AP To Lower Member Fees Again, Targets Online Customers

In an effort to accommodate struggling newspapers and other news organizations, the Associated Press plans to lower its fees by another $10 million in 2010, according to CEO Tom Curley, quoted in an article on the Editor & Publisher Web site.

While demonstrating the AP's determination to adjust to changing economic conditions, the decision to cut fees also reflects the dire circumstances of many of its newspaper member-owners.

Like many media businesses and industry observers, the AP has had to revise forecasts and plans repeatedly in the face of a steep economic downturn. In total, the AP now plans to cut fees by about $45 million in 2010, up 29% from the planned $35 million cut discussed in April.

This future cut follows a roughly $30 million reduction in fees already implemented this year in response to requests from beleaguered newspaper publishers, which have seen ad revenues decline steadily for several years.

Compared to the first quarter of 2008, in the first quarter of 2009 the newspaper industry's total print and online advertising revenues fell 28.3% to $6.6 billion. Under increasing financial pressure, some big newspaper publishers have said they will end their AP membership after the obligatory two-year warning period, or have threatened to do so.

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In late October, the bankrupt Tribune Co. said it will drop its AP membership after the required two-year notice period. The Columbus Dispatch, the Star Tribune of Minneapolis, and several other regional newspapers have already canceled their AP memberships.

On the upside, Curley also said the AP is seeking new, more lucrative licensing deals with news Web sites. Its four biggest online customers are currently Google Inc., Yahoo Inc., Microsoft Corp. and AOL. Given the rapid, continuing growth of online news consumption, the AP is hopeful that renegotiating licensing deals with some of these big online players will open up significant new revenue streams, even as the print products of its core membership dwindle.

In the near term, however, Curley revealed that he expects AP revenues will fall in 2009-2010.

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