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From AJR,   December/January 2008  issue

To Partner or not to Partner?   

Distributing news in the Internet era


By Barb Palser
Barb Palser (bpalser@gmail.com), AJR's new-media columnist, is vice president, account management, with Internet Broadcasting.     

Local content is king. That's one of the celebrated facts of the networked information age. Unfortunately for local news organizations, the strategic implications of that fact are a little murky.

As national portals for instance, the Google/YouTube behemoth make moves to distribute and host more local stories and video, there's paralyzing uncertainty as to how the owners of that content should respond. Should they partner with Google to scatter their content to the ends of the earth, trusting that it will bring new audience and revenue to them? Or should they guard that unique asset and refuse to send it anywhere without getting paid? (See "Online Salvation?")

This isn't an academic question; local news organizations are under desperate pressure to produce profits from their Internet and mobile ventures. As they walk the tightrope between a diminishing traditional business and a promising but immature new one, there's a sense that any strategic misstep could send them hurtling into the void.

Two recent media partnerships illustrate how complex this game of content ownership and distribution can be. The first is the one between Google and the Associated Press. On August 31 the following story was published, ironically, on the AP wire:

"Internet search leader Google Inc. on Friday began hosting material produced by The Associated Press and three other news services on its own Web site instead of only sending readers to other destinations.

"The change affects hundreds of stories and photographs distributed each day by the AP, Agence France-Presse, The Press Association in the United Kingdom and The Canadian Press. It could diminish Internet traffic to newspaper and broadcast companies' Web sites where those stories and photos are also found a development that could reduce those companies' revenue from online advertising."

That idea didn't sit well with the aforementioned news-papers and broadcasters, but the actual impact on local news sites is likely to be subtle. The partnership relates to the Google News site not searches on Google.com and to AP stories that are carried on the national and international wires. Instead of linking to dozens of sites with the identical AP story, Google News now hosts the AP story on its own site.

Practically, this shouldn't be a big deal. No local news organization should be dependent on random Google News links to national AP stories that happen to be on its site. Symbolically, however, the AP-Google business relationship raises the question (not new) of whether the AP a not-for-profit cooperative owned by its 1,500 daily newspaper members is a friend or foe to those members in the digital age. Now that the AP is being paid directly by Google (details haven't been disclosed), what are the future threats or opportunities for local members? If a member originates an AP story that ends up on Google News, it's likely to feel cheated even if the loss is minimal.

The second partnership is between Google-owned YouTube and local television stations, and involves much more strategic control and upside for the news organizations. Since June, 16 Hearst-Argyle stations have launched partner channels on YouTube, under an arrangement in which the stations publish clips on YouTube and share the revenue generated from display ads next to the video. Several more stations are expected to launch channels by the end of the year.

The participating Hearst sites boast YouTube logos on their home pages, linking to their YouTube channels. There you'll find video clips of TV news stories as well as some Web-only and user-generated video contributed primarily by Hearst-Argyle's recently launched network of local high school sports sites. (Check out youtube.com/wtaetv for an example.) In October LIN Television announced similar plans for its 31 stations.

The Hearst-YouTube partnership is young, but the marketing benefits are already evident; the mere presence of the YouTube logo on Hearst's home pages makes the sites look cooler and more 2.0-aware. And while it will take more time to understand the dynamics of audience flow from one site to the other, the YouTube video is being watched; by November, the Hearst YouTube channels had logged more than 13 million video views.

At this point neither the AP-Google nor the Hearst-YouTube partnership involves particularly high stakes; they're first steps in the dance between local content owners and gigantic content distributors. A key difference between the two deals is that the Hearst-Argyle stations will share in the revenue stream and AP's members do not.

There is no all-purpose solution to the protect vs. distribute dilemma; each opportunity needs to be analyzed for its marketing, revenue and long-term strategic value. For example, many distribution partnerships involve cross-linking with no compensation but send viewers to the originating site to view the content and, of course, the local ads. However, when it comes to relationships in which the distributor actually hosts the content, revenue share is a fairly reliable way of differentiating good deals from bad. News organizations can't expect to always sit on top of the online value chain but they can demand to be part of it.