Feb 12th 2009
From The Economist print edition
WHERE does news come from? The answer, much of the time, is from newswires. Many of the stories in newspapers, on television, radio and online are based on dispatches filed by the big news agencies. The biggest international newswires, Associated Press (AP) and Reuters, date back to the expansion of the telegraph in the mid-19th century, when rapid newsgathering first became possible. The agencies have usually been wholesalers of news; newspapers, broadcasters and websites act as retailers, repackaging and selling news to consumers alongside material generated in-house.
Some, such as AP (a co-operative owned by its subscribers) and the state-backed French News Agency (AFP), have stuck to that model. But Reuters, like the Dow Jones newswire (which grew out of the Wall Street Journal), has developed a huge business providing information to financial-services firms, for which rapid, accurate news is highly valuable. A more recent arrival, Bloomberg, started out as a provider of such information but has turned into a news agency as well, creating a worldwide network of bureaus and syndicating stories to newspapers.
The financial crisis is taking a terrible toll on both financial-services firms and newspapers, so you might expect the news agencies that serve them to be in trouble too. Not so. Christoph Pleitgen, a senior Reuters executive, says the big newswires have been staffing up in the past year. The Journal's owner, News Corp, announced job cuts at the newspaper earlier this month, but said that the Dow Jones newswire was adding journalists at its bureaus, especially in India. Likewise, Bloomberg's recent announcement of around 190 job cuts at a foreign-language television venture got more attention than its promise to create 1,000 jobs elsewhere, including in its news bureaus. And CNN, a television-news network, plans to set up a new international agency to rival AP and Reuters.
A few struggling newspaper groups have stopped subscribing to newswires. Many others, having cut their own newsrooms, have become more dependent than ever on regurgitating agency copy. The proliferation of news websites, hungry for content, but lacking staff to produce it themselves, has also boosted the agencies. Last year printed newspapers contributed only 25% of AP's revenues, says its boss, Tom Curley, down from 55% in 1985. Mr Pleitgen says that in developing regions, such as the Gulf, new television stations, websites and even newspapers are springing up, compensating for the newswires' loss of customers elsewhere.
But if newswires are thriving and newspapers are making ever more use of wire copy, why don't the wire services supply news direct to the consumer? The risk that newspapers will be disintermediated is noted in a new report by, of all people, the Reuters Institute for the Study of Journalism at Oxford University. In some ways, it is already happening. Reuters and Bloomberg offer their top stories direct to consumers on advertising-financed websites.
And as more people consume news via smart-phones and other mobile devices, the newswires are providing it there, too. Norman Pearlstine, a senior Bloomberg executive, says the firm's application for the Apple iPhone has been downloaded over a million times. Its service is free "for now". AP, which is owned by its main subscribers, is treading carefully: it has struck deals with 1,200 American newspapers to create mobile websites, for which AP provides national and international news and they provide local news.
Nobody yet knows which business model, if any, will work for mobile news. Mr Pearlstine notes that mobile users happily pay for a new ringtone, so why not for news? It is unclear how good news agencies will be at marketing direct to consumers. But as they continue building their worldwide news bureaus and providing more comprehensive coverage, they may be more likely to survive in the long term than those newspapers which, through constant rounds of cuts, risk becoming ever less distinctive.http://www.economist.com/business/displaystory.cfm?story_id=13109820