AScribe
In The News

To help universities and other nonprofits deliver news to the media and Web sites quickly, efficiently and cheaply, former San Jose Mercury News business writer Ron Wolf and former University of California at Berkeley business school spokesman David Irons started a public interest news wire called AScribe.

Over the past few decades, Business Wire in San Francisco and PR Newswire in New York have carved out a lucrative business delivering corporate financial news and features electronically to the media. They typically charge corporations $525 to $550 for the first 400 words of a release.

That is out of the price range of many colleges, universities, medical centers, foundations and other nonprofits. Not only do they have smaller public relations budgets than big businesses, but they also are not obliged by government ``prompt and full disclosure'' rules to spread the news -- regardless of the charge.

AScribe is addressing what Wolf calls the ``digital divide'' in the news release business.

``The Securities and Exchange Commission says public companies must release news that might move the market in a timely manner, and the duopoly of PR Newswire and Business Wire charge about $500 to get through their turnstile,'' he said.``That means many higher education and nonprofit organizations get left out.''

Of course, colleges and others can mail press releases. But Wolf knows from personal experience that reporters and editors tend to throw out most of their mail unopened. ``Today, you're either in the digital stream or you're in the recycling bin,'' he said.

Irons, meanwhile, was frustrated that universities often had a difficult time getting noticed and discussed establishing a Bay Area college news wire. However, it quickly became clear that it would be difficult to agree on who would organize, govern and pay for such a service.

So in early 1998, Wolf and Irons started what they call ``a news wire with a social conscience.''

``For too long, we've let corporate commercial interests pump sludge into our newsrooms,'' said Wolf. ``We want to make AScribe the PBS (Public Broadcasting Service) and NPR (National Public Radio) of the news release business.''

Wolf and Irons went to a consultant to find a name for the company but balked at the $25,000 fee. Friends and associates came up with AScribe, a name that could be copyrighted and had a meaning that tied in with the business. (An unrelated site, www.ascribe.com, offers information on software for the pharmaceuticals industry.)

AScribe first set up shop in rent- free UC Berkeley Incubator space in the basement of the Bancroft Hotel. UC Riverside signed on as its first client, and AScribe has since added seven other UC campuses and universities from Hawaii to Harvard. Its approximately 300 clients also include nonprofits such as the American Dental Association, the American Library Association, the Sierra Club and national laboratories.

AScribe also has signed up more than 50 media outlets, including The Chronicle, the Los Angeles Times, the Wall Street Journal and USA Today. It offers its services through the Associated Press wire, Dow Jones Interactive, LexisNexis and various other Web services.

On top of their initial $141,000 investment from ``friends and family,'' Wolf and Irons raised about $650,000 from angel investors and are now looking for more than $2 million.

But AScribe still subscribes to frugality. The company sublets space in the former Breuner's Furniture headquarters building from the Oakland Redevelopment Agency for $1.75 per square foot per month. Like many startups, it has bought used furniture to conserve cash, and it relies on 5-year-old Sun Microsystems Sparc servers.

``Our burn rate is less than the average VC bar bill,'' joked Irons.

AScribe is also modest in the way it bills clients. It charges a $90 annual membership fee and $12.50 to $17.50 per release, regardless of length.

The rates may soon rise, but Wolf said they will still be only a small fraction of what Business Wire and PR Newswire charge. Eventually, AScribe plans to make as much as 80 percent of its money not from university and other content providers but from the thousands of Web sites that are hungry for university and nonprofit news.

The company is sending out about 30 news releases per day on education, science, medicine, public policy and other issues.

Recent releases include news of a UC Berkeley business school class on philanthropy and an Institute of Medicine report that causes of the Gulf War Syndrome remain unclear. But the effectiveness of AScribe in getting stories in the press remains unclear. That's because it is difficult to determine whether reporters were tipped off by AScribe or the original news source.

In any case, early clients of AScribe seem pleased.

``Universities and other nonprofits must find ways to aggregate news so that it stands out in newsrooms and is easy to use for the builders of Web portals and other online services,'' said Harvard Medical School Associate Dean Don Gibbons. ``AScribe offers just such tools.''

Lorry Lokey, who started Business Wire in 1961, said, ``There is room for a company like AScribe that provides service to a niche market.''

Lokey, 73, is content to concentrate on the booming business of delivering corporate news. After attending Stanford University, where he was editor of the campus newspaper, Lokey went to work as a wire editor for United Press before going into public relations. In 1959, he became intrigued by a Los Angeles wire service that transmitted news for restaurants and cemeteries, and two years later, he started Business Wire to deliver business news.

In 1961, he charged companies $15 per release and had 16 media clients in the Bay Area. Today, Business Wire has 500 employees in 26 domestic bureaus and Belgium and serves 17,000 clients and 4,500 media outlets.

Lokey has done well with his $2,000 investment. He figures the number of Business Wire press releases will top 275,000 this year and total revenues will exceed $150 million, compared with $110 million in 1999. Business Wire's profit margins exceed 20 percent, according to Lokey. But he is not the only one doing well. Three years ago, Lokey decided to give half the company to his employees. He also has pledged $80 million to his alma mater and $1 million more to other nonprofits.

Lokey said he controls 54 percent of the U.S. business press-release market. But on the global stage, PR Newswire is the oldest and largest.

It was started in 1954 by TV Guide founder Herbert Muschel at a time when Federal Communications Commission regulations allowed only AT&T and Western Union to send a printed message to another person. PR Newswire was set up as a membership association, and all copy became the property of the news wire for the purpose of transmitting news releases to multiple media destinations.

Today, PR Newswire has 30 domestic and nine foreign bureaus and is still based in New York, although it has changed hands several times. It was bought by Western Union in 1971, which held it for 11 years before selling it to British media conglomerate United News & Media.

AScribe is not the only startup to enter the news wire industry fray.

Internet Wire of Los Angeles is using the Internet to deliver press releases as well as graphics, audio and video files across a dozen industry-specific channels such as business/finance, entertainment, health and sports.

In February, it raised $17.5 million in venture capital from Sequoia Capital, Hummer Winblad Venture Partners and other investors. But it has been in the news most recently for falling victim to a hoax allegedly perpetrated by a former employee who sent out bogus negative news about a publicly traded Los Angeles network equipment company.

The fake news release last month temporarily drove down the shares of Emulex Corp. by 62 percent before the news was corrected and the stock recovered. An SEC and FBI investigation quickly led to the arrest of a former Internet Wire employee.

As a result of the embarrassing mistake, Internet Wire CEO and former PR agency boss Michael Terpin said the company has added new layers of verification procedures and supervisors to make sure it doesn't fall victim again to fraudulent market-moving news.

Terpin said the biggest benefit Internet Wire has over established competitors such as Business Wire and PR Newswire is that it is so much less expensive. The 2,500 companies and 300 PR firms that use Internet Wire to send about 120 releases a day pay a flat rate of $275 per release regardless of length.

E-mail Peter Sinton at psinton@sfchronicle.com.

Photographs: Lea Suzuki / Jerry Telfer