My jaw has dropped on more than one occasion in the past
month as I’ve read about some of the uninformed conversations media leaders
(and industry outsiders) have been having about the future of news
organizations. Conversations about
changing fair use doctrine and copyright law, charging for content and disabling search engines are
being lead by people who don’t seem to understand the new economics of media.
It’s not the conversations about paid content that bother
me. These ideas are not new. They are very old ideas that have been
tested and failed. They will fail
again and then go away as will the World Association of Newpaper’s Associated
Content Access Protocol proposal.
You can read the analysis of this topic by people more eloquent than me
here, here, here, here, and here.
It’s the conversations about fair use and copyright that scare the hell
out of me.
First came the blog post by Judge Richard Posner in which he
suggests it should be illegal to link to copyrighted content without consent. The last paragraph of Posner’s (now
infamous) post states:
Expanding copyright law to bar online access to copyrighted materials
without the copyright holder's consent, or to bar linking to or paraphrasing
copyrighted materials without the copyright holder's consent, might be
necessary to keep free riding on content financed by online newspapers from so
impairing the incentive to create costly news-gathering operations that news
services like Reuters and the Associated Press would become the only professional,
nongovernmental sources of news and opinion.
Next came the 62 page white paper produced by Dan Marburger
(Ph.D economics) and David Marburger (1st amendment lawyer) and
endorsed by Connie Shultz and others at the Cleveland Plain Dealer. The report recommends changing
copyright law so that it would be illegal for “parasitic aggregators” to link
to or even discuss (!) facts published by a website for a pre-determined period
of time. Here’s the nut of
it from page 47 of the report:
“Unjust enrichment theory in common-law
unfair-competitor contexts would entitle the originator of news reports to two
kinds of remedies against competing parasitic aggregators if the originator
chose to enforce its common-law rights.
One would be to require those aggregators to disgorge revenues received
from advertising associated with the substance f the originator’s new
reports.
The other would be to obtain an injunction against
parasitic aggregators similar to that affirmed by the Supreme Court in
INS. In effect, the injunction
would bar those aggregators from commercially exploiting the substance of the
originator’s news reports in direct competition with the originator, but only
for a brief duration. The
injunction would last for a sufficient period of time to enable the originator
to exploit the brief commercial life of its news reports before the aggregator
can, and thus recoup the originator’s investment in journalistic services.”
I love the word “disgorge” in the first paragraph. As if anyone but Google is gorging on
online ad revenues.
The proposal became an online sensation as a battle ensued
between Jeff Jarvis and Shultz after Jarvis made some excellent arguments
against it on his blog, accurately pointing out that under these new rules, TMZ
would have owned Michael Jackson’s death – no one else would have been able to
even discuss it. (Incidentally,
the battle between Jarvis and the Plain Dealer became quite entertaining as it
devolved to the paper’s “reader representative” calling bloggers “pipsqueaks”
and incorrectly assuming that Jarvis couldn’t possibly have an audience as
large as Shultz’s. You can read King
Kaufman’s account here and the Guardian’s Dan Kennedy’s take here.)
But is doesn’t stop with changing copyright law. Now AP has proposed a type of DRM
system for news content – a mysterious “wrapper technology”. To be honest, I don’t even understand
what they are trying to achieve.
There are conflicting views even from within the AP with President Tom
Curley stating that a licensing agreement will be required for use of even
small amounts of content such as links and headlines and Jane Seagrave, AP’s Sr.
VP of global product development saying it is only for full text content. Either way, when I viewed the AP’s
explanatory illustration with Tim Quinn, my Director of Site Operations, we
were both left scratching our heads as to how this could even be
implemented. Some have likened it
to “magic beans” and the folks at reddit.com had a great time creating their
own version.
Each of these proposals requires the Internet to stop being
the Internet – as in an interconnected network – and reveals a woeful lack of
understanding of how value is created online.
This Grinch-like trying to stop the Media 2.0 world from
coming will not save traditional media as the case used to justify it is built
on false assumptions:
1. It shows a lack of understanding
of what is scarce and what is abundant. The Marburgers make a flawed assumption that “parasitic”
online news aggregators have the ability to drive down the CPMs charged by
traditional media news sites. For
this to be true, advertisers would have to be deciding between placing ads
either on an aggregator site or a traditional news site and no other
sites. They would have to ignore
the billions of annual ad impressions on pure-play content sites, blogs, forums
and social networking sites. We
would also have to ignore the fact that a substantial proportion of online
advertisements are placed through ad networks, both premium and remnant, where
advertisers are buying a channel rather than specific site brands. There is simply too much inventory
available for us to determine that one site is having a direct impact on
another site’s CPMs, especially at the national level. Ironically, Google is considered a
“pure aggregator” and therefore “economically good for originators of
news”. If you want to determine
who is driving CPM advertising rates down, look no further than Google and its
CPC marketplace.
