NEW YORK (AP) -- The board of The Associated Press on Thursday approved a major overhaul of the way the AP prices and packages news for its member U.S. newspapers.
Instead of offering news feeds defined largely by the volume of news delivered -- large, medium or small -- the new plan is centered on a core service of all national, state and international breaking news, with options for adding other services or purchasing stories individually.
Tom Brettingen, the AP's senior vice president for global newspaper markets, said the plan will offer U.S. newspapers more flexibility in accessing and using news of local interest that may originate in other regions.
The changes, which take effect Jan. 1, 2009, were first proposed at the company's annual meeting in May. The basic assessments charged to newspapers will continue to be based on circulation.
AP said most of its member newspapers would wind up paying either lower fees or see no changes. Brettingen estimated the changes would result in $6 million to $7 million less annual revenue for the news agency, a shortfall he said should easily be made up from growth in other areas, including video and online sales.
"It's an amount we believe we can swallow, and clearly it would be beneficial to the industry during challenging times to have a little bit less to pay us," Brettingen said.
The pricing changes mark the first time the AP has revamped its fee structure since 1985, when the cooperative began assessing newspapers based on their circulation instead of the population in their area.
AP CEO Tom Curley noted in a May speech that some member newspapers would rather not pay for news they don't use.
Many newspaper publishers are looking for ways to reduce costs amid a prolonged downturn in advertising. In the past two weeks, a number of U.S. newspaper companies reported slumping ad revenues for the third quarter.
AP didn't increase the basic rate paid by members in 2007 and will do the same in 2008.
As of the end of 2006, AP got about 30 percent of its revenue from U.S. newspapers and about 15 percent from online commercial sales, which is the fastest-rising segment of the AP's business, according to company spokesman Paul Colford.
AP is a global news company founded in 1846 and owned by its member news organizations. Last year, its net income fell 28.5 percent to $13.3 million as revenues rose 3.9 percent to $679.8 million.
The new plan, which the cooperative is calling "Member Choice," will affect U.S. newspapers. The AP said that broadcast and online customers should also benefit from the changes, although programs for those customers have not yet been completed.
Besides the core breaking news service, member newspapers also would be able to add premium services with in-depth news analyses, business, sports and entertainment articles.
Members also will be able to buy stories on an individual basis, something that wasn't possible before. Newspaper editors will be able to view and purchase stories outside of the core breaking news service using a Web-based interface called AP Exchange.
