The AP seems to be starting down a path that the RIAA tried a few years ago, oblivious to how well that worked out. I think the best summary I've seen thus far of the AP's silliness is this:
We have a pretty good sense of where that anger, and the lawsuits its spawned, have landed the music industry -- and they started out in good financial shape. Schmidt may not be offering them a viable alternative, but attacking Google is missing the point, and attacking sites that send traffic their way is certainly not a solution.
What I can't figure out is this - how does the AP think their content will be found if Google (et. al.) don't include them in search results and news summaries? Are they working under some delusion that people will wander over there independently?