Posts about newspapers

Google takes the FTC to school

Google just issued a response to the Federal Trade commission’s staff discussion draft on potential recommendations to support the reinvention [read: preservation] of journalism [read: newspapers]. (here was my reaction). It’s a wonderful document that takes the FTC — and the news industry — to school on the First Amendment, copyright, fair use, antitrust, media history, business, and technology. The government and publishers should be embarrassed to need such remedial education.

Highlights:

This says it best:

The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No policy proposal will be able to restore newspaper revenues to what they were before the emergence of online news. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.

Google’s doc leads off with promotion of its efforts to work with news organizations: Living Stories, traffic sent to news sites, technology help, and so on. They might as well just have linked to James Fallows’ paean and Eric Schmidt’s Wall Street Journal op-ed. You’ve heard these points before. My problem with them, as I’ve said, is that Google is trying to make friends with an industry that only wants enemies to blame for its failures. But at last, Google stops pulling punches and slaps down the industry’s self-deluding myths and the FTC’s dangerous ideas.

“[T]he current challenges faced by the news industry are business problems, not legal problems,” Google says,”and can only be addressed effectively with business solutions. Regulatory proposals that undermine the functioning of healthy marketplaces and stall the pace of change are not the solution.”

Google points out that newspapers’ circulation peaked between 1890 and 1920; that newspapers declared radio would kill them and only newspapers should hold the sacred and hallowed mission of news; that newspapers declared TV would kill them and characterized broadcast reporters as “parasites” (a lovely tip of the hat to Rupert Murdoch). We won’t buy that again. “The internet, rather than being the cause of journalism‘s downfall, provides a unique opportunity for news organizations to renew and reinvigorate journalism,” Google says.

Google lectures the FTC and the industry on internet business basics: “Unfortunately, the Discussion Draft does not acknowledge the basic economics of search engines and similar services and instead erroneously suggests that search engines are somehow cannibalizing newspaper advertising revenue rather than serving as an important connection to potential consumers.” Aggregators, Google points out earlier, send traffic and business opportunities to publishers. And Google does not make a significant amount of revenue from news … just as newspapers do not (subsidizing it with more lucrative verticals).

Google lectures the FTC et al on the unbundling of news. Fact o’ life. It then offers a primer on how publishers should be treating the readers who come to them via links.

Google restates the FTC’s dissection of newspaper revenue: 80% advertising, 17% newsstand, 3% subscriptions. “Pay walls,” it says, “could be an effective way to raise the 3% revenue figure.” A zinger for publishers. But Google’s fine with pay walls if publishers want them. It’s just not fine with government regulating them. “Innovating to create products and services that consumers want to pay for,” Google says, “is the only way to guarantee long-term subscription revenue growth, and none of the policy proposals are designed to foster that kind of innovation.” A zinger for the FTC (one I wish Google had dwelled on more since it does know innovation.)

Another zinger to the industry and the FTC comes as Google points out that classified revenue implosion had “nothing to do with copying or free-riding and everything to do with the emergence of a new, more effective and more efficient product into the marketplace. The FTC would ordinarily regard such a situation as a cause for celebration – consumers are getting a better product at a lower price – not an opportunity to slow down that innovation through regulation.”

Google salutes the flag the FTC raised on making government information more accessible — but then Google went the extra step to suggest “harmonization of state and federal law relating to copyrightability of government information.” There, the agreement ends.

Google decries proposals to extend copyright law and limit fair use and repeats its fine arguments against the antiquated notion of hot news from its FlyOnTheWall brief. “Facts, hot or cold, cannot be protected by copyright since there is no author of them,” Google instructs the FTC. “This has been the law of copyright since its inception….”

Google goes after proposals to establish taxes and fees to support legacy news operations. And it attacks efforts to let news organizations fix prices and charge aggregators. The doc makes the FTC eat its own words: “The FTC‘s long-standing position regarding antitrust exemptions properly subordinates a desire to advantage individual firms (here, print news organizations) to the need for a competitive, even playing field that offers the maximum good to consumers.”

