CNN Drops AP: Old Business Models and The New Journalism

Though it might not appear to have much impact outside of the media industry, the recent decision by CNN (TWX) to cut ties with the Associated Press matters to more than just news junkies and insiders. It marks another subtle but remarkable shift in the modern journalistic landscape of the United States, as older forms of information production and transmission give way to new technologies and ethics that seem to be evolving by the month.

Here's a little background: The Associated Press is a wire service, a news agency that has been around since the invention of the telegraph. "Neither privately owned nor government-funded," its website states, "the AP is a not-for-profit news cooperative, owned by its American newspaper and broadcast members.They elect a board of directors that directs the cooperative."

It's not an overstatement to say that AP has been an essential part of modern global journalism for well over a century. It covers local, national and international stories -- features and breaking news -- and pioneered many news-gathering technologies. Up until about a decade ago, it would have been hard to read a newspaper or watch a broadcast news show that didn't get at least some of its content directly or indirectly from the AP. But declines in subscriptions, the rise of the Internet and the ongoing economic downturn are all hurting the AP's newspaper subscribers. According to annual State of the News Media report produced by the Pew Research Center's Project for Excellence in Journalism, newspapers have lost about $1.6 billion in annual reporting and editing capacity since 2000. That's about a 30% cut in their editorial resources. Newspaper ad revenues, meanwhile, fell 29% last year.

"Advertising has dried up, and in particular the golden cow which is classified advertising has been lost to Craigslist," says Kip Wotkyns, assistant professor of journalism at Metropolitan State College of Denver. "The result is that newspapers have fallen on hard times, many of them have closed and a lot of them are in deep trouble -- and so they're looking to cut costs at every corner. And one of the places that they cut is these syndicated or cooperative arrangements like the AP."

A Wire Service of Their Own

"With traditional media companies facing an advertising slump and rising competition on the Web, the AP has come under pressure from its members to cut rates," the Associated Press recently reported about itself. "It lowered its fees for U.S. newspapers by $30 million in 2009 and plans a $45 million cut for newspapers and broadcasters this year."

Meanwhile, CNN is experiencing troubles of its own. Ratings for its U.S. television programming are down, and the Project for Excellence in Journalism State of the Media report says advertising revenue for CNN and its sister network, HLN, were projected to drop 8% to $513 million in 2009, down from $556 million the previous year. A CNN spokesman said the terms of AP's licensing agreement "did not fit our business model."

But there's an editorial element, as well. CNN is trying its hand at running its own news wire service, and focusing its budget and editorial energies on producing more original content. And while its TV channels may be losing viewers and advertisers, CNN.com is one of the busiest sites on the Internet. But the Atlanta-based company isn't completely going off on its own. CNN says it has signed a new, limited agreement with the Reuters news service to provide additional breaking-news content.

AP, meanwhile, has been expanding beyond its traditional market. AP Television News, the organization's video news agency, was launched in 1994 and has a global list of subscribing broadcasters. Earlier this year, the organization unveiled AP Gateway -- a new business unit charged with developing direct connections to consumers through the Internet, mobile phones, e-readers and other devices. And AP's News Registry, "a platform for tagging, setting rights and tracking usage of news content across the Internet," is expected to move out of beta and be open to all of AP's members and broadcasters by year's end.

Sooner or Later, People Will Miss Real Journalism

Nothing in the news industry is certain these days. Consumers may be migrating to the Web for their news fixes, but online advertising remains a tough market. According to a new survey by the Project for Excellence in Journalism and the Pew Internet & American Life Project, 79% of internet users "say they never or rarely had clicked on an online advertisement. They don't mind them. They simply ignore them."

And there are concerns that old-school, professional journalism -- the type practiced by AP, the L.A. Times, the Denver Post and other traditional outlets -- may slip away in favor of a flood of unfiltered and unverified information. Professor Wotkyns says that, while he expects some form of "radical decentralization" of news in the future, perhaps with the growth of so-called citizen journalism, the business model to support newer forms of journalism has yet to present itself. And he thinks the notion of a trained journalist is not outdated.

"Eventually they're going to miss us," he laughs,"but it may take a while." Some incident will happen, he says, where "innocent folks will be gravely harmed by this kind of no-filtering, and something that's inaccurate will get out there, or something that is edited to a particular political persuasion will get out there. It may take a while to understand that there really is a [place] for professional journalism."