AP Now Faces a Direct Challenge from CNN

December 1, 2008

Update: December 1, 2008, 10 am Eastern: A reader sent me a link to this Los Angeles Times’s story “Writers Strike Out on Their Own with a Web Site” here. Although not aimed at news, the notion of pooling content in a Web services seems interesting.

Original Post: December 1, 2008, 8 am Eastern

TechMeme ran an interesting story about CNN’s wire service for media companies. What makes the service interesting to me is the point made in “CNN Pitches a Cheaper Wire Service to Newspaper” here. The Associated Press’s fees are becoming unpalatable to some of its subscribers. CNN offers an alternative that is “cheaper”. For me the most interesting detail in this write up was:

But this week editors from about 30 papers will visit Atlanta to hear CNN’s plans to broaden a service to provide coverage of big national and international events — and maybe local ones — on a smaller scale and at a lower cost than The A.P.

When I read this, I thought, “That’s one way to slash marketing costs. Get the prospects to come to you.” In my experience, newspaper and magazine editors are often inclined to follow the pack. If CNN lands some of the visitors, I think others will follow and quickly. In my opinion, the AP will have to rethink its business model or look for a partner with cash. I can think of a couple of suspects, but we might we in the midst of the first step in a more significant shift.

Keep in mind that this is a hypothetical situation conceived by an idle goose. The AP gets acquired. The buyer merges Web logs into the “new” AP. CNN then finds itself on the wrong side of the deal. CNN’s approach is really a slightly more modernized version of AP. Therefore, CNN may find itself having to change its approach. The destabilizing of the news business accelerates, and as the established players jockey, the opportunity for another player, savvy to the Web log space, steps in. A third player, therefore, has the opportunity to force further changes in the news business.

Destablilization recently has not helped the incumbents. Destabilization, if anything, rewards organizations sufficiently agile to exploit opportunities and large enough to have the capital to undertake a dicey venture.

What would it mean if Google or Microsoft jumped into news, signing up writers to create content for their services? What happens if an investment bank funds a start up with technology and a business model that converts AP’s and CNN’s tired old business into something newer and more exciting? My thought is that CNN itself is vulnerable.

Even if AP and CNN survive, the traditional news business is now up for grabs. If newspapers and magazines keep downsizing, the people who write the news will be open to new opportunities. Sure, some will get the equivalent of their old jobs back, but most will be intellectual gears in the next-generation news system.

Where does search fit into this? Easy. Organizations want to know what the major media outlets are saying. But more and more organizations want to obtain intelligence as a combination of what’s publicly available, what some specialists can provide, and what their own internal information offers. This means more appetite for systems that can acquire and process these information streams. Companies that gain value in this type of climate are outfits like Silobreaker and others with “mash up” and intelligence functions.

Stephen Arnold, December 1, 2008

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