Bottom line: There’s no need for the FTC’s meddling:

….Google continues to work with publishers to find ways to ensure that journalism survives and thrives on the Web. We remain optimistic about the future of journalism: The Fourth Estate is too crucial a part of a functioning democracy, and the Internet too powerful a medium, for journalism to die in transition to a Web-first approach. News organizations have more readers than ever, more sources of information than ever, more ways to report and tell stories than ever, and more potential ways to generate revenue than ever. Journalism will change, but the free market and free society will ensure that it won‘t die.

Amen and good night.

Comments to FTC 20 July 2010

Related: Here’s a segment of On the Media this week with me lambasting the FTC:

Independence day for newspapers

Today Journal Register, a newspaper company, declared its freedom from old publishing methods and old journalistic methods. The company’s 18 dailies published today, July 4, using nothing but free, web-based tools. And they involved their communities in their journalism in new ways. They call this the Ben Franklin Project.


Here’s their VP of content, Jon Cooper, reporting on the work of the project in each paper (my emphasis):

The difference between how these stories are usually written and how they were written for today is the process. In many cases the stories reported as part of the BFP began with the audience. The people who are usually last in line were moved to the front of the process. Rather than just being able to read the finished product, the audience – through town hall meetings, social networking sites, direct requests via email and in person and more – was asked to help determine what the editorial staffs should cover.

This took the in-company collaboration to where it needs to be – collaboration between the audience and our organizations. To truly serve the communities in which we live and work we must be part of those communities. We must be connected to those communities. We must listen to those communities. And, we must be help accountable by those communities.

And here’s their CEO, John Paton praising his staff for their accomplishment:

On this Independence Day, you have declared that our Company’s future will be freed from expensive and restrictive proprietary publishing systems but more importantly that our Company will be freed from the old way of thinking about how we do business. You have ensured we will become a Company with a future and one that will continue in its mission to serve our communities with compelling local journalism.

And while the tools you have found and adapted are an achievement, it is our new approach to journalism which is the true revolution here. The Ben Franklin Project is the beginning of a new era of an open and transparent newsgathering process. Our publications harnessed the power of their audiences to tell stories of importance to their communities. Those stories ranged from childhood obesity to property taxes.

This is all the more remarkable because Journal Register is an oft-bankrupt, long-neglected, poor waif of a newspaper group that is suddenly seeing new life under the leadership of Paton, who is bringing his precepts and success from Spanish-language publisher ImpreMedia — digital first, print last — to this company. I’m advising him (along with my friends Jay Rosen, Betsy Morgan, and Jim Willse).

It was only a few months ago that John and I sat in my office at CUNY and he told me about the laughably deplorable state of technology in the company he’d just taken over. He said they still have VDTs. If you came into the news business after about 1980, you’ve probably never heard the term and assume it’s something cured with a shot. Video display terminals hooked into old mainframe publishing systems were how we published starting in the ’70s (I’ll date myself badly and say that I started on them at the Chicago Tribune in 1974). They were replaced in the ’80s and ’90s by PCs. But JRC still had them. That’s how bad it was.

Paton told me he was looking at having to spend $25 million just to get the company’s technology up to date. Hold on. We took to the white board and brainstormed how one could publish a paper today using Google Docs, Flickr, and WordPress. Paton, as is his habit, took my bull(shit) by the horns and ran with it. His staff found other, better free tools to do everything (even advertising). He printed one test edition of a paper to prove it could be done. Then he decreed that all his dailies would do this on one day, on July 4. More important, he used this as a means to get the staffs to think differently about their relationships with their communities, to act differently in how they made journalism. And they did it. Theyr’e not dealing in some theoretical future of news talked about by consultants and professors. [cough] They are building it.

A friend of mine who’s met Paton [that’s Mark Potts] asks why it took the newspaper industry 15 years to get a Paton, a leader with the guts to see a new future for the business rather than merely trying to protect the past. I don’t know but I tell news executives around the world to watch what’s happening at humble JRC. There’s a future there.

There is no hot news. All news is hot news.

The most dangerous defensive tactic parried by legacy news organizations today is their attempt to claim ownership of “hot news” and prevent others from repeating what they gather at their expense for as long as they determine that news is still hot. It is a threat to free speech and the First Amendment and our doctrines of copyright and fair use. It is a threat to news.

