More than a decade ago, AP made two crucial decisions: to not create a destination site and to license its content to news portals. Either of these decisions on their own would have been damaging, but the combination of the two has been nearly deadly.
I couldn't agree with him more - and have in the past have stated that indeed AP.com is the answer. So this begs the question, why haven't they done this? Why don't they start a destination site?
The answer of course is their members. Each of their members is a news organization of some sort (newspaper, tv, radio, etc.) and each has its own presence online. The members don't want the AP publishing stories on AP.com - the members want AP stores read on member sites. Their brands mean something to them and they're not ready to punt on them in favor of a different brand. This leaves the AP stuck.
This of course is not an uncommon scenario. Many times when existing businesses become investors/ owners of a new venture, at some point the business of the new venture and the business of the investor start to conflict. What is good for a new business is not always good for the investor. And as you add more strategic investors, the problem compounds.
We certainly saw this at Topix. We are a local news aggregator who was purchased by local newspaper companies. To the degree the new owners promoted our brand on their properties they viewed it as having the potential of cannibalizing their audience. So getting the full support of the owners was at times difficult.
With Topix, it didn't matter to us as much financially though. We had sold our interest. We knew the deal we were making and who we were making it with. Alot of strategic investment, however, is not M&A but rather just what it says it is: investment. And whenever a strategic investor owns a piece of your company, potential competitive issues come up.
Is your product competing with their business? Can you do a deal with one of their competitors? Who's products/ services can you purchase? Who can you sell your company to? Who can you hire? And the list goes on and on....
This is not to say strategic investments can not be done right. They most certainly can. My first start-up took in strategic investment from 2 big companies that were competitors and we sold to a third that competed with both. We had structured the initial investment in a way that made the eventual sale work for everyone.
Managing strategic investors can be challenging. It's best done up front before problems arise. Otherwise you end up stuck in the middle - and that's not a good place to be. Just ask the AP.