AP to Google: “Drop Dead.” Or Pay Us. Um, Couldn’t This Be a “Fair Use” Case?

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associatedpressIt was very interesting to watch how events unfolded after the Associated Press told Google to either pay the AP for the right to aggregate its content, or to stop doing so entirely. First off, most industry watchers think the last thing the AP will do is litigate because it would almost certainly either lose or lose enough aspects of the case to make their bottom lines even more fragile and vulnerable than they are.

Meantime, in the Washington Post, a writer for PaidContent.net, Staci D. Kramer (and by the way, I’m not even sure I understand this arrangement) reported that Alexander Macgillivray, associate general counsel for products and intellectual property at Google, responded to the AP’s demand by noting

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“that users are sent from different Google sites to newspaper sites at the rate of more than one billion clicks a month and that Google helps the publishers make money from those referrals: ‘Our AdSense program pays out millions of dollars to newspapers that place ads on their sites, and our goal is that our interest-based advertising technology will help newspapers make more from each click we send them by serving better, more relevant ads to their readers to generate higher returns.’ “

This reportage occurred with the backdrop of the closing day of the Newspaper Association of America’s annual meeting — at which the CEO of Google, Eric E. Schmidt, delivered a response speech. Per the New York Times’ coverage, Schmidt delivered a

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lengthy discourse on the importance of newspapers and the challenges and opportunities brought about by technologies like mobile phones

I mean, talk about bravery! So here, in essence, is the question: When Google News aggregates headlines from news providers such as the Associated Press it asserts that it does so under the legal doctrine of “fair use.” Well, on Monday, reported the Times:

The Associated Press said that it would work to require Web sites that use the work of news organizations, including The Associated Press and its member newspapers, to obtain permission and share revenue with them.

The AP is doing this not to challenge what does and does not constitute “fair use,” but because not to obtain permission and/or share revenue derived from this content is “a misappropriation of newspaper content,” as the Times put it.

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Here’s another encapsulation of the matter from the Times story. Per a quote from Jim Chisholm, a media and newspaper-advisory consultant:

“While Google News generates a lot of audience, ultimately, the question is going to be who is going to make the money out of that: Google or the publishers.”

Quite right — so maybe the current formula just isn’t favorable enough to the content providers and a court case would, in fact, provide a necessary and productive avenue for redress. To really understand the depth of the issue, moreover, read these four provocative paragraphs from this morning’s Wall Street Journal:

“Tensions have been brewing between newspapers and Google for a long time,” says Ken Doctor, analyst with Outsell Inc. “Web search has built its business on the currency of news, and they have derived great benefit from news content, making them a mass medium while leaving newspapers with an almost niche status.”

Outsell estimates Google is responsible for 20% to 30% of the traffic on the average newspaper web site, but the online newspaper business remains only a thin slice of the industry’s revenue base.

Meanwhile, Google reported a 31% revenue increase last year to $21.8 billion, while newspapers overall lost roughly $5 billion in ad revenue, and the industry has been savaged by a rash of bankruptcies, job losses and closings.

Doctor says Google and other online portals are luring huge audiences to their sites with the promise of news content, and newspapers are only able to generate traffic from a user that actually clicks through from a web portal to their site to read a story. Meanwhile, Google sells text ads on its news aggregation pages, and it also directs traffic from there to its main search page, where it generates search ad revenue.

Now, did I just exemplify fair use with the above graphs or am I part of the problem? Or both?

Well, if you ask Doug McLennan, who blog Diacritical is now part of my morning reading, there’s more than enough disingenuousness on both sides to bother just about everyone.

….The news industry’s woes have spawned a number of increasingly desperate please for solutions, the most common of which seems to be that readers are going to have to start paying for content because it costs us to produce it and they just have to. That’s not an argument, it’s cry of desperation, and there’s so far no evidence that readers will so pay because they want to.

But if you want to understand why the news industry has so failed at adapting to the web, this latest threat by AP is a good example. Google is the enemy? Actually, Google send more traffic to most websites than any other source. Publishers clamor for Google attention. A whole industry has grown up around optimizing web pages to attract Google. Google can throw so much attention to a news story that it can swamp your server. This is bad?

No, Doug, obviously not. But the problem remains of one company making money off another in such a way that it renders the original product valueless, or at least severely devalued. And then there are the scofflaws who make it difficult, vis a vis the “fair use” construct, to meaningfully resolve the issue:

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I will say that it does seem to me that sites like Huffington have been crossing a line in recent months. Their excerpts are now often so long that there’s no reason to click the link to see the original story. This does seem like they’re appropriating stories in a way that offers no benefit to the source. As a daily user of the site, I find the long excerpts annoying (I’d prefer to see the complete original).

I understand HufPo wants to inflate its page views. In the long run though, I think this policy damages them – from the reader side, it forces extra navigation to get to the sources, and from the publisher side it cuts down the amount of traffic HuffPo could send.

And all of this — if your head isn’t already spinning — is just half the problem. Let’s the AP and other content providers can work out more equitable formulas for the profits made off of this content. How much will writers see of that rising revenue? And if you can point to the HuffPo and excoriate it, perhaps understandably, for flauting the “fair use” idea to an extreme, how do you police such a thing on the Web?

Well, why not look at the “fair use” of music sampling. Here is a great little website that explains a famous Supreme Court case of 1994, Campbell vs. Acuff-Rose Music. That case considered two prior cases in which the following were to become landmark examples of judicial thoughtfulness. First:

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“in truth, in literature, in science and in art, there are, and can be, few, if any, things, which in an abstract sense, are strictly new and original throughout. Every book in literature, science and art, borrows, and must necessarily borrow, and use much which was well known and used before.”
Emerson v. Davies,8 F.Cas. 615, 619 (No. 4,436) (CCD Mass. 1845)

And then:

“look to the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supercede the objects, of the original work.” Folsom v. Marsh, 9 F.Cas. 342, 348 (No. 4,901) (CCD Mass. 1841)

This is a link to the full text of the Campbell decision. I might add that there’s a real flaw in my suggestion: the question in the Campbell case was about parody and the extent to which parody can be considered part of the “fair use” idea. The only thing being parodied here is the idea that the newspaper industry can be saved (because, pssst, it’s ultimately about how people get their information and, pssst, it’s not going to be by reading print).

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