There are a couple aspects to these AP cancellations I find interesting:

* Editor & Publisher and other outlets have suggested the rejection of AP contracts is a negotiation tactic rather than a dismissal of the AP. A contract requiring two years' advance notice doesn't fit with the fast-moving nature of content, nor does it make sense in a tumultuous industry. I wouldn't be surprised if the AP changed its renewal model, especially if other big papers follow this same non-renewal trend.

* While the AP works to keep its contracts, firms like Politico are creating niche wire services that blend information and advertising sales. It's a *very* interesting model that dovetails quite nicely with the Web's vertical content structures. If Politico's wire/ad service takes off, I could foresee similar services popping up in virtually every vertical -- *and* it might make sense for targeted news organizations to partner with network ad services (Politico's ad serving system is run by Adify), especially since the ad networks are facing declining ad rates. In time, we might see aggregate online-offline publications that supplement original reporting with a variety of targeted wire/ad service relationships.

Mac, I absolutely agree with you, on both these points. I think, though, that even if the AP changes its renewal policies, it would have to revisit its fundamental structure and operations to remain competitive. Although the niche/vertical model that Politico is advancing may not claim all spaces, we will certainly see a range of new conceptualizations for news distribution and its monetization emerge in the next couple of years.

@Mac & Peter
Good points.

Now, can a company such as AP, structured with local general purpose agencies/correspondents, global geographical coverage/segmentation easily move to a niche/vertical model?

Some years ago, while I was working for Xerox Graphic Arts Europe with a mission to shift from a geographical model to an industry by industry vertical model, before the Internet bubble collapsed, it was already a slow process...

By 2001, Xerox went back to its geographic, general purpose, coverage...
The company doesn't seem to be badly doing, still.

@Peter and Alain -- I think the AP will persist in some form for many years to come, but I doubt they'll be able to embrace verticals from within. It's the same issue newspapers face on a more granular level -- how do you change the entrenched mindset? This is a prime reason why I think smart papers -- and the AP, on a broader level -- should look for ways to aggregate verticals under a broad umbrella, but allow each of those verticals to maintain an individual identity (sort of like Gawker). The back-end efficiences shouldn't manifest on the front end because the audience is only loyal to a particular site, not the overall organization.