The old companies — NY Times, Advance, Gannett, Belo, McClatchy, Scripps, AFP, AP, Washington Post, et al — are lining up against the new companies — Google and Twitter — on hot news as they file briefs in the TheFlyOnTheWall.com case. I’ve just read both briefs and will give you highlights in a moment.

Hot news also makes an ominous appearance in the Federal Trade Commission’s thinking about rescuing legacy news companies as it proposes a constitutionally abhorrent doctrine of “proprietary facts.” And hot news is a factor in the dissemination of Rolling Stone’s story about Gen. Stanley McChrystal, which the Times’ David Carr writes about today, scolding Time and Politico for reproducing the story because RS hadn’t (and because it was so hot).

Hot news refers to a 1918 case, INS v. AP, in which one wire service — barred from transmitting news from Britain in the war — rewrote the others’ news for its clients three time zones away. It was cited in the Fly case, in which brokers — Barclays, Merrill, Morgan Stanley, et al — complained that the web site repeated its analysts’ recommendations. Now news companies want to use hot news to restrict aggregators and others; Google and Twitter are trying to cut them off at the pass.

Hot news is ridiculously obsolete. What’s hot today? As Tom Glocer, head of Thomson Reuters, said, his news is most valuable for “miliseconds.” Hot news limitations should be repellant to journalists, even desperate ones, because every journalist builds on the facts revealed by others. It should further be repugnant to them as it constitutes a form of court-supervised prior restraint. Hot news restrictions would be suicidal to news organizations — even though they foolishly think it would protect them — because it would restrict everyone’s ability to spread the news via links and send journalists audience. Hot news should worry every citizen because the free flow of information is vital to a democracy.

The architecture of news and media — how it is gathered and shared — has changed utterly since 1918 … and 1998. That’s what makes the Rolling Stone story instructive. McChrystal’s quotes leaked and spread instantly, having significant and instant impact on news and the affairs of state. The fact of the quotes was hot news indeed. As I asked four days ago, under hot news, would the magazine have been able to prevent others from repeating these facts? Ridiculous, no? Because Rolling Stone did not publish its own story online and because it was so hot, Politico and Time published PDFs of it — even though Time is a party to the Fly brief — which Carr perhaps rightly scolds them for. But maybe he should also scold Rolling Stone for not recognizing the importance of its news and recognizing the opportunity in sharing it. Once Rolling Stone did put the story on the web, the other publications linked to it. The link economy works when given a chance. So does the First Amendment.

“Once facts are made public,” says the Google-Twitter brief, “they belong to the public.” Once McChrystal’s quotes were known, they were part of the democratic dialog. To restrict us — anyone — from repeating them is to steal from the public. (That is a key argument in my next book.) “The reporting of truthful information,” says the brief, “is one of the most protected forms of speech under the Constitution…” These parties aren’t just fighting about old and new media. They are fighting about the nature and value of the public sphere.

The two briefs illuminate the worldviews of the two camps all too clearly. The legacy companies’ brief argues that hot news is “necessary to protect the news industry’s incentive to gather and report news….” It complains about “free riders” who may repeat their news at lower cost. “One of the greatest concerns among news originators,” they say, “is inexpensive technology that allows easy aggregation of news.” The legacy companies nowhere even acknowledge the economic value of links to their news.

The news companies complain about newspapers going bankrupt, not acknowledging that fate came as the result of high debt and mismanagement. They even have the balls to whine that news is a “low-margin business under economic pressure” (though not long ago, it was a high-margin monopoly). They say they are not going after occasional use of others’ facts — since they all do it — but instead the “systematic” (read: computerized) gathering of their news. They do not acknowledge the tools — robots.txt — that allow them to cut off aggregators. It’s an intellectually disappointing, morally weaselly attempt to get anticompetitive aid from the courts while blithely ignoring the profound constitutional implications for news and the democracy.

