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London Review of Books and a startlingly nice piece on the intersection of news, newspapers, paper news, and technology.

And a quote from the editors at The National Review: observations on aggregation.

There isn’t anything inherently wrong with aggregation. On the contrary—unless we expect readers to get all their news from one publication or, alternatively, spend all day sifting through numerous websites themselves—the Web needs aggregators. And smart aggregation does, in fact, add something to the world by bringing a certain editorial judgment to bear on the selection of pieces.

The Editors, The National Review, behind a paywall: TNR

From our first day in business, Bloomberg was making news, with numbers
Mike Bloomberg and a modest ambition

While most news organizations today are listing in the high seas of the digital world, Bloomberg News has proven to be an adventurous and successful competitor. They started with a key asset, the Bloomberg terminal, and a gaping niche – business journalism. As it has grown, it’s become an instrument of recognition for the entire Bloomberg enterprise, a sales tool, and a critical hedge against competition.

Bloomberg seems to have demonstrated that it’s possible to make money from reporting the news. It’s a fierce competitor to the Wall Street Journal, Reuters and other business reporting. It runs a thriving business. But Bloomberg isn’t interested in selling news feeds. Indeed, much of it is given away for free on the web portal. Bloomberg gives it away because it wants to eliminate the profit margin in delivering the news, so it can starve competitors and enhance the value of the terminal. It wants to make the news a commodity.

Bloomberg’s entry into journalism would push traditional news sources to improve their coverage and respond to Bloomberg News. The underlying dataset in the Bloomberg platform gave them a distinct informational advantage over the competition. The information and analytics on financial instruments was just not widely available and not something on which traditional news sources had focused. As Bloomberg says, they were already in the news business – just with numbers. The terminal had become, for example, the de facto source of pricing for US Treasuries and replaced the Federal Reserve’s daily pricing sheet with a Bloomberg terminal at the offices of the AP. Each day, when the AP published the closing Treasury prices, sourced and attributed to Bloomberg, they were effectively running a news story, or an advertisement – take your pick. This unique resource separated them from the competition, gave them pricing power and promoted the terminal – all in one stroke.

Business journalism at the time also lacked the luster of reporting on riots, elections, and wars. Journalism schools didn’t teach business and finance reporting. The mainstream, national press would gloss over financial markets on the way toward bigger stories. As Bloomberg remarks, “Even at the Wall Street Journal, it was rare to find top editors who included among their accomplishments daily stints covering stocks and bonds.” Bloomberg News would enter a seemingly uncontested field. In 1988, Bloomberg marshalled Matt Winkler to enter the fray.

Bloomberg News also provided a much-needed hedge against the possibility of losing key news-suppliers, such as Dow Jones. Bloomberg had already eaten into the Dow Jones Telerate business. While Telerate presented static images of Treasury prices, Bloomberg users were presented with live data on which they could run analytics. When Dow Jones did respond, they pulled the plug on their feeds to Bloomberg, expecting that Bloomberg customers would come back to Telerate and abandon the Bloomberg platform. It turned out that clients found Bloomberg News sufficient: at worst, good enough to get the job done and, at best, invaluable in combination with the underlying dataset. Dow Jones eventually relented six months later and resumed delivering their feeds through the Bloomberg platform. Telerate would later be shut down.

The rapidly growing news enterprise advanced and protected the Bloomberg franchise. It spread the reputation and influence of the Bloomberg organization, and this sold more Bloombergs. More Bloombergs funded more news, and Bloomberg news became increasingly visible beyond the terminal. It worked its way into radio and television first. Then it began traditional print syndication, and syndication brought Bloomberg’s business reporting to the New York Times, among others. With these outlets, the Bloomberg brand became more prominent, more potent. It sold more Bloombergs.

The news division at Bloomberg was never designed to sell the news. It was designed to sell Bloombergs. It started with a market niche and a key asset – business reporting and the terminal. But it rapidly evolved into an important hedge against the risk of key suppliers, such as Dow Jones, cutting off Bloomberg as a customer. When Dow Jones dared to do so, Bloomberg had won. Bloomberg news was good enough to be a substitute or an improvement on most serious business and financial reporting from Reuters, the Wall Street Journal, the FT, the New York Times, and anyone else who might have contact with their customers. Business and financial news reporting, at first an area of distinction for Bloomberg, had become a commodity.