2. There is no way to quantify the
actual economic impact of the “parasitic aggregators”. CJR reports that Jane Seagrave of AP
estimates it to be “tens or hundreds of millions” of dollars, but doesn’t
elaborate on how she’s arrived at that number. The Marburgers state that
“Changing the law to prevent the free riders’ unjust enrichment should boost
the market rate for online advertising associated with daily news reports to a
level that covers the costs of using large staffs of journalists to produce
them, plus a modest profit. Based
on what? They also refer to the
Daily Beast and Newser as two of the “parasitic aggregation sites” that are
driving ad rates down. The thing
is, neither of those sites currently sell advertising. And what about advertisers such as
Purina who are creating their own sites using aggregation? They’re good because they are “pure
aggregators”, but they are bad because now they don’t need to advertise on the
traditional media site. As soon as
you stick your finger in one hole, another leak springs somewhere else.
3. It assumes that the commercial
life of a news report is “usually about a day”. Ever heard of the Long-tail?
4. It assumes that the old model of
being a closed, dominant portal is the only model for creating value and
funding quality newsgathering. The
Marburgers refer to a 1942 article published in the Harvard Law Review by
Rudolf Callmann who predicted the destructive effect of free riding on
newsgathering. I’ll refer to the
2005 PowerPoint by economist and Harvardbusiness.org blogger Umair Haque, who
states that value is now created by being open to aggregators, micro-platforms
and re-constructors. Being open
provides economies in distribution, coordination and production that enable the
popularity of content to grow. Haque
believes that failing to understand this will be the single biggest cause of
fatal strategic errors committed by mass media companies.
5. It assumes that all online
advertising is IAB standard positions sold on a CPM basis. I can testify from my experience with
my own sites that increasingly, advertisers are asking for custom integration,
page take-overs, tool sponsorship, advertorial sections, etc. It’s no longer based solely on driving
page views. Context, environment
and engagement are becoming increasingly important.
6. It focuses on newspaper websites
as solely about creating breaking news content and completely ignores the other
things we are and should be doing to add value. We should be at the centre of our communities. See Steve Buttry’s blueprint for the
complete community connection here.
We should be partnering with local advertisers and seeking ways to drive
ROI for their advertising dollars.
We should be creating vertical niche content sites. We should be providing news,
information, context around long-running stories, data, listings, events,
advertising, flyers, coupons, maps, etc.
See Mark Pott’s excellent checklist here.
7. It assumes newspaper websites
cannot become aggregators themselves. This is ridiculous.
In fact, news websites must become aggregators if they are going to
survive. There is no need to
re-create content that exists on other sites, we should be linking to it. We should be creating local networks
and selling advertising for local bloggers. The Miami Herald’s South Florida Blogs and the Tribune’s
Chicago Now are excellent examples of how newspapers can help drive traffic to
the local blogging community.
8. It assumes that only print media
companies can create quality news reporting and opinion. Of course, we know this is already
being proven wrong. Countless
authors, scientists, professors and other experts have created global brands for
themselves producing high-quality original content on their blogs.
Globalpost.com, the Huffingtonpost’s new investigative fund, spot.us are all
experimenting with creating original news content without a traditional
newsroom.
This leaves me frustrated. We’re wasting time.
Rather than trying to figure out how we can restore the industry to
where it was ten or fifteen years ago, we should be planning for the role we
will play in this new world.
Rather than trying to figure out ways to stop users and content
producers from linking and connecting and discussing and collaborating, we
should be figuring out how we can enable them. Rather than looking to users to pay for content to make up
for our revenue declines, we should be figuring out how to help our advertisers
navigate this new world of media by focusing on delivering return on their
investment with us.
So I have to ask a question. Can the disrupted manage their own disruption?
In this brilliant analysis, Michael Nielsen suggests that
the answer is no. He believes that
“organizational immune systems” prevent us from doing what needs to be done to
save the industry and that true innovation would require us to be so radical in
our decision-making, our executive teams would get fired.
I’m not quite so pessimistic, but I do think it will require
news media executives to focus on where we can provide value in the new media
economy, not on how we can protect what was and will never be again.
This new economy requires radically different product
strategies: letting the outside in, curation rather than ownership, becoming a
part of an ecosystem, moving from mass to vertical content and viewing the site
as a service instead of a product.
The blogosphere is full of potential solutions for media
companies to explore. Here is a
vision from Xark! of what the next 11 years might look like as we migrate to
the new media world.
I’m lucky. At
the Star, we are starting to have these conversations about our future in Media
2.0, but it can’t just happen in small, isolated pockets. There needs to be industry-wide thought
devoted to these issues.
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