The Google-Twitter brief issues many calls to the importance of free speech and news in a democracy that only a few years ago the news organizations would have been saluting. It cites a 1991 case, Feist Publications v. Rural Telephone Service, in which the court said that “[t]he first person to find and report a particular fact has not created the fact; he or she has merely discovered its existence.” Thus even competitors “remain free to use the facts contained in another’s publication to aid in preparing a competing work.” Says the brief: “Central to Feist is the rejection of the notion that ‘sweat of the brow’ can itself create intellectual property rights. ‘The primary objective of copyright is not to reward the labor of authors but to “promote the Progress of Science and useful Arts.”‘” Hot news, they argue, “attempts an end-run around the Copyright Clause.”

Google-Twitter remind the court that news organizations all use each others’ facts: TV stations repeat newspapers’ reporting without attribution and now newspapers do the same to TV. Indeed, the brief says Feist establishes that “the freedom to use facts — even to “free-ride” on facts gathered by others through great effort — is constitutionally protected. Friend Spencer Reiss just told me how he moved mountains to cover Nelson Mandela’s release from prison in time for a hard Newsweek deadline only to find that his editors in New York got what they needed from TV. That is our news ecosystem; it’s not new, only bigger and faster.

“In a world of modern communications technology,” the Google-Twitter brief says, “where anyone with a cell phone may disseminate news throughout the world even as it is occurring, the notion that a single media outlet should have a monopoly on time-sensitive facts is not only contrary to law, it is, as a practical matter, futile.” They worry that news organizations would pay sources not to cooperate with competitors and that judges would become “super-editors” determining the hot time period of, in their example, news about the Times Square bombing.

Worse, even the fear of litigation would “chill the lawful dissemination of important news by fostering uncertainty among news outlets as to how long they must ‘sit’ on a story before they are free of a potential ‘hot news’ claim.” During last week’s damaging storms in the New York area, I saw a Long Islander complain that by keeping its news behind a wall, Newsday was ill-serving the safety of its community. Says Google-Twitter: “Breaking news may involve a threat to public health or security, but the district court’s opinion, if affirmed, would stifle the dissemination of such crucial facts — a particularly dangerous outcome in circumstances where the time-sensitive nature of the event is the precise reason why the facts should be widely disseminated as quickly as possible.” If Newsday has a better forecast than a competitor, could it keep the fact of a warning of danger to itself?

In the U.S. and Europe, news organizations are trying to extend copyright and limit fair use but the Google-Twitter brief is eloquent in objection. “Under Feist, this Court has repeatedly confirmed that facts must remain in the public domain, free from any restraint or encumbrance.” It quotes another case: “[A]ll facts — scientific, historical biographical, and news of the day … may not be copyrighted and are part of the public domain available to every person.” Another: “[R]aw facts may be copied at will. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art.” Another: “[A]llowing the first publisher to prevent others from copying such information would defeat the objectives of copyright by impeding rather than advancing the progress of knowledge.” Do news organizations truly want to oppose the progress of knowledge?

Says the Google-Twitter brief: “The modern ubiquity of multiple news platforms renders ‘hot news’ misappropriation an anachronism, aimed at muzzling all but the most powerful media companies. In a world of citizen journalists and commentators, online news organizations, and broadcasters who compete 24 hours a day, news can no longer be contained for any meaningful amount of time.” This fight sn’t just about a few huge companies. This fight is about our rights.

This is social news

Last week in Berlin, I spent the day with the student-interns at Axel Springer’s in-house, two-year journalism school (that’s common in the industry in Germany) to critique the work they did creating a new news site that used social tools to report: This is South Africa. The site — and the students — were impressive because they stretched the definitions of news and reporting and the culture of journalism and did so inside a media giant. Companies in the U.S. would be wise to inject such youth and innovation into their bloodstreams

The students set off to report on South Africa around the World Cup using only social connections to people there via Twitter, Facebook, YouTube, Flickr, et al. They did not argue that this would replace reporters on the scene; it complements.

They studied the blogging scene in South Africa and made connections with them. They used Twitter and Facebook to follow the news and also to ask people there to report for them and to take pictures. They distributed their news socially.

