Tom Curley, AP president and CEO, announced the change Monday at the annual meeting of the 156-year-old news cooperative.
Most of the 15,000 news outlets that buy AP's news, sports, business and entertainment coverage have been allowed to "re-purpose" the same material online at no extra cost since 1995. At that time, graphical Web browsers were just beginning to transform the Internet from an esoteric computer network to a mass medium.
The new pricing policy, effective Jan. 1, begins to shift some of the funding of AP to the growing online market, as technological advances and digital devices are making it ever easier for people to get their news whenever and however they want it.
"The need for online licensing is clear," Curley said during a speech at the meeting in the Masonic Auditorium, attended by member publishers, editors and broadcasters. "For The Associated Press to endure during this digital transition, we must be able to preserve the value and enforce the rights of our intellectual property across the media spectrum."
About 300 commercial Web sites, including popular destinations such as Yahoo Inc.'s Yahoo, Time Warner Inc.'s AOL and Microsoft Corp.'s MSN, already have been buying AP content, said Jane Seagrave, the news cooperative's director of new media markets.
But price increases are often a prickly issue for the AP because it's a not-for-profit cooperative that is owned by its customers — the traditional media that form its membership.
The AP expects to offset the costs of the new online licensing fees by temporarily reducing its annual membership rate increases, Chairman Burl Osborne said.
These rates — known within the AP as "assessments" — have climbed by an average of 2.75 percent annually during the past decade.
A formula for calculating the AP's online licensing fees still hasn't been set, making it difficult to predict how the pricing change will affect individual news outlets. Currently, the AP bases its rates on the circulation of newspapers and audience of broadcasters, with the largest paying more than their smaller counterparts.
A digital advisory committee will be set up to ease the transition to online licensing, Osborne said. The committee is aiming to hold its first meeting by fall.
Curley, the former publisher of the Gannett Co.-owned USA Today, has been looking for new sources of revenue since he became AP's chief executive officer in mid-2003.
In Curley's first full year on the job, AP's 2004 revenue totaled $630.1 million, a 6 percent increase from the previous year. The news service's losses narrowed to $728,000 last year after a $11.1 million loss in 2003.
The AP products currently under development include a computer database of stories, photos, graphics, audio and video, designed to make it easier for newspapers and broadcasters to find the content that best suits their local market.
In September, the AP plans to introduce a new multimedia package designed to appeal to young adults, a prized advertising demographic deeply immersed in the Internet and other digital media.
"As the audience turns to new platforms and adopts new habits, the news must follow," Curley said.
Several newspaper publishers at the meeting said AP's new online licensing policy makes sense, as long as it doesn't significantly increase their expenses. "I'd like to see what the total bill is going to be," said David Bradley, publisher of the St. Joseph News-Press in Missouri. "I hope it doesn't turn into an onerous burden."
Monday's meeting also featured five AP reporters who addressed trends changing the world, from evolving international alliances to strong currents of change within Christianity.
A bit of drama penetrated the conference hall when religion writer Rachel Zoll addressed the crowd from the Vatican, where she is covering the papal conclave. As Zoll spoke via video link, the crowd in St. Peter's Square could be heard roaring in the background.
"It's black smoke," she said, signaling that the gathered cardinals had not selected a pope during the conclave's first day. "We'll just continue with our speech for now."
Sally Buzbee, chief of Middle East services, spoke about the rise of China and the influence of Shiites in the Middle East; technology writer Brian Bergstein addressed the increasing capacity to archive digital information of all types; science writer Malcolm Ritter warned of the prospects of a global pandemic; and political writer Ron Fournier discussed the emergence of new American "hometowns" centered on churches and social groups.
Four incumbents and one new meLmber were elected to the AP board of directors in results announced Monday.
Re-elected to three-year terms were Burl Osborne, publisher emeritus of The Dallas Morning News, owned by Belo Corp.,; Michael E. Reed, president and chief executive officer of Community Newspaper Holdings Inc.; William Dean Singleton, vice chairman and CEO of MediaNews Group Inc.; and H. Graham Woodlief, vice president of Media General Inc. Dennis J. FitzSimons, chairman of Tribune Co., also was elected to a three-year term.
Incumbent Joe Hladky, chairman and publisher of the Gazette Co. of Cedar Rapids, Iowa, and new member David R. Lord, president of Pioneer Newspapers Inc., were appointed to two-year terms.
AP's meeting was held in conjunction with the annual convention of the Newspaper Association of America.