Targeting first the iPad and then e-readers, Associated Press’ (AP) new application will incorporate a paid subscription model for putting content on mobile devices to prevent online news aggregators that link and quote from other organizations’ stories to drive traffic to their own sites.
AP has unveiled plans to set up a division that would help the news cooperative and member newspapers and broadcasters sell digital content for use on a new generation of electronic readers, or e-readers, which is one function of Apple’s iPad.
In a keynote speech Friday before the Colorado Press Association, Tom Curley, president and chief executive of the AP, said the new business unit would be called the AP Gateway and would become “the launching pad for new products and services from AP and other interested news publishers.”
Curley told the CPA convention in Denver that the first Gateway application would be used to deliver news to the iPad, which Apple plans to release in late March. The application would incorporate a paid subscription model and would be open to AP members.
“Beyond that, we expect to offer our content partners a variety of ways to take their content to market, both individually and collectively, directly and indirectly, taking advantage of new business models, including the wide variety of pay-model services now under development,” Curley said, according to a transcript of his speech posted by PaidContent.org.
In launching Gateway, the non-profit is offering members a way to take advantage of the “splintering” of the Internet into many channels for news distribution created by the expected growth in the use of new Internet-connected devices, such as smartphones, Curley said. Quoting Forrester Research, the AP CEO said that while 80% of the U.S. population look to get their news for free, “there is a slice of that remaining 20% who will pay for it under the right circumstances.”
“Just how big a slice that becomes will depend on how creative and responsive we producers are,” Curley said.
The news executive listed three ways to make money in digital media, syndication licensing, advertising, and subscriptions; and said Gateway can enhance all three by tagging, tracking and enabling new business opportunities.
The AP is among news organizations looking to control, and charge for, distribution of its content over the Internet. While news content has been easily accessible for free through a Web browser on a PC, content providers are looking for business models in which subscribers would pay to receive content over mobile devices, which would also be used to deliver advertising.
The need to generate more revenue from content is imperative to the news industry’s survival. As subscribers moved to the PC-dominated first generation of the Web, so did advertisers, leaving newspapers and magazines with heavy losses. And as almost always happens, in order to survive, the news industry is changing, learning from other application makers who are currently making money online. E-readers are just the latest to to add to a long string of mobile devices now able to display news online and some, like Apple’s iPad are able to run applications like the AP Gateway.
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