AP chief talks about supply and demand

Finally re-read AP CEO Tom Curley's talk about news supply and AP3P: Now that I understand how the economics of this all come into play, it's starting to make more sense. AP will adopt human-curated search a la Maholo, in which an editor-driven News Registry will drive traffic to the site that broke the story. The objective here is to do a better job of sending traffic to the source of a story than Google might do.

But I'm still concerned - and only out of the deepest respect for AP (full disclosure - I spent nearly 6 years promoting AP Digital starting in 2000, and the company as a whole including at least a year or more under Curley, and also launched AP Essentials, the online company store, which my proudest moment of all ;-)

To start, I must say I agree with Curley's first argument - yes, there's a "oversupply" of AP news content, even as demand for online news has increased dramatically in the 2nd half of the 2000's, as a result of higher web use overall, and more recently, the mobile digital news explosion.

So even with greater demand, basic supply-demand curve tells you to reduce supply to increase the market clearing price of your news. Remember, news reporting is based on the fixed costs of maintaining a staff, but the economics of the web should give you nearly unlimited profit potential based on the possibility that a story can be replicated an infinite number of times for nearly no additional incremental cost.

But this potential must meet a demand for any revenue to be possible. And that's where far too many pages of content have been published - way beyond the demand of even an enormously news-hungry online audience that's growing everyday.

1,400 member paper sites publish a story, Yahoo News publishes the story, The New York Times publishes it, and even the India Times publishes that story, and because I, sitting in Brooklyn NY can find that story on any of these sites via search, there is no reason for me to discriminate among any of these sites.

I often will find an AP story on the St. Pete's Times, bounce over to Salon, jump to the Washington Times, and then read a wire story posted on a college paper site. I don't really care which paper site I'm on. And frankly, except for the NY Times & Yahoo, I'll probably never go back to any of the other sites. 

AP and its members are responsible for this oversupply, by replicating their offline distribution model online and adding millions of additional impressions per story via digital deals. As a result, Yahoo and then Google became the top news destinations, while even the biggest newspaper sites dropped traffic.

In the old days, a paper in one town got to publish an AP story with no competition. Now that paper fights virtually every other news site in the world for eyeballs on that story. I remember when a friend of mine at Salon would mention that they couldn't believe how cheaply AP sold them their national news wire, and how much traffic those stories brought in.

End Non-Member Digital Distribution
Is it time to cut out the digital news aggregator sites? Maybe. Now that newspaper sites have matured, and google and yahoo news are less necessary.

But it's not time to cut out search engines. By limiting news distribution back to 1,500 member sites, and forcing google and yahoo to simply point to a limited number of sites, AP could make up the difference and improve the lot of its member sites as the only place to get this news.

This strategy would also require AP to cut out distribution of US news to international sites such as the Times of India. Remember that the web is truly global now, so I'm just as happy reading AP cover Washington on ToI as I am on the Post site.

And I'd drop the News Registry, at least powered by AP editors. Human powered search is best left to passionate amateurs, and would be a waste of editorial time. This is where crowdsourcing or even a little bit of open source editorial work would invite news junkies in to do some necessary work that AP staff isn't equipped to handle. Remember, Wikipedia is 45 minutes away from total chaos, but that never happens, as long as a devoted global team edit out the spam and update disputes around the clock.

News Market
Finally, here's the big idea. Instead of a News Registry, I'd go with a News Market. When AP is breaking a story, and it often still does, don't flood the web with the story everywhere, for everyone, on every site. Instead, hold a quick auction. Let the highest bidder run the story, say for a day, and exclusively for that time. Or the highest 10 bidders. Or even 100. But contain distribution. Perhaps this is where the embedded meta tags and tracking cookies can help out.

As a result of search, a great story by AP on just a single member site, with the right promotion, will be found and can deliver that member and AP revenue and profits.

I'm optimistic that the AP will win this war. I just think there's a more digitally savvy way, and there's the old-school way. Hopefully there can be just a bit more new-world thinking here, so the news industry can save itself gracefully.


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