Because Bloomberg doesn’t need to sell the news, those that do are at a disadvantage. They rely on profit margins from distribution, sales and subscriptions to the news. Bloomberg doesn’t. Bloomberg makes money through subscriptions, but they’re subscriptions to the terminal. The news is just another commodity, and it suits Bloomberg just fine to see it have commodity-margins. It just makes the terminal more valuable.

The facts do not owe their origin to an act of authorship.
Justice Sandra Day O’Connor (Feist v Rural Telephone, 1991)

But does the hunt, the research, the interviews? Or perhaps its organization into a story for the dissemination to a reading public? And can these be made exclusive? These questions have bubbled up as the newspaper industry wrestles with what the internet is doing to their business.

The Cleveland Plain Dealer’s Connie Schultz has argued fervently about the rights of authors and their newspapers to capitalize on their product. She came out against “the aggregators” as though they were a malfeasant band of marauders bent on destroying the institution of journalism and by extension democracy. Citing Daniel and David Marburger, she claimed, “parasitic aggregators reprint or rewrite newspaper stories, making the originator redundant and drawing ad revenue away from newspapers at rates the publishers can’t match.”

James Moroney, publisher and CEO of the Dallas Morning News takes a similar approach. He invokes the ‘hot news’ doctrine and asks congress to apply it to the internet. Says Moroney, “perhaps it is time for congress to establish a principle of ‘consent for content’ for breaking news–similar to the ‘hot news’ doctrine recognized by a few states.”

Copyright law sufficed to protect the written word, fixed in a medium, but these claims demand remedy for a larger issue. They aim to protect the investment required to collect the facts and write a story, when it might easily be re-written and distributed by another. But they ask for monopoly control of the story itself — indeed, ownership of the collection of facts and ideas that might make up a breaking story on government corruption, for example. Justice O’Connor, however, finishes with little support for these views: “The distinction is between one of creation and one of discovery.” And discovery is not subject to property rights.

The viewpoints of Moroney, Schultz and the Marburgers have their origin in the nature of print. Print leads to a confusion between controlling the medium and controlling the content – that is, the mistaken idea that breaking a story equates to owning it. The Supreme Court compounded the confusion in 1918 with its decision to augment copyright protection with “quasi-property rights” for the facts and events that make up a news story — the hot news doctrine. It was a legal solution for the disruptive impact of a new technology: newswires. News was paper, and these rights formalized the metaphor. They derived from the physical qualities of the paper, attached property rights to the news and would provide a legal basis from which to make, in this case, the AP’s news exclusive. Theoretically, the AP could then exclude people from learning of it or reprinting it without permission. They wouldn’t just report the news, they would own the news. Read the rest of this entry »

Information wants to be free….Information wants to be expensive, because in an Information Age, nothing is so valuable as the right information at the right time.

Steward Brand

Before marshalling a quote, review the source. Sometimes the sound-bite doesn’t always match up with the what the author or speaker originally intended. Walter Isaacson reminds us of this lesson in his contribution to the Atlantic’s 14 3/4 review of the biggest ideas of the year. The often ignored final clause to the old saw, information wants to be free, warns: “information wants to be expensive.” But soon after Stewart Brand observed both sides of the information question in the Whole Earth Catalog in 1984, we collectively edited it down to a revolutionary, communitarian call to arms.

Isaacson laments that the rally-cry we’ve attributed to Stewart Brand never resolved the “tension between the two parts of Brand’s maxim.” Now, on the heels of the economic collapse in 2008 and enmeshed in an anemic recovery, the news industry in 2009 became less of a service and more of a question, as in: how can newspapers survive? Will journalism survive? Who will pay for it? For the answer, Isaacson returns us to 1710 and the Statute of Anne, when on April 10th, Parliament asked Queen Anne to assure an author the sole Right and Liberty of Printing their works. The Statute, according to Isaacson, “helped to encourage and sustain generations of creative people and hardworking hacks.” Though the Statute marks seminal moment in the history of copyright, one must not mistake it for an ancestor to today’s problem with the news industry. It underpins the age of the author, not the information age.

