The Associated Press, a nonprofit news cooperative, announced plans Friday to launch a business unit that will sell premium content directly to consumers on the next wave of mobile devices such as Apple’s much-anticipated iPad.
The move takes dead aim at search engines and online news aggregators that profit from compiling content produced by AP and its member newspapers.
It comes at a critical stage for the newspaper industry, which has struggled to find a business model that works in an age when content is shared freely on the Internet.
“In the near future, we should no longer be held hostage to search engines and headline aggregators,” said William Dean Singleton, AP chairman and chief executive of MediaNews Group, owner of The Denver Post. “We can deliver much more timely, relevant and compelling experiences directly to our consumers and not through some search engine that makes a lot of money off of our content.”
Singleton’s remarks were made Friday during a Colorado Press Association luncheon at the Brown Palace Hotel in Denver.
The AP Gateway business division will develop products and services — such as an application for the iPad — that offer consumers packages of stories, videos, photos and other content. The iPad tablet, with a 9.7-inch, multitouch screen, is slated to hit stores in late March.
Gateway products will draw content from AP’s News Registry, a system that tags and tracks digital content generated by AP and member newspapers. More than 200 mostly small and medium-sized papers have joined the registry.
AP CEO Tom Curley said the launch of Gateway comes amid a new era dubbed by Forrester Research as the “Splinternet” — where the Internet is fragmented and the online experience is no longer tied to standardized Web surfing on desktop computers.
“On the unified Web, most sites were searchable, and most consumers defaulted to the remote control of keyword search to find information and news that they wanted,” Curley said during a keynote speech at the CPA luncheon. “It didn’t always work so well — you’d get a Miami version of that Colorado story. It seemed to be good enough for the consumer. On the Splinternet, you don’t have to settle for good enough.”
He said Gateway will deliver relevant and personalized content for consumers. Revenue will be generated through licensing agreements, advertising and subscriptions. The AP board of directors has yet to establish a revenue-sharing policy, Curley said.
“Many of the services and products will be opt-in, and publishers must be able to set their own prices,” he said.
Singleton urged member papers to join Gateway.
“The more who opt in, the better will be our collective and individual chances for success as we scale up an unbeatable base of content for new product development,” Singleton said. “Our industry, for too long, has failed to get together on important initiatives.”
The big question is whether readers will open their pocketbooks for content that, for the most part, can be accessed for free on the Internet.
Curley cited research that showed 20 percent of the population is willing to do so “under the right circumstances.”
Larger papers such as The New York Times are working on their own digital publishing projects for new platforms such as the iPad and e-reader devices like Amazon’s Kindle.
AP’s effort to control and charge for its content was inevitable given the industry’s struggles, said Ben Burns, director of the journalism program at Wayne State University in Detroit.
“I think to some degree, it will be successful,” Burns said. “Eventually, you’re going to pay for good online content if you want it.”
Andy Vuong: 303-954-1209, avuong@denverpost.com or twitter.com/andyvuong
