Lawyers: To Save Newspapers, Let's Destroy Pretty Much Everything Else Good

from the yeah,-that'll-work dept

A bunch of people have been submitting an opinion piece from the Washington Post, that is basically one of the most stunning set of suggestions for what Congress could do to "save" newspapers. If I didn't know any better, I'd think it was satire, because the suggestions are so mind-bogglingly bad and dangerous, it's hard to believe anyone wrote it with serious intent. Also, it's worth noting that the Washington Post didn't bother to detail the rather massive conflicts of interests from both lawyers. Apparently they both have represented numerous big name newspapers. And what is it that these big newspaper journalists keep telling us about how it's the "blogs" that hide conflict of interests? Anyway, let's dive in to the meat of the argument:
The Internet innovators that have thrived online enabled their own success as early as 1996 by securing immunity from defamation and other liability caused by user postings on their sites. Two years later, they persuaded Congress to add another exemption, this one for user postings that violate copyright law. These safe harbors have allowed companies from Yahoo to YouTube to prosper from the content they carry with little concern of being held accountable for it.
First, it's rather troubling that two lawyers could so fundamentally misunderstand the safe harbor rules put into both the CDA and the DMCA. The claim that it was the internet companies that somehow sought out these rules is laughable and ignores the history of both laws in question. Both the CDA and the DMCA where massive extensions of laws that purposely limited internet communications massively. The two safe harbor provisions were tiny incursions into both laws designed to (reasonably) point out what should have been obvious: if someone breaks the law, the liability should be on the person who broke the law and not on the tool or service used to do so. That's called common sense. These safe harbors weren't, as implied by these lawyers, some massive gift to internet companies. They were a small "safe harbor" for internet companies worried about these two massive laws that criminalized a tremendous amount of communication, showing that the liability should fall on the actual party, rather than on the tool.

Publishers should not have to choose between protecting their copyrights and shunning the search-engine databases that map the Internet. Journalism therefore needs a bright line imposed by statute: that the taking of entire Web pages by search engines, which is what powers their search functions, is not fair use but infringement.
That would be a massive reinterpretation of copyright law, and would effectively destroy much of what makes the internet useful. This proposal would make it illegal to index the web. It would outlaw search engines. Yes, for the sake of saving some outdated newspaper businesses, these lawyers wish to make it so that before a search engine can index any website, it needs to negotiate permission. This would kill the internet.

Now that many news aggregator sites have taken "linksploitation" to a commercial level by selling ads wrapped around the links they post, Congress has the incentive it needs to pass a federal law protecting hot news. Such a law would give publishers an additional source of legal leverage outside of copyright to demand fair compensation for the content they create.
The "hot news" doctrine, considered by many to be one of the worst legal decisions ever made when it comes to intellectual property needs to be reversed, not federalized. It is the one case in the US where "facts" can be considered protected information, and that's bad for everyone. Suggesting an expansion of the hot news doctrine shows a fundamental misunderstanding of First Amendment rights, copyright, the internet and communications.
Eliminate ownership restrictions. Media insolvency is a greater threat today than media concentration. Congress should abolish caps on ownership of broadcast stations and bars on newspaper and television ownership in the same market. These outdated rules belong to an era when the Web was a home for spiders.
The above suggestion might be the only one in all of this that makes any sense. Of course, when combined with the other suggestions, it becomes a horrible idea. These lawyers would effectively kill off all forms of competition to newspapers... and then let the big news organizations combine? Why?
Use tax policy to promote the press. Washington state is taking a lead in the current crisis with legislation signed into law this week to slash business taxes on the press by 40 percent. Congress could provide incentives for placing ads with content creators (not with Craigslist) and allowances for immediate write-offs (rather than capitalization) for all expenses related to news production.
We've already discussed how silly Washington state's new rule is, but are these lawyers really saying that Congress should specifically pick winners and losers in the online classifieds space? How does that not offend the basic concepts of what Congress is supposed to do? How could two lawyers suggest this with a straight face?
Grant an antitrust exemption. Congress first came to journalism's defense with antitrust relief in 1970, when it permitted endangered newspapers to combine their business operations without fear of antitrust suits if their newsrooms remained independent.
So because newspapers are too clueless to survive, they need to be granted monopoly rights? Sorry, don't buy it. The whole thing is stunning in just how brazen it is in basically stating that (a) newspapers are more important than all of the internet and (b) just kill off that pesky internet and everything will be fine. Usually, when industries try to work on regulatory capture (getting regulators to put in place laws that favor them) they at least try to couch it in language that pretends it's for the public good. To outright suggest killing off the internet in favor of newspapers is incredibly shameless.

In responding to this, Jeff Jarvis highlighted a comment made by Dale Harrison that's worth repeating:
A lesson worth remembering is at the turn of the 20th century people had a transportation problem... and the solution turned out not to be a "faster horse"... but a Ford.

And one should note that the Ford didn't arise out of the "Horse Industry Revitalization Act".

I think the future of the media business will look as different as Ford and Toyota's operations look from horse traders and blacksmiths.

Imagine what the passage of such ill-conceived legislation would have done to the car industry a century ago.

It would have strangled the nascent auto industry at birth, postponing its inevitable rise while sheltering a dying industry, only postponing its inevitable demise... doing great damage to both. Newspapers need to be encouraged to adapt to the future, not retreat behind legislative walls hoping the future will go away.

The newspaper industry's troubles go to the very core of their historical business model.

What's historically given value to editorial content is the relative scarcity of distribution versus readers. Newspapers have enjoyed natural localized economic monopolies that allowed each of them to exercise monopoly control over the amount of content (and advertising) they allowed into their local marketplaces.

Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. Newspapers then built costly organizational structures commensurate with that stream of monopoly profits (think AT&T in the 1970's).

The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns advertising (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad rates being "too low" is inverted... the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.

An individual reader now has access to essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media's monopoly control of distribution and supply.

The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content will be driven to zero... infinite supply pushes price levels to zero!

What this implies is that no one can marshal enough market power to monetize the value of content in the face of such an infinite supply and such massively fragmented distribution. Pay-walls, lawsuits and ill conceived legislation won't allow the monopoly conditions to be re-constructed.

There are certainly ways to make online news profitable... and many of us are working to develop such approaches... but I can assure you they don't involve inventing a "faster horse"...
Indeed. It's time to stop having Congress keep passing laws that stop innovation in hopes that legacy industries magically come up with faster horses.

Filed Under: conflict of interest, journalism, regulations

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  1. identicon
    Anonymous Coward, 18 May 2009 @ 8:04pm


    Techdirt rails against misuse of antitrust investigations into organizations like Google, which has not committed any real actions that are monopolistic. It has acted as a successful corporation does, that is, continue to be one.

    Most posts about antitrust law are against politicians who confuse market dominance with monopolistic behavior.

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