Their news coup came when they reported on the trampling of spectators at an early game, beating big-media competitors in Germany by 30 minutes to more than two hours. They also argued that they covered stories the mainstream press didn’t, getting social contacts, for example, to take pictures of Blikkiesdorp, the “tin-can town” or concentration camp where homeless, black South Africans were moved for the games (I did find coverage in Die Zeit but not much elsewhere). They say they heard and shared the authentic voices of South Africans they met online and reported via different sources than mainstream media’s, interacting with those sources in new ways. They interviewed sources via Skype and even Facebook. They tried to tie online with the streets and create vuvuzela flashmobs across Germany. They measured success by retweets and conversation.

The students called what they made a beta. That alone is contrary to news culture, where we tried to convince ourselves and our audiences that we reached perfection at every deadline. The entire relationship with their public is something new for news culture — something I hope they can bring into their company and its publications as this class of students starts now on their practicum, producing Welt Kompakt (which on July 1 will have an issue produced by bloggers). I hope the students have the opportunity to train other journalists in the company on what they learned about what they can gain by using new tools to build valued new relationships with the public.

My only complaint about their project: They bragged that it had no ads. Give me these students for a term in my entrepreneurial journalism course and I’ll turn them into capitalists.

: SEE ALSO: Five things journalists should learn from bloggers.

FTC protects journalism’s past

The Federal Trade Commission has been nosing around how to save journalism and in its just-posted “staff discussion draft” on “potential policy recommendations to support the reinvention of journalism,” it makes its bias clear: The FTC defines journalism as what newspapers do and aligns itself with protecting the old power structure of media.

If the FTC truly wanted to reinvent journalism, the agency would instead align itself with journalism’s disruptors. But there’s none of that here. The clearest evidence: the word “blog” is used but once in 35 pages of text and then only parenthetically as an example of buying ads on topical sites (“e.g., a soccer blog…”); otherwise, it’s only a footnote. The only mention of investing in technology — the agent of disruption — comes on the 35th page (suggesting R&D for tools such as “improved electronic note-taking”). There’s not a hint of seeing a new ecosystem of news emerge — the ecosystem we study and support at CUNY — except as the entry of nonprofit entities that, by their existence, give up on the hope the market will sustain news.

If the FTC truly wanted to rethink journalism and its new opportunities and new value in our democracy, it would have written this document from the perspective of the people it is supposed to represent: the citizens, examining how we can benefit from news that is newly opened to the opportunity of collaboration and greater relevance. Instead, the document is written wholly from the perspective of the companies and institutions of the industry.

The document, like good government work, does a superb job of trying very hard to say very little. From its hearings and research, the staff outlines proposals I find frightening, but many of them are as politically absurd as they are impossible — e.g., what I’ll dub the iPad tax to put a 5% surcharge on consumer electronics to raise $4 billion for public funding of news — and the document doesn’t endorse them.

Still, it’s the document’s perspective that I find essentially corrupt: one old power structure circling its wagons around another. Change? That’s something to be resisted or thwarted, not embraced and enabled. The FTC’s mission in this administration of change — its justification for holding these hearings and doing this work — is to foster competition. Well, the internet is creating new competition in news for the first time since 1950 and the introduction of TV. But the commission focuses solely on newspapers, apologizing that it ignores broadcast — but not even apologizing for ignoring the new ecosystem of news that blogs and technology represent.

“This document will use the perspective of newspapers to exemplify the issues facing journalism as a whole,” the FTC says. And later: “[N]ewspapers have not yet found a new, sustainable business model, and there is reason for concern that such a business model may not emerge. Therefore, it is not too soon to start considering policiies that might encourage innovations to help support journalism into the future.” That is, to support newspapers’ survival. There’s the problem.

Among the ideas the FTC presents:

* “Additional intellectual property rights to support claims against news aggregators.” The document even takes on the language of Rupert Murdoch and company describing aggregators as “parasitic.” It espouses their perspective, that search engines and aggregators “use” content when, from my perspective, such use promotes and adds value to that content (and we’ll soon see how Murdoch’s properties do without it). The FTC doesn’t broach the concept of the link economy and the value and distribution created by aggregators — not to mention (and they don’t) that created by recommendations from readers via Twitter and Facebook (neither word appears).

