Summary:

As we’ve been reporting here, in the weeks since the Associated Press began notifying papers about the new rate plans that go into effect Ja…

imageAs we’ve been reporting here, in the weeks since the Associated Press began notifying papers about the new rate plans that go into effect Jan.1, 2009, a number of newspapers — including the Star Tribune — have exercised the two-year opt-out clause in their contracts. The Spokesman-Review has taken it a step further, challenging the two-year clause itself. I spoke with Tom Brettingen, chief revenue officer for AP, about the cancellations, the challenge and the changes. Brettingen was at AP in 1984, the last time the co-op dramatically changed the way rates were handled by shifting the scale from population to circulation. That went over better, he recalls, in no small part because business was better for the industry then. “What’s different (now) is the economy isn’t very good and the newspaper industry is having a hard time for all the reasons know so well.” The other difference: this time, the AP is changing services as well as rates, moving to a breaking news basic package with broader licensing rights and services like state wires that are add-ons in the current plan, a premium package or premium a la carte.

(The AP will not release even hypothetical numbers for a 100,000-circulation paper, although I was told members can share any info they want. If you want to share your AP costs under the current plan and the way it will change in 2009, please drop a note to staci AT paidcontent.org )

Much more after the jump

Returning money: Brettingen contends the final version returns money to the industry. “We’re getting about $20 million less this year [2009]. .., What gets the attention is the price. If we had found a way to make that easy, it would have been a great plus — if we had simply decided each newspapers could pay us 10 percent less. The difficulty is in a co-op everyone needs to be treated exactly the same.” In this version, “almost all papers go down.” Brettingen is frustrated by suggestions that AP doesn’t understand. “Clearly, we understand that some papers are facing decisions. I can have you or this many local reporters … hard decisions are being made.” But he and others at AP continue to pitch the service as “one of the great bargains in the industry.”

According to AP, roughly 90 percent of its newspapers save money under the new plan, leaving about 10 percent who won’t save money or could pay more. AP estimates that newspapers spend roughly 1 percent of their total expenses on its services and that smaller papers pay probably about 10 percent of their editorial budget while AP fills close to 40 percent of their main news sections.

Two-year clause: Brettingen describes it as “exercising the right to leave you in two years” but says AP has always carried 4-5 percent cancellations and that a number of people cancel, lift and reinstate. Why two years ? “There are a lot of reasons for that

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