AP: An Old Media Revival?

Nielsen/NetRatings' list of the "Top Ten Fastest Growing Web Brands" in the U.S., released last week, contains plenty of the usual suspects--that is, companies that barely existed a year ago but now draw millions of eyeballs a month.

Yahoo!'s (nasdaq: YHOO - news - people ) Flickr? Check. PartyPoker? Sure. News Corp.'s (nyse: NWS - news - people ) MySpace? Of course.

Then there's the Associated Press.

Yes, that Associated Press. According to NetRatings (nasdaq: NTRT - news - people ), the venerable U.S. wire service, founded in 1846, saw the number of unique visitors to its sites surge to 9.7 million in July, more than triple their traffic from a year earlier.

Some of that increase stemmed from major news events last month, including the outbreak of war in Lebanon due to hostilities between Israel and Hezbollah. But the increase is also a sign that the AP's efforts to increase its Internet presence, primarily by offering more video content to its member newspapers, is paying off.

AP is a nonprofit cooperative owned in large part by about 1,500 daily newspapers in the United States. As a result, AP's fate is closely tied to newspapers, even though it generates about two-thirds of its revenue from other sources, such as AP Television News, international and online sales, and other related services. The company generated net income last year of $18.5 million on revenue of $654.2 million, swinging from a 2004 net loss of $728,000 on revenue of $630.1 million.

"It's a critical moment in the industry," says Jim Kennedy, AP vice president and director of strategic planning. "We want to do everything we can do for the members. We want to give them the tools they need to transform their businesses.''

AP has been providing online multimedia content to its member newspapers for years, via interactive maps, graphics and slide shows. But it has ratcheted up its efforts in the past 12 months: Last fall, it launched a pilot project called asap, a news service aimed at younger readers, featuring a variety of multimedia content, including audio and video clips. AP has committed to asap through at least 2007.

In March, the company joined with Microsoft's (nasdaq: MSFT - news - people ) MSN subsidiary to start the AP Online Video Network, which packages video news reports for newspaper and broadcast station Web sites. AP produces the reports, while Microsoft provides the technology and advertising sales support. The service is only viewable on Microsoft's Internet Explorer browser. Compatibility with other Web browsers, including Mozilla's Firefox, is expected by the end of September.

And at the end of May, AP inked a deal with blog search engine Technorati that added relevant blog links to AP articles delivered through the wire service's Hosted Custom News product for newspaper Web sites.

About 350 U.S. newspapers feature asap content, for which they pay an added fee, while around 1,100 papers and about 450 TV and radio stations use the free video network. AP sells national advertising for asap and splits the revenue 50-50 with the hosting newspaper site, which keeps all of the proceeds from any local advertising it sells. Newspaper sites receive 20% of the national ad revenue generated by the video network, with the rest split between AP and Microsoft. By the end of the year, they'll be able to insert local advertising if they provide their own video content.

Meanwhile, AP continues to work on other multimedia initiatives, including an enhanced package of business and financial news, dubbed Money & Markets, which will enable readers to view updated stock prices and search for corporate press releases and regulatory filings. Money & Markets is scheduled to roll out in October.

Behind the scenes, AP is working on refining the ability of news editors to search for AP content across different content platforms via more specific categories and links to related content.

"Once you've done that," Kennedy says, "it creates a base upon which you can build products."

Those products would be aimed at driving more traffic to its member newspapers' Web sites and could also help AP increase sales to non-member online partners, such as Yahoo! and Time Warner's (nyse: TWX - news - people ) AOL unit, both of which purchase packages of AP national, international and business news to run on their news Web sites. (Forbes.com also pays for AP content.) Online sales to these and other customers account for about 14% of AP's total revenue, a figure that the company is hoping to increase, Kennedy says.

Last week, AP and Google (nasdaq: GOOG - news - people ) revealed that they had reached an agreement under which the search-engine giant will pay AP for news content, although neither side disclosed the financial terms of the deal.

Although AP has all the resources necessary to launch its own branded portal site, the company has no immediate plans to do so, preferring instead to stick with its longstanding practice of distributing its content via its members and customers.

"We're not positioning ourselves as a dot-com,'' Kennedy said, adding that while he wouldn't rule out the possibility of a portal site at a later date, he stressed that it would have to be "in the context of the membership being part of the entire network."

 
 
Date Posted: 17 August 2006 Last Modified: 17 August 2006