AP cuts newspaper rates, moves to protect web news

NEW YORK (Reuters) - The Associated Press unveiled rate cuts on Monday to help member newspapers reeling from declining advertising revenue and said it would sue websites that use its members’ articles without permission.

Changes announced by the AP at its annual meeting in San Diego include $35 million in rate assessment reductions for 2010 on top of $30 million it already instituted for 2009.

The 163-year-old newswire service also will allow member newspapers to cancel their membership with one year’s notice instead of two, while offering a discount to papers that stay on a two-year cancellation notice.

Jim Kennedy, AP’s vice president of strategic planning, said in a telephone interview that AP would have to reduce its costs to compensate for the rate cuts. That includes not filling vacant jobs and possibly buyouts.

Dean Singleton, AP chairman and chief executive of Denver-based publisher MediaNews Group, said, “We feel it is critical to help our members during these extremely difficult times, and these numbers show our deep commitment to doing that.”

U.S. newspapers are buying out or laying off workers to stay in business. Some, including EW Scripps Co’s Rocky Mountain News and Hearst Corp’s Seattle Post-Intelligencer, have closed in recent weeks. The New York Times Co has said it might close the money-losing Boston Globe.

The AP, a nonprofit cooperative formed by its member newspapers, said revenue from U.S. papers would fall by about a third between 2008 and 2010.

In 2007, 25 percent of its $710 million in revenue came from U.S. newspapers.

Seventeen percent of its revenue comes from digital sales, such as the Internet and mobile devices, Kennedy said, adding that the number could grow to more than 20 percent in 2010. Most newspaper publishers get about 10 percent of their revenue online, and the other 90 percent in print.

The AP also threatened to “pursue legal and legislative actions” against websites that do not properly license news content. It said it would develop a system to track its members’ and its own news distributed online to determine whether it is being legally used.

“We can no longer stand by and watch others walk off with our work under misguided legal theories,” Singleton said.

The announcement came a day before Google Inc’s Chief Executive Eric Schmidt is due to speak at the Newspaper Association of America’s annual conference, also in San Diego.

Many newspapers resent search websites like Google and Yahoo Inc because they say they siphon away ad revenue that should be going to their own websites.

Last October, the AP suspended plans for a new pricing structure because of complaints from member papers, who said they could not afford it.

Some newspapers have threatened to cancel their membership, prompting the AP to try to find ways to keep them. One option the wire service is offering is a limited service for papers “with minimal world and national coverage needs.”

Thomson Reuters Corp competes with the AP in providing news.

Reporting by Robert MacMillan; Editing by Andre Grenon, Gerald E. McCormick, Toni Reinhold