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May 28, 2010, 4 p.m.

Publish2’s Ryan Sholin: “We did not set out to kill the Associated Press”

This week, with much fanfare, Publish2 announced its News Exchange service. Using the new platform, CEO Scott Karp wrote, “newspapers can replace the AP’s obsolete cooperative with direct content sharing and replace the AP’s commodity content with both free, high-quality content from the Web and content from any paid source.” With the result being “a new efficient supply and distribution chain for high quality content brands.”

The “obsolete cooperative.” (Also: “The Associated Press monopoly over content distribution to newspapers.” And also: “The New AP.”) Fighting words, to be sure — and, all in all, a remarkably effective approach for a new initiative coming from a nearly-three-year-old, ten-staffer startup that needs to fight above its weight class: The announcement drew tons of attention from media new and traditional, much of it framed in journo-irresistible terms of “Scrappy Startup Takes on the Associated Press.” And some of it framed in terms even more irresistable than that: “Scrappy Startup Wants to Kill the Associated Press.” Hooboy: David v. Goliath goes digital!

But now that we’re moving beyond the initial flurry of announcements and analysis of the News Exchange, it’s worth noting the nuances in Karp’s publicitytastic “New Associated Press for the 21st Century.” “Disrupt” doesn’t mean “destroy”; it simply means to “throw into disorder.” And, for all its fight-focused framing, Publish2 (at the moment, at least) seems much more intent on shaking things up than on shaking things down. As Karp himself noted as he introduced P2X, it’s “a platform aimed at disrupting the Associated Press monopoly over content distribution to newspapers.”

And there’s another word worth noting: distribution. The Associated Press, after all, has two core functions: There’s the AP, content producer; and then there’s the AP, content distributor. The “blazing guns” Publish2 has aimed at the cooperative, to borrow Mark Coddington’s phrase, seem to be directed much more toward the latter. To my mind, that’s a crucial distinction: I’m all about shaking up the structures of distribution, of expanding the marketplace when it comes to wire content available to news organizations; I’m much less enthused about the idea of killing off a valuable — and even, I’d say, valuably institutionalized — source of reporting and information.

And — whew! — as Publish 2’s Ryan Sholin explained to me today, “We did not set out to kill the Associated Press. That’s not the goal. I don’t think that’s a logical thing to even want to do.” What the News Exchange and its creators do want, Sholin said, is to broaden the ecosystem of access when it comes to the wire content available to newspapers.

And that content includes…the AP’s. “If the AP wants to sell content through our system and distribute it to their subscribers,” Sholin said, “that seems like a win for everybody. So we’d welcome that.”

Chutzpah! So, though the battle-of-the-news-co-ops won’t (necessarily) be a death match: game on.

During our conversation, Sholin also provided some background info on the structure and goals of the — indeed, quite fascinating — News Exchange. Here’s what he told me, in a lightly edited transcript:

The general mechanics:

There’s two big pieces to the News Exchange. The first piece is that it allows news organizations to share content with each other. And that’s something that they’re already doing — but they’re not doing it in a way that’s efficient or scalable. Most of those content-sharing networks that you see popping up are emailing stories and budgets back and forth. And that’s far from the most efficient way to do the job. And it’s also not scalable.

So what we’ve done is build an efficient, scalable system that ties directly into print publishing systems. So instead of sending copy editors off on email and copy/paste errands on deadline, they’re just going to be able to open a folder in their print publishing system, the place where they’re already getting all of their stories to flow into the papers, it’s going to be right there for them in the format they need it.

[Megan: How do the News Exchanges relationships with newspapers work right now? Is there an existing network?]

Right now, we’ve got about two dozen newspapers that are beta-testing. For the most part right now they’re kind of jumping in and putting up their newswire. I don’t know exactly what’s going on behind the scenes. But if I were a newspaper and I were checking this out, and I liked it, I’d be turning around and going to the people that I share content with, and telling them, “Jump in.”

The financial mechanics:

Today, everything is free. If you want to come and share your free content, or your content for free, with your partners, you’re more than welcome to. If you want to take your online-only content and put it out there for print publication, you’re more than welcome to. At the same time, if you want to sell your content — for example, if you’re a nonprofit that wants to sell your content to newspapers — you can use our system to manage subscription, distribution, and promotion of those newswires, and be off on your own selling it and dealing with your own contracts and purchase orders off in your own systems right now.

