Saturday, July 25, 2009

The AP, Stuck in a Hole, Digs Deeper

The AP, Stuck in a Hole, Digs Deeper: Richard Perez-Pena, reporting for the NYT on the AP’s latest announcement regarding their attempt to restrict their articles from being linked to or appearing in search results:

Tom Curley, The A.P.’s president and chief executive, said the company’s position was that even minimal use of a news article online required a licensing agreement with the news organization that produced it. [...] Each article — and, in the future, each picture and video — would go out with what The A.P. called a digital “wrapper,” data invisible to the ordinary consumer that is intended, among other things, to maximize its ranking in Internet searches. The software would also send signals back to The A.P., letting it track use of the article across the Web.
They have no idea what they’re talking about. Seriously, look at this gibberish. Someone just sold the Associated Press a bag of magic beans. (Via Daring Fireball.)

Ten years ago, the music industry bought into some magic beans called SDMI. I remember discussions back then where some people really believed it would be possible to tie the wrapper indissolubly to the contents. We know how that story evolved. The magic beans were soon discarded for less magic but somewhat more effective lobbying for new laws (DMCA) and legal action by the industry associations. It could be that the AP believes in magic beans, but more likely they believe in their lawyers' ability to use the DMCA to go after any bigger players who do not respect their wrappers. IANAL, but my hunch is that they could erect a plausible case with huge potential downsides for the defendant if there were able to move the argument from fair use, seen as protecting manual copy-and-paste of small quotes by individual authors, to DMCA infringement in using wholesale automatic means to slit AP wrappers in a news aggregator.

Many Web publishers and aggregators already pay the AP for their feeds. IMO the AP is trying to create a legal environment in which any publisher/aggregator that gets big enough will feel compelled to pay up. They may not be able to maintain the high prices they charged in the days of paper, but whatever price they are able to charge is better for them than the zero they get from all those smaller aggregators today.

Behind all of this obfuscation, it's really all an argument about who pays and how much. The news costs something to collect, write, and edit. The AP and other news sources might believe that they have a rarer and more valuable product than they really do — who doesn't feel that way about their creation? — but there is some value that should lead to someprice. What happened is that the old price discovery mechanisms (I buy this physical newspaper or that one, or don't and get my news from radio or TV; with several regulatory and structural inefficiencies that engendered monopoly rents) have not been replaced by sustainable new ones. Thus, the AP is trying to design a new market mechanism that exploits the legal infrastructure that was created by media lobbying. It may be unseemly, but so far we have not been very good at developing an unregulated digital market for news and other content that can effectively balance demand and supply by paying producers enough to keep producing.

Some argue that the problem is that the incumbent producers are too inefficient and just trying to protect their lucrative inefficiency. Sure, but it's not as if there are many examples out there yet of more efficient news producers (as opposed to aggregators and editorializers) who are making a decent living providing all that we seem to want to read today.

I care a lot about the news. I subscribed to the paper NYT for 24 years in CA, NJ, and PA. I don't now because it stayed pretty much the same but my news needs diversified as the Web increased news diversity. I'm also a long-time subscriber to Salon. But I find myself reading it less and less. I'm still a subscriber of the New Yorker, Scientific American, Backcountry magazine, and Ski Journal. I still read much of the New Yorker (and delight in its cartoons) and Ski Journal (a beautiful use of high-gloss print), but the rest is being displaced by a multitude of aggregators and blogs, from Google News to the Loom to Wild Snow that give me access to a much broader range of news in a more timely manner. I'd be happy to pay as much or more as I did for the NYT to support all of those sources in some distributed way that doesn't require me to deal with pay walls for individual properties. Pay walls are very inefficient both economically and mechanically because my news reading only touches a teeny fraction of each source's content over time. I'd love a mechanism where I pay one payee a flat subscription and pennies flow to sources in proportion to the amount of their content I read (BTW, why don't all public radio stations in a metro area do that, based on audience metering?). Market mechanism designers, were are you?

7 comments:

drewpca said...

http://www.inamoon.com/what/ is a micropayments system that shares your ideas of paying one source (a flat rate, in their case) and having that source distribute the money to the sites you use.

Fernando Pereira said...

I checked in-a-moon, interesting. But Matt is candid that the idea is in the "chicken-and-egg phase." How to bootstrap it is the real challenge, a similar problem exists with switching to new revenue models for scholarly publication.

Varun Aggarwala said...
This comment has been removed by the author.
Fernando Pereira said...

Thanks for the Times link, it's the best summary and analysis of the "Free" debate that I've read. However, I don't think it supports your diagnosis that the core of the problem problem is a generation that doesn't want to pay. No generation as a whole ever pays for what's available gratis. That's why we have had those annoying public radio fund drives for decades, and even then only a small fraction of regular listeners becomes paid-up members.

Varun Aggarwala said...
This comment has been removed by the author.
Fernando Pereira said...

'is through consensus which should be that "No free offerings"'. That would be collusion not allowed by antitrust law in the US. Unless newspapers get an antitrust exemption from Congress like professional sports franchises. Somewhat unlikely given the level of mutual appreciation between Congress and the press, but who knows... Maybe Congress would like that additional sword of Damocles hanging over the heads of pesky journalists.

Varun Aggarwala said...
This comment has been removed by the author.