The Associated Press has announced plans to launch an advertising-supported mobile news network and to reduce its rates for American newspaper clients, after holding the rate steady for the past two years.

Mobile News Network, which will be organized by ZIP codes, will launch this summer. It will deliver local from participating newspapers and national and international news and photos from AP to advanced cell phones such as the iPhone. A news videos service is in the works.

The move comes in response to increased economic woes in the U.S. newspaper industry. It is predicted that members will save approximately $14m (£7.1m). The AP had previously proposed a rate restructuring that stood to save papers about $5.9 million, but decided to increase savings, reports Follow the Media.

The price cut may also serve to pacify certain member papers who had voiced protests about, among other issues, the rate restructuring plan (go here, here, and here for a look at current tensions between AP and its members).

"We have a very simple message for you today. We hear you. We understand that these are both difficult and historic times for our industry," said Dean Singleton, CEO of MediaNews and AP chairman, at the time of AP members' annual meeting.

Sources: European Journalism Centre, Follow the Media through MediaGuardian