We are going to add on a marketplace layer. And what that’s going to do is allow, number one, the newspapers to set a price for their newswires. I’ve talked to editors who say, “Hey, we want to sell our college football coverage. The team in our town is a popular team across the state and across the region, we want to sell this newswire to other newspapers.” And then we also have paid content providers. Even people who are looking to put photos and other content in the system who are interested in selling it. And we’re going to make it easy either to pay for either a subscription to a newswire — or, if the content provider allows it, à la carte pricing, as well. The pricing structure is definitely going to be up to the individual content providers.

[Megan: So, essentially, you provide a space for the market interactions, and charge organizations for the convenience cost of the facilitation.]

Yes. When we build on the marketplace layer, we’ll charge a transaction fee, but it’s going to be based on the volume of use. So if you’re a nonprofit organization trying to sell your stories to six papers, we’re not terribly interested in taking your money. But if you’re a major, international news provider who is using our system to sell and deliver subscriptions on a large scale to American newspapers, that’s a case where I’m sure we’ll be taking a transaction fee — based on volume of use, circulation of the papers you’re selling to. Forty-five minutes into every call with each editor, when they ask me, “What’s the business model?” that’s one half of it — that’s one side of it.

[Megan: So the fee will be determined on a case-by-case basis?]

I don’t know if I’d say case-by-case, exactly. But it’s definitely going to be based on volume of use and circulation. It’s not just going to be a blanket fee. We’re exploring all our options and it’s something that we’re going to talk in great depth with newspaper editors and content providers about. The goal here, in the long term, is to save newspapers money. So we’re not looking to add on anything to what they’re already paying for newswire content.

So the other side of the question of how are we going to make money is definitely that we’re looking to help newspapers reduce their dependence on other newswire sources like the AP. So if we make it possible for a newspaper to drop from an “AP complete” to “AP limited” — or to cancel the AP altogether (and obviously there’s a longer timeline involved with that) — we’ll be looking to assess something like a license fee for the software. And it’ll be a fraction of the difference.

The goal here is that if we can cut newspapers’ newswire bill in half, that would be a big win for them. For the major metros, we’re talking about hundreds of thousands of dollars. We talk to editors about this all the time, and they do the math in their head, and say, “Oh, that’s four FTEs.” So I personally like the sound of that: newspaper editors saying, “Oh, if you saved me that much money, I could hire this many reporters.” That seems like a good thing.

Providing content vs. facilitating its exchange:

[Megan: What about the criticisms that the News Exchange won’t provide original content, as the AP does?]

The original content is out there. There are freelancers on the streets of Bangkok right now who are tweeting and filing photos and providing reports to people like The Economist and the BBC and the Financial Times. Over the past three years, Publish2’s been building up a user base of about 10,000 journalists, and we’ve done that by approving them all by hand, in large part. If someone has an @newspaper.com email address, they’re automatically shepherded into the system. But for all of our other users, we’ve spent a lot of time and resources and energy in making sure that we’ve got a user base that is journalists-only. And the end result is that there’s a ton of top-shelf freelancers already in the system.

So connecting the kind of top-shelf freelancers — content providers that we don’t normally think of as people we can easily connect with to write a story — that are out there with editors in the U.S. is one big step. That’s a big piece of this. And the other big thing is just to say, “Let’s take all the international news providers that are out there and put them in one bucket.” The newspapers that are out there, picking their stories for the day: Let them decide who’s got the highest-quality content. Let them vote by slotting the stories on the pages.

One thing that we’re going to try and do in the coming days is try and get the word out a little bit and probably put up some blog posts about what the system — how the system can help a freelancer, a newspaper, a blogger, a media company — just to give an idea of the different value propositions that we’re offering to everybody in the ecosystem. Because there’s a lot of moving parts, and only so much that Scott could say onstage for six minutes. It was very much about getting the big idea out.

And I can tell you, as the guy who’s been here all week fielding calls and emails and tweets and registrations, that we got the word out. The big idea is out there. So it’s been a very exciting week here.

POSTED     May 28, 2010, 4 p.m.
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