The Statute introduced the idea that an author could own their words and assign the right to make copies to booksellers – the copy right. Booksellers, as members of the Company of Stationers, had in many cases divested or abandoned the printing of the actual works and instead focused on amassing a portfolio of copy rights from authors, sourcing a printer, and selling the finished copies. On assignment, the copy rights would last fourteen years, following which, the rights would revert to the author. With the Statute, the author became an economically significant entity in the publication of books and letters. It was a revolutionary step. If a bookseller wanted to publish a work, they would have to negotiate for the copy right with the author, and so we can celebrate with Isaacson the role it played in encouraging and sustaining authors.

Though the author technically owned the right of copy, the only way to exploit that right was through the Company of Stationers. These booksellers acquired literary property from authors, but with the what amounted to a guild-system, they were also the only ones fully capable of publishing and exploiting the property. They maintained the register of copy rights, certificate of copy right, and storage of nine fine volumes, a process that was eventually abandoned. These were practices that had grown familiar with the Star Chamber Decree and the  Licensing Act in the seventeenth century, both of which effectively delegated regulation and censorship of the press to the Company. Without the booksellers and the Company, the authors had no real alternatives for publication. It was no wonder that many members of the Company would refuse to return copy rights to their owners after fourteen years and effectively enjoy a perpetual right.  The Statute may have introduced the author as a meaningful economic actor, but the system maintained the Company’s role as a regulator of the press.

The Statute offers a telling moment in the history of the press and the author, but today’s problems in the news industry don’t emerge from issues of authorship. There is no longer a Company of Stationers. Anyone can be a publisher, and that is part of the problem. The Company provided as much a means of control and regulation as an engine for publication. Today’s inheritors, however, have looked on with fear as the internet enabled nearly anyone to assimilate, analyze and present the news of the day and its analysis. They can’t control or regulate publications and the press in the same way they might have in the 18th century. Nor does the Statute’s protection of an author’s creative output shield them from having another consume, digest and regurgitate the salient facts and ideas of a given work. Afterall, the Spectator harvested as much in its daily rehashing of manners, mythology, and literature. Today, there is little one can do to stem the tide of commentary, analysis and alternatives that have washed over the shores of the mainstream press. While the Statute provides an ancestor to the age of the author, it remains a silent bystander to the conditions of information age.

Dow Jones invests considerable resources to produce timely and trusted news and business information. Briefing.com has been brazenly taking a free ride on the reputation of our publications and on the investment Dow Jones makes in quality, real-time journalism….Dow Jones respects and defends the rights of other news organizations to report on news events in a timely manner. Here, however, Briefing.com did not use its own resources to uncover, verify and describe news events. It waited for Dow Jones to do all the work, and then simply copied the content. In order to continue to offer the quality news and business information customers expect and count on, Dow Jones will take action to stop the misappropriation of its content.

Mark H. Jackson, general counsel for Dow Jones: via BusinessWire

Breifing.com has been free-riding on Dow Jones’ substantial investments in gathering and reporting timely news

The Complaint

It’s produced a river of gold, but those words are being taken mostly from the newspapers. I think they ought to stop it, that the newspapers ought to stand up and let them do their own reporting.

Rupert Murdoch, speaking at a taping of “The Kalb Report” at the National Press Club in Washington on April 6: via Bloomberg

There are those who think they have a right to take our news content and use it for their own purpose without contributing a penny to its production. Content creators bear all the costs, while aggregators enjoy many of the benefits. In the long term, this is untenable…It’s not fair use. To be impolite, it’s theft.

