Is it time to reinvent the newswire?
It's hard to justify an AP subscription when all your media competitors are just a click away.
Welcome! I'm Simon Owens and this is my media industry newsletter. You can subscribe by clicking on this handy little button:
Let’s jump into it…
Is it time to reinvent the newswire?
The Associated Press is in a somewhat unique position in our media ecosystem; it plays a tremendous role in news gathering across the world and yet it’s sometimes easy to forget it even exists. That’s because most news consumers encounter AP reporting on non-AP websites that subscribe to its newswire services.
And for much of its 177-year history, those newswire clients provided the bulk of the nonprofit’s revenue. That’s why it’s somewhat notable when a major media organization decides to end its AP relationship and go without. All the way back in 2010, CNN caused a stir when it announced its decision to drop the AP, instead opting to rely more on its own journalism to populate its website and newscasts.
And then this week we learned that two major newspaper chains — Gannett and McClatchy — are dropping their AP subscriptions. Representatives at both organizations indicated that the ROI of AP content didn’t justify its costs. “This shift will give us the opportunity to redeploy more dollars toward our teams and build capacity where we might have gaps,” a Gannett executive said in a statement. McClatchy was even more direct: “With this decision, we will no longer pay millions for content that serves less than 1 percent of our readers,” said Kathy Vetter, its senior vice president of news and audience
I’m actually surprised it took this long. I’ve long considered newswire companies to be completely anachronistic in an online ecosystem where every website has access to the same exact content. In the pre-internet era, an AP subscription was tremendously valuable because each participating newspaper had a regional monopoly that kept it from competing against the same AP articles published at other newspapers. If you owned The Richmond Times Dispatch, you didn’t care if the Los Angeles Times ran the exact same articles because you weren’t competing with the Times for readership.
But now those regional monopolies no longer exist, and with every competitor merely a click away, a media outlet has a much harder time recouping its costs on content that’s simultaneously displayed across thousands of websites. Not only does a newswire subscription not make sense in the current environment, but it’s becoming fiscally irresponsible for local news outlets to spend any resources at all on non-local news. Given the struggles at both Gannett and McClatchy specifically, I don’t blame them at all for redeploying their quickly-dwindling resources toward local journalism.
Of course, none of what I’m saying will come as a revelation to those working at the AP and other newswire services. As The New York Times noted in its reporting on the issue:
The A.P. once relied primarily on licensing fees from newspapers but now has a variety of other revenue streams, including a news website, an e-commerce site, and software and production services. According to an article on its website, fees from U.S. newspapers account for roughly 10 percent of The A.P.’s income.
In fact, Axios reported just this week that the AP is partnering with Taboola to launch an ecommerce vertical that will generate revenue through product recommendations. Not to be outdone, Reuters rolled out a paywall on its owned-and-operated website back in 2021, and more recently it launched a research subscription offering for individuals.
This type of diversification indicates that the AP and Reuters are slowly transitioning from newswire services to their own distinctive news brands. But does that mean there’s no longer a market need for newswires? Or is there an opportunity to reinvent the newswire for a post-scarcity internet?
There are a few examples I can think of where newswire companies still offer differentiated value.
One is called State House News. It employs about eight reporters, all of whom are focused on a single beat: the Massachusetts state government. It provides an important resource to newspapers spread across the state that can’t afford to place their own staff at the state capital but still need policy coverage that’s important to their local readers. And because every State House News article is locked behind a hard paywall, it doesn’t directly compete with its own newspaper clients for distribution.
Another cool company is called Stacker. It specializes in data journalism, but it flips the newswire concept on its head. Rather than charging media outlets for access to its content, it distributes it to them for free. With the cost barrier eliminated, those outlets are then more incentivized to run its articles on their websites.
So how does Stacker make money? Well, its team of data journalists work with brands to create sponsored content that leverages the brand’s internal data. For instance, here’s an article that parses data to determine “where graduation rates for students with disabilities are improving.” The piece was developed in paid partnership with a company called Marker, which connects students with learning disabilities to trained tutors.
