Contents
Newspapers live by being faster and better than the competition. Yet they share a common problem: news from far away is expensive. The founding of the Associated Press shows how rivals solve this problem together and still compete against each other. In 1996, the economists Adam M. Brandenburger and Barry J. Nalebuff popularized a word for this pattern: co-opetition.
A costly war far away
Situation
In the spring of 1846, war breaks out between the United States and Mexico. Readers in New York want to know what is happening at the front. But the theater of war is thousands of kilometers away. Bringing the news from there costs a lot of money. Each newspaper on its own would have to bear these costs.
Link to the principle
Here is a problem that all the rivals share. If each newspaper built its own courier service, they would all pay a lot of money for the same news. Readers would gain nothing from it. In this part of the work, competition brings no advantage; it only wastes resources.
Five rivals at one table
Situation
Moses Yale Beach, publisher of The Sun, organizes the alliance in May 1846. Taking part are the New York Herald, the Courier and Enquirer, the Journal of Commerce and the Evening Express. They share the cost of gathering the news. The Associated Press grows out of this alliance.
Link to the principle
Brandenburger and Nalebuff describe how the same player can be a competitor in one respect and a partner in another. In gathering the news, the newspapers help each other. In winning readers, they keep fighting. First they enlarge the pie together, then they fight over the slices.
Gathering together, selling separately
Situation
The basic pattern remains: the members share the raw material of news, but each newspaper turns it into a paper of its own, with its own layout, its own commentary and its own tone.
Link to the principle
Cooperation lies where everyone needs the same thing and no one can stand out. Competition lies where readers see a difference. This separation is the core of good co-opetition. If you don’t draw the line, you either lose your profile or waste money.
When cooperation turns into exclusion
Situation
The alliance becomes powerful, and power invites abuse. Its bylaws forbid members to pass news on to nonmembers. As a result, newspapers that don’t belong find it hard to keep up or to join. On June 18, 1945, in Associated Press v. United States, the U.S. Supreme Court rules that these rules violate antitrust law.
Link to the principle
Here the limit becomes visible. Co-opetition is strong as long as the rivals create something together that would otherwise not exist. It crosses the line as soon as it serves to shut out third parties. Then the shared pie becomes a closed shop.
A cooperative to this day
Situation
The Associated Press is still organized today as a not-for-profit cooperative. Its members are American newspapers and broadcasters. They contribute reports and at the same time use what the agency supplies.
Link to the principle
Competitors jointly build an infrastructure that none of them could support alone. Every member’s contribution makes the service more valuable for everyone. That is co-opetition in a lasting form: the cooperation has its own rules, its own organization and a clear boundary with competition.
Key takeaways
Key lessons
- Ask where you have the same problem as your rivals.
- Share costs where duplicate work gives no one an advantage.
- Compete where your customers see the difference.
- Give the cooperation fixed rules and a form of its own.
- Make sure it doesn’t shut anyone out; otherwise it becomes a cartel.
Summary
In 1846, five rival New York newspapers share the cost of war reporting from Mexico and in doing so found the Associated Press. They cooperate in gathering the news and compete in presenting it. Later history shows the limit: when the cooperation shut out outsiders, antitrust law stepped in. Co-opetition works as long as it enlarges the pie and does not close off the market.
Sources
- Adam M. Brandenburger and Barry J. Nalebuff: Co-opetition. New York: Currency Doubleday 1996.
