Do we really need the AP anymore?

So Dow Jones is leaving the Associated Press. This is a very big deal, folks, and I think it’s fair to examine the assumption of the “co-op’s” value proposition in light of disruptive technologies. While the AP began as a cooperative, it has evolved over the years to that of a monopoly, and one that can exercise complete control over pricing. You want the “service,” you pay for it, whether you can afford it or not. This is reflected in AP Chief Revenue Officer Tom Brettingen’s reaction to the Dow Jones decision.

“We did not believe we were being adequately compensated for the use of our content on DJ Newswires,” Brettingen said in a statement. “We weren’t able to resolve that with DJ, so we’re going our separate ways.”

I love it. “Our” content. If the AP paid members for that content, it would be easier to justify such a statement. That’s not the case, however. AP members contribute the content and then pay stiff fees to get in on the aggregation of everybody else’s. Regardless of the shade of your rose-colored glasses, the reality is that it is very much a one-way street.

So the question for media companies is whether the service is really necessary anymore. DJ has decided to go with the French news service Agence France-Presse, but the bigger issue remains — what will the AP do when “members” begin searching out a less-expensive, less dictatorial system?

A wire service is a middle man in the news business, assembling items from members and passing various feeds back to those members. This is the spirit of a cooperative, but there are two problems with this for the group. One, the Internet makes assembling items into a feed ridiculously easy, so the cooperative simply can’t make the case that costs keep escalating. Two, newspapers are especially well-position to go their own way, because they’ve been working together with the Yahoo! consortium and other cooperatives for many months in an attempt to shift their business model to one that’s more web-centric.

The AP has recognized that shift, but rather than use its resources to help the industry, it’s used the occasion to charge more for “different” uses of the same material.

Believe me, it isn’t cheap to be an AP “member,” and at a time of industry-wide expense reduction, one wonders how long that money can be justified. And anytime the AP decides to create a new feed from its content pool — niches, for example — the price goes way up, period. The AP argues that it’s cheaper to pay them than to organize such content for yourself, but that value proposition is, frankly, on-the-table.

Meanwhile, the AP continues to go where the dollars are. They just hired 21 new staffers to bolster their entertainment news offerings, knowing that media companies covet this content. That feed, I promise you, will cost plenty. The problem in this niche, for the AP, is that the existing sources of entertainment news don’t give a rip about being a part of the cooperative, so the AP has to have its own staff to keep up.

And that reflects the real problem for the AP overall: sources of news content aren’t scarce anymore, and machines — like Google News — are taking the place of editors required to assemble all that content and spit it out.

Like everything else in the world of media, the nature of the wire service is being disrupted by technology. Just because the world of journalism once required wire services to organize and distribute news from faraway lands doesn’t necessarily mean that it does today.

Moreover, the real battle that media companies face is local, and with consumers able to tap other sources for regional, national and global news, the value of that content to local media companies is declining rapidly.

These are tough times that call for asking hard questions.

Dow Jones is just the beginning.

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