©2009 Grace Image, San Francisco

If the October 12, 2009 speech by AP President and CEO Tom Curley to the World Media Summit in Beijing is any indication, the dilemma over how to pay (and who should pay) for professionally generated content is heating up. The AP blames third-party aggregators for taking the money and… NOT sharing, to put it mildly.

Railing against what he called, “free-riders and pirates,” Mr. Curley cited the following issues for news media providers:

"Random distribution of traffic by aggregators such as search engines directs audience and revenue away from those who invest in original news reports but assures the aggregators and their ad networks of a stream of revenue based on aggregation and indexing of published news content.

Crowd-sourcing web services such as Wikipedia, YouTube and Facebook have become preferred consumer destinations for breaking news, displacing Web sites of traditional news publishers".

AP’s purportedly game-changing “Protect, Point, and Pay” strategy—a new rights tracking and management system—leaves one to wonder just how it would be implemented and who would stand to lose if it is successful in addressing AP’s concerns.

Zachary Seward, of Nieman Journalism Lab suggests that the main target of AP’s frustration was Google. According to Mr. Seward, AP is hoping to take advantage of the ongoing battles between Google and Microsoft to negotiate better terms in the next round of contracts for the press association’s content. Citing ad hoc remarks Mr. Curley made in Hong Kong a few days earlier, Mr. Seward theorized that, “If Microsoft and the AP come to terms, it could have huge implications for consumers… ”. AP has already been experimenting with Yahoo for an alternative search partnership that the AP calls “News Registry.”

Changing business models are clearly the number one issue for content providers. All forms of media production require talent, time, and boatloads of cash. In the old-media heyday, advertising—and in some cases subscriber fees—comprised the main revenue base. But in a more fragmented digital world, it isn’t clear how the true cost of media, whether for news or entertainment, will be borne.

Those outside the industry shrug and say get over it—if print is dead then switch to online. If TV audiences are zipping their way through ads or prefer to hang out online, then go there. Who cares about the medium?

But to media providers, it is a big deal. Online advertising, while growing quickly, is still a weaker source of revenue than print (and far weaker than TV). This is in part because the audiences are so fragmented, and media is still priced according to rules established for traditional distribution methods. Measurements for online media viewing haven’t kept pace with the speed at which the audience is moving in that direction. Until viewing measurements are more accurate, advertisers are less convinced of the impression value of ads that are seen online but not clicked.

So where do search companies factor in? Mr. Curley summed up their power nicely when he spoke about internet users: “Even before they [users] started paying more attention to each other than to Web sites,” he acknowledged in his Beijing speech, “…users had adopted search as their online compass for everything, including news.”

The scenario he describes affects how money changes hands in the internet age. If users go straight to branded media outlets, advertising dollars remain with that media outlet, just as in the old days with a printed newspaper or TV broadcast channel. In that instance, the content provider may be hurt still by lower online ad pricing, but doesn’t have to share its ad revenues with anybody else. If, however, the user gets to a piece of media via search, those advertising dollars—or a significant percentage of them—may go instead to the search engine company that brought the user to the media.

Search engine companies would argue that they provide an important step in the media consumption value chain, and that their fortunes are earned from a real service, not piracy. The internet is a vast and increasingly crowded landscape. Users value aggregation and filtering to find an array of content that interests them.

Tom Wilde, the CEO of search and publishing platform, EveryZing, likens internet-based TV to atomic particles, too small to allow users to easily find video content and thus to attract advertisers. His company is working to enlarge those particles with a new universal search engine designed to do a better job of gathering online audiences. Fox News and Fox Business Networks, among other media outlets, have signed on to power search on their sites to help enhance online ad opportunities.

Meanwhile, the frustrated Mr. Curley admits that the digital audience “seems to be having fun,” and acknowledges that, “From all visible signs, it’s [the other side of the digital bridge] not a place where a news organization can survive by just doing business as usual, creating and marketing content.”

He’s right about one thing. The digital audience is having fun. Users are able to talk to friends and relatives via Skype, follow a steady stream of data on Twitter, get homework help on Wikipedia, and find what they’re looking for on Craigslist—all without paying a penny or having to view a single display ad.

No wonder consumers are enjoying this part of the ride; to them, it’s free. The issue for content providers remains the same: somewhere, at some point, revenues need to get back into their hands so they can stay in business.

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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."