Tribune Company newspapers to drop AP

Editor & Publisher reports that the Tribune Company, which publishes newspapers across the country, has given the required two-year notice of intent to drop the services of the Associated Press.  The announcement comes as a blow to the AP, and not just in subscriptions, which have declined as a result of their new two-tiered rate structure.  Their agreements also give them the right to distribute original reporting from their clients, which means the AP will lose nine significant sources of news:

Tribune Company has given a two-year notice to the Associated Press that its daily newspapers plan to drop the news service, becoming the first major newspaper chain to do so since the recent controversy over new rates began.

Tribune, which owns nine daily papers including the Los Angeles Times and Chicago Tribune, joins a growing list of newspapers that have sought to end AP contracts, or given notice of that, following plans to introduce a new controversial rate structure in 2009. The notice was given earlier this week. …

Tribune daily papers besids the flagship in Chicago affected include The Sun Sentinel of Fort Lauderdale, Fla.; The Orlando Sentinel; Red Eye of Chicago; the Hartford Courant; The Baltimore Sun; The Morning Call of Allentown, Pa.; and The Daily Press of Newport News, Va.

“I think many editors are concerned about the new financial rate model that AP has rolled out,” Earl Maucker, editor of the Sun Sentinel, said about the notice. “It is a natural approach for us to take a hard look at that. Are there other alternatives out there that would provide the depth and breadth of coverage we need?”

In recent months, other non-Tribune papers have also given the required two-year’s notice to drop AP. Those include: The Star Tribune of Minneapolis, The Bakersfield Californian, The Post Register of Idaho Falls, and The Yakima Herald-Republic and Wenatchee World, both of Washington.

In fairness, the AP’s new rate structure sounds like a reasonable way for smaller newspapers to acquire its services.  Instead of a single flat rate to all customers, the AP restructured their offering into two options.  One would provide only breaking news in the traditional wire-service sense to lower-tier clients at a reduced price.  The premium clients would receive more in-depth pieces and investigative reports.  Smaller newspapers would therefore have a lower cost burden to getting at least some content, while larger newspapers could choose either direction.  It doesn’t sound like a bad idea — if, in fact, it worked as the AP characterized it, as a cost reduction for most clients.

They promised in 2007 that this new rate structure would result in net savings for its clients, but AP didn’t release the figures until July.  Obviously, the rates didn’t produce the results AP described.  Since receiving the new rate schedule, several of their high-profile clients have served notice of intent to cancel, and at least one is challenging the two-year advance notice requirement.  The cost savings appear to be vaporware.

AP has a relative monopoly inside the US on wire service ever since UPI all but died fifteen years ago.  Perhaps they got too arrogant and figured that their clients had nowhere else to go, without considering the option of just giving up the cost of AP entirely in an industry-wide downturn.  Their new rate structure seems to bear some resemblance to New Coke, an unforced disaster in the midst of market dominance.  I suspect that the New AP will go the way of New Coke, and soon enough to keep from losing not just clients but also valuable news resources.