AP board approves agency to sell digital news

Feb. 13, 2011
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NEW YORK (AP) — The Associated Press' board of directors has approved an independent agency that aims to generate more revenue for the AP and other media companies by licensing digital rights to their content. Thursday's approval formalizes a concept announced in October.

The AP, a not-for-profit news cooperative, said the top priority for the agency will be to ensure that news providers are paid for content appearing on websites, phones, tablet computers and other devices. Potential customers include larger websites that run or excerpt content from those news providers without paying for it, AP CEO Tom Curley said in an interview Thursday. He said the agency doesn't plan to target smaller blogs.

Curley said the agency also will try to help its participants develop better ways to sell ads on digital devices. And it will sell data to companies that want to know more about the news coverage targeting them, such as when and where stories in which they are mentioned are being read.

Although he played a key role in its creation, Curley said another executive will be hired to run it. The agency will be called the News Licensing Group and start with about 20 employees when it launches in July.

Before then, Curley said the agency will need to raise at least $20 million. Most of the money will be sought from news companies. Ownership stakes will be divided among the AP and other news providers.

The group will serve as a one-stop shop for content from the AP and more than 1,000 U.S. newspapers. Its expansion plans call for material from broadcasters and overseas news outlets to be added later this year.

Websites and developers of applications for digital devices will be able to buy rights to use all content or just specific types of material.

The approach is loosely modeled after the American Society of Composers, Authors and Publishers. ASCAP collects royalties from broadcasters, restaurants, websites and other places that perform or host performances of copyright-protected songs. That money is then distributed to more than 400,000 songwriters and others involved in the creation of music.

Like ASCAP, the News Licensing Group will negotiate fees and turn over most of the revenue to the content owners. The group will keep a portion of the money to pay for employees, technology and other expenses. The percentage of the group's cut hasn't been determined.

Curley said several websites already have been approached about licensing deals, but he declined to identify them.

"There has been some good give and take," he said. "Do I think everyone will respond that way? Of course not. But people haven't had this opportunity until now. They haven't been able to go to one place and get (content). This is why we think this is a game changer."

Curley said similar licensing rights agencies have brought in annual revenue ranging from $40 million to $1 billion. If the new agency is as successful, it would help media companies offset a decline in their traditional sources of revenue as other options on the Internet lure away their audience and advertisers. Newspapers have been particularly hard hit. Ad revenue has fallen 40 percent to 50 percent at some publishers during the past four years.

The downturn has also affected the AP, which gets about one-fifth of its revenue from newspapers. The AP's revenue declined in each of the past two years, marking the first consecutive drop since the Great Depression. Curley expects revenue to rise this year.

 


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