP does have a licensing agreement, terms confidential, with Yahoo! and AOL. Google? Kennedy, usually voluble, hung his head when asked. "That's a problem."

Curley was not a lot more forthcoming. "Well, we're not suing Google," he said, alluding to Agence France Presse, which did just that a year ago,
and immediately had all links to its content dropped from Google
services, a loss of exposure that may hurt more than being ripped off
might hurt. The AP's most direct competitor, Reuters, to date has welcomed Google links and has sought to be featured in Google Finance, launched in beta format last week.

So
Google is essentially helping itself to AP content for free? "I
wouldn't characterize it that way," Curley said. A Google spokesperson
said the company would not comment on ongoing negotiations, which
suggests that Google and AP are talking. Meanwhile, Google News has no
mention of the Associated Press on its display page, but does link to
AP stories posted on such sites as SI.com.

Then again, no one said all the pieces of a transitional business would fall into place overnight.

That
was part of Curley's answer when asked why some newspapers are hanging
back on picking up the video service. "It has only been out three
days," he said when we spoke March 3. Some may be waiting a while to
see whether they can do better than a 50-50 revenue split, showcasing
local video or national and international clips from other sources.
Others may not be equipped technically to be first-movers.  Five
hundred outlets have picked up the service so far, with more in the
pipeline.

And it looks to be an awfully good match to current
trends, introduced just as broadband and improved video technology make
this sort of report easy to view and well-pitched to office workers who
take a quick news fix, now and then, while on the job. The current
version offers a one-minute summary and a menu of a dozen stories (to
be expanded to 50 or so daily as it develops). In effect, it lets you
be your own news director.

That is not necessarily a happy
development for broadcast outlets, though some of their sites are among
the initial subscribers. As recently as 18 months ago, online was off
to the side for many broadcasters, but suddenly both network and local
are scrambling to put together branded online video reports with their
talent and their own advertising base.

Also, among those not on board, for now, are Microsoft's own two Web site joint ventures -- MSN.com and MSNBC.com. Both offer a selection of videos from "NBC Nightly News," the "Today" show and other NBC sources.

Coincidentally or not, AP got the service off to a fast start its
opening week with an exclusive tape (from undisclosed sources) of an
early White House conversation during Hurricane Katrina in which the
possibility of breached levees was raised.

In my sampling, the
videos display more quickly and play better, with with better audio and
picture quality, in some places more than others. (Yahoo! is especially
good.) That, too, is part of the break-in period, and comsumers of most
any kind of online video require some patience.

asap and online
video are only two among a dozen or so current strategic initiatives,
Kennedy said. The nascent video news service captures AP's big business
challenge in miniature. Ultimately it will succeed or languish
depending on strength of content and user-friendly delivery.  

The
story plays out largely absent the attention lavished on the newspaper
and broadcast industries, the rise of upstart online wild-cards and
hard times at once-proud titles. You can't buy a share of AP, so it is
not on the scope of Wall Street analysts.

But the stakes are
high. Will the service be able to deliver the same or improved volume
and quality of original news in the future as it has in the past? AP
has a couple 21st-century content strategies up its sleeve to answer in
the affirmative. They are the focus of the second article in this
series later this week.

Coming Wednesday: A look at some of the AP's new strategies for news.