Stacker then distributes those articles as part of its newswire services. What’s great about this model is that there’s no financial payments between the brands and the media outlets that run the articles, so there’s no need for a “sponsored” label to be attached to the articles. As a result, the media outlets get high quality content while the brand clients get organic distribution and earned media. It’s a win win for all parties. To learn more about how this model works, check out my interview with Stacker co-founder Noah Greenberg.
I think there’s still a market opening for newswire services, but the model needs to account for how content spreads in the current environment. Simply charging clients to run the exact same article that’s available everywhere else no longer makes financial sense, especially given that most traditional media outlets are doing everything they can to rein in costs. In an era when content scarcity no longer exists, any successful media operation depends entirely on the delivery of differentiated value.
What do you think?
Quick hits
The New York Times's recipe vertical generated a huge surge in subscriptions during the pandemic, and it's managed to hold onto those subscribers by increasing its recipe output: "The plan is to produce up to 100 recipes a month, a roughly 40% increase over 2023; and to double its selection of cooking demo videos to 100." [Business Insider]
It's good that Meta is giving more money to creators, but its methodology for distributing funds is still completely arbitrary and therefore not a true revenue share. [Social Media Today]
"Private equity firms have poured billions of dollars into music, believing it to be a source of growing and reliable income. Investors spent $12 billion on music rights in just 2021 — more than in the entire decade before the pandemic." [NYT]
The Baltimore Banner now has 44,000 paid subscribers, and subscriptions generate half of its revenue. [Axios]
The LinkedIn feed is certainly seeing more engagement than ever, and I've talked to several B2B media operators who say LinkedIn has become their #1 social traffic driver. However, I would caution creators from becoming too reliant on the platform given that it does virtually nothing to share revenue and controls the distribution levers that can siphon off traffic with a slight tweak to the algorithm. [Digiday]
"Netflix has steadily grown its share of audience demand ... over the past four quarters ... Peacock also grew somewhat during the same period, but for the rest of the streamers, the data is grim: Demand for Max, Disney+, and Hulu has been relatively stagnant, and demand for Paramount+ has decreased." [Puck]
The Borowitz Report started as a Mailchimp newsletter in the early 2000s, moved to The New Yorker for over a decade, and is now reemerging as a newsletter. It's cool to see a creator come full circle. [Hollywood Reporter]
::takes long drag on cigarette:: “Encyclopaedia Britannica? I haven’t heard that name in years.” [Bloomberg]
The problem with so many Musk-led Twitter initiatives is that they're half-assed and deeply unserious. I've actually always been bullish on the potential for Twitter video, but executing it well would require a far less capricious owner at the helm. [New York]
TikTok is working hard to improve its internal search engine — to the extent that it's financially rewarding creators who produce content that caters to popular searches. [The Verge]
This is a good profile of a relatively new nonprofit news outlet in LA. What's especially interesting is that one of its founding funders is highly skeptical that a nonprofit news outlet could survive without the help of deep-pocketed donors: “I don’t know if it’s necessarily doing justice to say that, ‘yeah, journalism is gonna…find a viable revenue model.’ ... I don’t think there’s a circumstance where if you can just twist the dials the right way it’s going to unlock lots and lots of earned revenue from a big subscriber base.” [Nieman Lab]
Want a daily dose of media industry news?
I only send this newsletter out twice a week, but I curate industry news on a daily basis. Follow me on one of these social platforms if you want your daily fix:
Thanks for this context around AP. I recall one of my first duties as a beginning reporter was to clean the AP machines and change the ribbon at midnight while waiting for the morning papers to come off the press. I never gave AP another thought as I learned about the internet, email, and on to subscriptions online.
But I like having a *news home*, right now the LA Times, that bundles in a few AP wire stories with their own content. Flip the e-edition front-to-back to get that dopamine hit with the comic catharsis at the end.