The FTC looks at extending copyright and corralling fair use and also outlines the dangers, ending up with no recommendation, thank goodness. It also looks at proposals to extend the “hot news” doctrine of a 1918 court case by the Associated Press but doesn’t begin to grapple with the definition of hot (Tom Glocer of Reuters says his news has its highest value in its first three miliseconds) and it does acknowledge that news organizations “routinely borrow from each other.” Rip ‘n’ read, it’s called.

What disturbs me most in this section is that the FTC frets about “difficult line-drawing being proprietary facts and those in the public domain.” Proprietary facts? Is it starting down a road of trying to enable someone to own a fact the way the patent office lets someone own a method or our DNA? Good God, that’s dangerous.

* Antitrust exemptions. The FTC looks at allowing news organizations to collude to set prices to consumers and with aggregators. Isn’t that the precise opposite of what an agency charged with protecting competition for the benefit of customers should be considering? Shouldn’t the FTC recoil in horror at such sanctioned antitrust to protect incumbents’ price advantages? Not here.

* Government subsidies. After saluting the history of government subsidies for the press — namely, postal discounts, legal notice publication, assorted tax breaks, and funds for public broadcasting — the agency looks at other ideas: a journalism AmeriCorps paying journalists; increased funding for public broadcasting; a national fund for local news suggested in Columbia’s report on journalism; a tax credit for employing journalists; citizen news vouchers (a la campaign checkoff); grants to universities for reporting. It also looks at increasing the present postal subsidy (which would only further bankrupt the dying postal service in the service of dying publications); using Voice of America and Radio Free Europe content (aka propaganda) in the U.S.; and enabling the SBA to help nonprofits.

* Taxes. At least the FTC acknowledges that somebody’d have to pay for all this. In one section, the FTC looks at licensing the news: having ISPs levy a fee on us that the government then dolls out to its selected news purveyors — call that the internet tax. It’snothing but a tax and it would support incumbents surely. In another section, it examines the aforementioned iPad tax; a tax on the broadcast spectrum; a spectrum auction tax; a tax on ISPs and cell phones; and a tax on advertising (brilliant: taking a cut of the last support of news in America).

* New tax status. The document spends much space looking at ways to make journalism a tax-exempt activity and suggests the IRS should change its regulations to enable that. It also looks at changing tax law to enable hybrid corporations (“benefit” and “flexible purpose” corporations that can judge success on serving a mission and not just maximizing profits) as well as L3Cs.

* Finally, the document looks at the one thing that should be in its purview as a government agency: getting government to make its information open and accessible to view and analyze. Well, amen to that.

I’m quoted in the document from my testimony saying that I am “optimistic to a fault about the future of news and journalism. The barrier to entry into media has never been lower…. But what we do need is a level playing field.” And in a footnote: “If you’re talking about surviving, you’re talking about the perspective of the old, legacy players who had a decade and a half to get their act together, and they didn’t The future of journalism is not institutional, we now know, it is entrepreneurial.”

But this document does nothing to enable that entrepreneurial future. If you want to give somebody tax breaks — and I wouldn’t — give them to those who invest in innovation — whether as disruptors from the outside or as visionaries from the inside. I certainly would not change laws to favor incumbents over those innovators. I see no reason to provide tax subsidies to support an activity that is now a hundredfold more efficient than it used to be. Rather than restricting the flow of information by making it proprietary, I’d argue that it is in the interest of democracy to make it yet freer.

The real problem I see here, again, is the alignment of the legacy institutions of media and government. Here, the internet is not the salvation of news, journalism, and democracy. It’s the other side.

The real advice I gave the FTC is not quoted in the document. It’s this: Get off our lawn.

: DISCLOSURES: This is on my disclosures page, but it can’t hurt to repeat here that I hold stock in (but am not paid by) a platform that aggregates and is used by publishers to link to more content (Daylife). I am advising the company run by the afore-linked visionary, John Paton at Journal Register. I run the project at CUNY that is researching new business models for news. And I blog.

: I cross-posted this on Business Insider and Huffington Post; see also the discussions there.

: Thanks to Scribd, the full document is after the jump….
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