When newspaper ad revenues were in free fall in 2008, there was much angry complaining among editors about the high cost and inflexibility of the Associated Press service. At a gripe session in Washington, one editor compared the cooperative to the USSR’s politburo. Threats to quit were common.
In the end though, AP cut its rates, offered several levels of service and has retained the great majority of its newspaper members (who also own the cooperative and hold most its board seats).
But there was an exception.
Starting in 2009, Chicago Tribune editor Gerould Kern quietly began working with Reuters to build an acceptable substitute service. Kern told me the Chicago Tribune ran its last AP material in March 2012. With six other Tribune papers (but not the Los Angeles Times), it dropped AP entirely at the start of 2013.
Kern said in a phone interview that he cannot recall a single reader complaint about inferior wire coverage. At “a price that has saved us significant amount of money,” Kern said, the Tribune and others are getting “more than adequate” content from Reuters and can devote more resources to local investigations, arts and sports.
“We are not anti-AP,” Kern told me several times, “but we believe in competition and choice in the market place. That makes everyone better.”
Reuters is pushing hard to recruit other converts but so far with only moderate success. “We’ve been around for 160 years,” Steven Schwartz, global managing director of the Reuters news agency, said in an interview, “but we needed to create a (national) service from the ground up. We have been encouraged by the uptake to date, but it’s a long road.”
For Reuters, the sales pitch is all about price, “a fraction of the cost (of AP),” Schwartz said. Neither he nor Kern would be more specific, but I would guess that Reuters charges half or less of AP’s rates, themselves reduced by 30 to 40 percent since 2008.
Schwartz had no criticisms of AP’s quality, but when I suggested that some papers may be sticking with AP because of loyalty and the ownership connection, he flashed a competitive side:
Ours is an industry steeped in tradition and that’s both good and bad. Gerry’s leadership (in making the switch ) has been unusual….I would say if a paper is continuing out of a sense of commitment to AP, that’s probably a breach of fiduciary duty.
AP too has some fighting words apropos the competition. In a speech at the newspaper Association of America convention in Denver in March, CEO Gary Pruitt said of newspapers considering dropping membership:
If you walk away from AP, you walk away from your ownership stake in the most important news organization in the world. Good luck with that.
(The Associated Press is a non-profit cooperative owned by its newspaper members. “Profits” are held and reinvested in the company. Newspaper members get special input on news or business matters only in the sense that newspaper executives have a large majority of seats on the board. However, broadcast and international are now bigger business segments for AP.)
Pruitt promised improvements in state coverage, more video and further pricing options. But with industry advertising revenues sinking again this year, I don’t see much likelihood that the issue of settling for a “good enough” wire alternative will go away.
Kern and Schwartz concede that even getting to good enough took some doing. Reuters is part of Thomson Reuters, an internationally oriented company whose main business is specialized financial information.
So for a start Reuters needed to hire correspondents in cities like Denver and Dallas to provide its own coverage of the biggest breaking national news in the U.S.
“We didn’t want a fire hose,” Kern said. “We have a news service of our own (McClatchy/Tribune) that is the largest supplemental wire. With that and some other contributors, we already had a rich vein of national content.”
“Sports was a crucial issue to resolve,” Kern continued. Reuters needed to build out with affiliations to many single-subject digital sites and piece together sports agate. That was the last content category to be finished before Tribune was ready to go without AP.
AP also prides itself on deep election night coverage and an ability to call races accurately. Reuters began testing a new system in the March 2012 presidential primaries with IPSOS market research doing the polling and forecasting. It has performed well, Kern said, and will be expanded by this November’s general election.
On the other hand, Reuters has made no attempt to build state-by-state bureaus with legislative coverage like AP’s. Kern said that content-sharing arrangements among previously competing papers and other sources serve that need adequately.
Pruitt hinted at a counter-offensive in his March speech to NAA, and that is now rolling out. AP has assigned a senior executive to oversee the state reports and hired additional journalists. The service also has started producing national packages on issues like flood insurance and ethanol that can easily be localized by a member paper with a little additional reporting.
Kate Butler, vice president/ membership and local markets, told me that a new mid-tier level of service will be offered soon and begin operation in January 2015. At the same time, she said, the AP will expand its cafeteria-style add-on content packages on topics like the arts and sports from 5 to 10.
Its current limited basic member service costs roughly 50 percent of what a paper would pay for the full basic package, Butler said. The new mid-tier will be about 75 percent with extra slices of content 5 to 10 percent.
Traditionally Associated Press required member papers to provide two years’ notice to cancel. That’s now been reduced to one year for those who pay a small premium. That window allows AP to adjust rates and address individual complaints, though for fairness’s sake it offers comparable pricing for papers of similar size.
Butler said that at least two other chains looked at the Reuters alternative but have decided to stick with AP.
Even after the rate adjustments, full AP service costs a typical metro over $1 million a year and a bigger metro like the Chicago Tribune considerably more than that. Even a mid-sized paper can rack up a bill well into six figures.
Reuters offers typically include extended free trials and a willingness to tailor the package individually to what a paper feels it needs but cannot produce itself.
In a dozen of my own searches of Tribune’s content, I found few if any obvious gaps in wire coverage of major stories. For certain story types — breaking news obituaries, for example — the Reuters’ versions were not as complete or well-crafted as AP’s. But I doubt the typical reader would notice a difference.
Tribune and other defectors would also lack access to AP enterprise stories, its deep foreign reach and top-of-the-line photography and video. But from the readers’ perspective, they may literally not know what they are missing.
Some of AP’s past programs at the newspaper publishers convention included live hook-ups to world trouble spots and in one instance, a presentation by a photographer/reporter who had talked her way into a Middle Eastern opium den and came out with riveting video. This year, the content portion of Pruitt’s talk, emphasized First Amendment initiatives and a practical effort to get better access for White House photographers.
Over the next several years, I think AP clients and the service itself, will be asking just how much excellence they can afford. The good old days of monopoly-pricing power are gone.
Even with a focus on keeping expenses lower, AP’s Butler said, “I know (the service) is a substantial cost, but we think it also delivers a substantial value.” As for Reuters, she added, “It is good to have competition and choice. We wish them well but not too well.”