The Associated Press (AP) will further cut fees paid by struggling newspaper members and develop an advertising-supported service that will deliver stories and photos to advanced cell phones. The service, which will carry local news from participating newspapers as well as national and international news from AP, is being tested with several newspaper companies and is expected to launch in the summer under the name Mobile News Network.
AP President and Chief Executive Officer Tom Curley said Monday that while the service was designed specifically for Apple Inc's iPhone, it can be used with other "smart" phones. Curley said the service would be organised by ZIP code, with AP managing and paying for a central facility to handle technical and ad-serving functions.
Local ads would be sold by participating newspapers and national ads by ad networks. Revenue would be split 50-50 between news providers and ad sellers. AP said it was working with cell phone manufacturers and carriers to develop a user interface for the service. A product to provide news videos is also in the works.
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Curley said several newspaper companies participated in setting up initial rules for how news would be contributed and the revenues split: Advance Publications Inc, Hearst Corp, Lee Enterprises Inc, McClatchy Co, MediaNews Group Inc and Rust Communications Inc.
Newspapers have been seeing steady declines in advertising revenues in recent years, and many have responded by cutting staff and reducing other expenses.
The AP has also faced calls from members for more price cuts amid steep revenue declines at newspapers because of a downturn in the economy and an ongoing shift of readers and advertising dollars to the Internet.
Last year, total advertising fell 7.9 percent at U.S. newspapers, according to the Newspaper Association of America. That included a 9.4 percent decline in the core print ad business, offset partly by an 18.8 percent increase in online advertising. Responding to the revenue declines, AP said it was further reducing its fees to newspapers in 2009, following two years of no increases.
The AP had previously announced major restructuring of the way it prices and packages news that would create a core product of breaking news, with separate add-ons of premium services. Those changes, due to go into effect next year, had been expected to return about $5.6 million in cost savings to member newspapers.
