In a major turnabout, the Associated Press has just reversed course on its controversial rate plan following a board meeting today. The co-op, facing defections from members large and small, will cut member assessments by another $9 million next year, for a total of nearly $30 million—and will start an examination of its member structure that could result in a complete overhaul. The board voted to issue a moratorium for the papers—a minority of AP members—facing cost increases next year and unwound a provision of the new plans that would have made some AP text content, including enterprise, columns and some sports and entertainment features, premium. AP Rate reductions will be considered for AP Broadcast members as well.

The move follows by a week the announcement that Tribune Company gave its two year notice, although the company said it planned to discuss alternatives with AP in the interim. Keep in mind that under the plan slated to go into effect next year, most member papers would have seen decreases—something admitted even by some of those who gave AP the required two-year notice to leave the co-op.  But it did not go far enough for some, especially in these days of staff slashing. Last week when the Columbus Dispatch announced its decision to leave AP in January 2011, the paper’s letter read, in part: “The changes to AP’s rate structure were not as substantial as we were led to believe or that we need to maintain our service. Given the choice of maintaining our staff or AP’s service, it’s in the best interests of our operation to maintain our local reporting staff.”  Criticisms also included the way the plan was structured between basic and premium; long-standing concerns about the way AP shares articles from its member papers; being locked in to a two-year cancellation requirement; and issues with AP’s own changes in coverage.

Lots more, including the full release, after the jump...

The review of AP’s pricing and governance structure starts immediately, with plans to conclude by mid-2009. It sounds like everything is on the table: “re-examining all current policies and rules, such as the two-year notice now required for leaving the news cooperative, and considering other potential changes, including the creation of different classes of membership and services.” Board chairman Dean Singleton stirred up a bit of a storm earlier this month when he told our David Kaplan: “I’m at a loss as to what some of the members are complaining about. The AP gave $21 million in fees back to the members and they weren’t complaining before they gave it back. Now they’re complaining, I guess because it wasn’t more. ... AP has become the whipping boy for an angry bunch of editors who want to blame somebody for their woes.” Singleton sang a different tune today: “It is time to consider fundamental change to address members’ rapidly changing needs and to assure that AP remains the world’s leading news organization.”

I’m waiting for an interview with Tom Brettingen, the AP chief revenue officer who spoke with us in September about the rate plan. In the release, AP CEO Tom Curley said: “For two years, we held rates flat, with no increases. This year we rolled out plans to reduce assessments by up to 10 percent, while providing a far greater range of content. Because of the downturn in the global economy, we are at a point where we must now examine more than just what content costs – but also how AP deals with all of its members and customers.”

So why change—and why now?: The financial near-chaos of the last few weeks has made tough times even worse for some—and provided cover for others seeking to slice costs. Combined with the two-year requirement for cancellation, AP likely was looking at more papers willing to seriously consider life without AP and waves of announcements similar to those from Columbus and Chicago. Not all of those papers would be gone at the end of two years, but the uncertainty would be a drain and, unlike a private service like Bloomberg or other wires, the co-op’s own set-up would make it difficult to find case-by-case solutions. I wasn’t in that meeting but it is not a stretch to see that AP stands a better chance by accepting the need for dramatics now and moving towards a solution that doesn’t just adapt history, but creates an organization that matches the change in the industry. 

AP Board approves further rate reductions; AP to undertake review of membership structure

NEW YORK—The Associated Press will reduce U.S. newspaper member assessments by another $9 million next year and immediately begin a re-examination of the AP membership structure.

By the middle of 2009, AP will complete a review of its pricing and governance structure, re-examining all current policies and rules, such as the two-year notice now required for leaving the news cooperative, and considering other potential changes, including the creation of different classes of membership and services.

In the meantime, the AP Board of Directors voted at its quarterly meeting in New York on Thursday to provide all member newspapers complete access to all AP text content, at no extra cost. In addition, it voted to approve a moratorium on the rate increases that a minority of newspapers were expected to see in 2009 under the current AP pricing structure.

AP estimates these steps will save newspapers another $9 million, on top of the nearly $21 million in savings previously announced in rate assessment reductions. In addition, AP will study the potential for rate adjustments for AP Broadcast members as well.

“Our industry is in the midst of an unprecedented confluence of fast-moving and extraordinary events. Challenges to newspapers and to the economy as a whole keep changing the equation for AP and its members,” said William Dean Singleton, chairman of the AP Board of Directors and vice chairman and CEO of MediaNews Group, Inc. “It is time to consider fundamental change to address members’ rapidly changing needs and to assure that AP remains the world’s leading news organization.”

“We fully understand the pain and the challenges of our members, and we have worked to address these concerns,” said Tom Curley, president and CEO of AP. “For two years, we held rates flat, with no increases. This year we rolled out plans to reduce assessments by up to 10 percent, while providing a far greater range of content. Because of the downturn in the global economy, we are at a point where we must now examine more than just what content costs—but also how AP deals with all of its members and customers.”

This year, AP has been rolling out to members a new pricing and services packaging plan, called Member Choice. Under Member Choice, newspapers were eligible to receive nearly $14 million in assessment reductions. In addition, they would get up to another 5 percent—up to total of $7.5 million—in reductions by enlisting in the AP’s Content Enrichment program. About 10 percent of AP newspaper members saw an increase in rates under this plan, although most of them were part of groups getting overall rate reductions. Those increases will now be put on hold until AP completes the review of its structure.

Two levels of service were available under Member Choice: AP Complete and a core service, AP Breaking News. All members will now receive AP Complete, with full access to all of AP’s English language text content, including analysis and enterprise.

AP will immediately launch the study of the cooperative structure and of service options, with plans to report back to the Board of Directors by AP’s annual meeting in April of 2009 with suggestions on how it might be reorganized. The AP Board of Directors oversees and approves all changes regarding structure, pricing and governance of the cooperative.

About The AP

The Associated Press is the essential global news network, delivering fast, unbiased news from every corner of the world to all media platforms and formats. Founded in 1846, AP today is the largest and most trusted source of independent news and information. On any given day, more than half the world’s population sees news from AP.

• AP’s Controversial Rate Plan: History In Links