The old media is running out of time. The online editions of The Washington Post (NYSE:WPO), New York Times (NYSE:NYT), and Time, Inc (NYSE:TWX) properties do well, but not well enough to off-set losses at their print properties.
The print publishers have begun to mumble more often that Google News, The Huffington Post, and The Daily Beast are taking unfair and illegal advantage of them by using the print media’s carefully reported stories as content to build their aggregation sites. The legal issues are engulfed in a fog. Fair Use laws slightly favor the aggregators, but that is only based on the very small amount of aggregation done in the press a decade ago. Wholesale aggregation of content that is expensive to produce and requires extraordinary skill and experience to report has never been seen on the current scale because it only began two or three years ago.
There has been a great deal of speculation about what the basis of a suit of The Huffington Post by The New York Times would look like in legal terms. First Amendment attorney David Marburger has said in widely circulated comments that the best legal leverage that the old media has is to get Congress to amend the Copyright Act to restore the common law as a way to fight unfair enrichment that aggregators get by utilizing content created by other media. Passing a law of that kind through Congress could take years, if it could be passed at all.
Martin Nisenholtz, who runs the digital operations of The New York Times, recently made nasty comments that The Huffington Post was violating copyright laws in some of its aggregation practices. Yet, The New York Times has not hired a leading First Amendment attorney to take a case against Huffington to court. None of the Times’ peers have indicated that they have any intention to seek legal recourse against aggregators. None have suggested that they are aggressively negotiating with Huffington to back off from the way that it uses their content.
The copyright and fair use laws may be too ill-defined for old media to make a strong case. Worse, the laws may protect and further the cause of the aggregators. There is clearly no substantial precedent to help old media companies or they would have taken advantage of it long ago.
The point at which old media may be forced to take legal action is coming soon, even if it does not have a strong case. The Huffington Post recently passed The Washington Post and LA Times in terms of the visitors each has to its website each month. Huffington’s revenue is rumored to be small, perhaps as little as $8 million this year. As that number grows, it will take more advertising share from its old media rivals.
Several of the largest media companies, with News Corp’s (NYSE:NWS) Rupert Murdoch in the lead, say they will begin to charge readers for access to much of their online content. The Wall Street Journal already charges subscription fees to read WSJ.com. Access to The New York Times and The Washington Post online are free. That could change quickly. Both large papers could begin to ask readers to pay a modest fee to read their editions online. This will begin to shape a new battle between old media and aggregators. It is one thing to aggregate and summarize content that is free. It is another to aggressively summarize or take content verbatim from behind subscription pay walls erected by old media to make money on premium writing and extensive reporting. The most aggressive aggregators are likely to ignore the issue of whether content is being paid for by subscribers. The New York Times might find it troubling to see stories that it has spent tens of thousands of dollars to write and which its online readers must pay for, summarized in great detail or excerpted at great length at an aggregation site. That could be the straw that breaks the camel’s back.
The legal fight between old media, The New York Times and all the other old world print media, and the aggregators including GoogleNASDAQ:GOOG) News and Huffington is coming. Old media can’t afford to defer the fight or to avoid it altogether. It is better to make the effort and lose rather than let companies that they view as lamprey eels suck them dry.
Update: Several sources have told 24/7 that a suit by old media may be brought under the Interstate Commerce Act.
Douglas A. McIntyre