Rupert Murdoch, speaking at the U.S. Federal Trade Commission’s workshop in December: via Bloomberg, BusinessWeek

Bruce Sanford and Bruce Brown commented in the WSJ on “Google and the Copyright Wars” (11/12). Many are focused on the status of orphan works in the Google Books project, but Sanford and Brown argue that the idea of fair use and its application by search engines is the controversy’s center, not orphan works. Sanford and Brown would say that a search engine’s use of the web’s content is definite and definitely unfair.

Fair use of a book’s content, a website, or even the news underpins a search engine’s ability to find and deliver websites to users of the internet. Sanford and Brown stake out a position for search engines that is similar to a public library. Just as a library can employ the contents of its archive to establish an index for its patrons, the search engine uses the contents of the internet to establish an index for anyone at all. Sanford and Brown, however, contend that search engines are not libraries, so fair use does not apply.

Sanford and Brown argue that two distinctions separate search engines from the library model. Search engines not only copy text, they reproduce it in their results as snippets. Rights of reproduction are protected for copyright holders. Second, search engines sell advertising, and the sale of advertising is contingent on their ability to copy, store and reproduce copyrighted material. These distinctions, argue Sanford and Brown, disqualify search engines from the safe harbor of any exemption made for libraries. Their remedy: legislation.

The problem is, search engines don’t find safe harbor in the library model, and legislation is not the answer. Yes, a library applies fair use in its practices, and search engines have been compared to them in the past, but not all applications of fair use are found in the confines a library. This may be why they are so quick to demand legislation to expand copyright, even though expanding copyright may drive more business to the lawyers who protect it than the websites involved.

The Ninth Circuit court framed a four factor test for fair use in the case of Perfect 10 v. Google, et al in May 2007. The test would distinguish between copyright infringement and fair use in the case of Google’s use of Perfect 10 material in its search results. The four factors comprise: the purpose and character of the use; the nature of the work, ie fact-based or creative; the amount of the work used; and the effect on the market for the work. None of them invoke the metaphor of the library used by Sanford and Brown.

When Google displayed the Perfect 10 images, the Circuit determined that all four factors weigh in its favor. The images may have been highly original, but the results incorporate “an original work into a new work, namely an electronic reference tool,” and this is highly transformative: “a search engine may be more transformative than a parody because a search engine provides an entirely new use for the original work, while a parody typically has the same entertainment purpose as the original work.” Though Google would use a degraded thumbnail version of the image, its “use of the entire photographic image [is] reasonable in light of the purpose of a search engine.” The Ninth Circuit, therefore, reasoned that Google’s use of Perfect 10 thumbnails would be considered fair use. Though it didn’t provide a decision, it did suffice to vacate Perfect 10’s preliminary injunction against Google.

Sanford and Brown mistake the metaphor of a library as the only example of fair use when alternatives, such as the Ninth Circuit’s opinion, are perfectly acceptable. Perhaps this is why, having fleshed out their metaphor, they seize on legislation as a solution. Indeed, they would have Congress assert, “once the cache is monetized for the benefit of a search engine, the line of copyright infringement is crossed.” Isn’t this a sort of Hail Mary pass to rights-holders?
Legislation could make it illegal to monetize a cache without permission, but it’s not the panacea that Sanford and Brown are driving at. If the legislation mandated payments for rights-holders, it would, but this is probably not a suggestion that would be found in the pages of the Wall Street Journal. More likely, it would not, and it would leave websites in the position of the prisoner’s dilemma. If everyone cooperates and insists on payment, it will be to their mutual advantage, but the search engines direct so much traffic that each website has an incentive to break ranks; hence, everyone reluctantly opts in for fear that they’ll be the lone hold-out. In effect, it’s as though the legislation never happened, with one important distinction: there’s a new law on the books that requires a few good lawyers to understand. Perhaps that’s what’s really driving Sanford and Brown’s comment.

There is an exception, however. Not all players are equal in this game. Some may wager that holding-out is viable regardless of legislation or whether others do. That’s exactly what News Corp has done. They have begun negotiating a possible payment from Microsoft for the exclusive right to index their content. Though derided by many on the internet, should they find an agreement, their example will prove an important experiment in the question of paying for content.

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