The first newspaper to offer an electronic edition was the Columbus Dispatch in 1980. Since then, online news has become all-pervasive, so much so that every paper has a significant online presence. Not only has the Internet given established print titles an alternative outlet for their content, but it has allowed a plethora of online-only news sites, blogs and content aggregators to take advantage of this low cost publication medium.
Whilst some publications (such as the Financial Times in the UK and Le Figaro in France) charged readers a subscription to view their online content, the vast majority took the decision that online content should be free, and so it is that in 2010 most of the world’s print media can be read online without charge.
The intention was, and in some cases still is, that ‘free’ content can be made to pay for itself through advertising. However, with the well publicised limitations of this model becoming more acute by the day, talk is increasingly turning to alternative revenue streams, namely paid-for content. Indeed in December 2009 Rupert Murdoch said ‘The old business model based on advertising-only is dead’. But this presents two obvious questions:
• in a world where the Internet is brimming with free online news sites, why would anyone pay?
• how will content providers prevent unauthorised dissemination of their paid-for content?
Reasons to Pay
One way to differentiate news content is to offer local or specialist information that, in the eyes of the consumer, justifies payment. The Hamburg Abendblatt provides free national news to entice readers to its site but requires payment for its local news; so supplying readers with the latter from a reputable source. Similarly, the depth of financial coverage offered by, for example, the Financial Times and the Wall Street Journal means that their readership are prepared to pay a subscription for online access.
Another distinguishing feature is portability of content. Traditionally reading papers via a mobile phone was akin to reading the phonebook through a matchbox sleeve, but ‘apps’ for mobile phones (and soon the iPad) have dramatically improved the mobile news interface and, therefore, opened another revenue stream.
However, perhaps the most important consideration is packaging. When and where do readers pay for their content? If consumers were required to pay a set fee every time they read a story online then it is likely that they would soon seek alternatives, but if the cost was bundled with some other service, such as satellite television subscriptions, would users opt out? By way of example, New York’s Newsday has in excess of 1.5m paying customers. However, at one stage less than 100 of these had signed up exclusively for online news content alone. The remainder paid as part of their cable TV subscriptions.
As explained above, free content needs advertising, however, for many, a lack of advertising is a positive selling point. Music streaming services, such as Spotify, have demonstrated that consumers are willing to pay a premium to escape the distractions and interruptions of advertising. A news site devoid of scrolling adverts or pop-ups would arguably be similarly attractive.
Of course, if there were no other choice, then consumers would be forced to pay for online news content. However, not only are consumers used to being able to access news for free, but also, as the music industry has demonstrated, no matter how tightly one tries to control the distribution of content, the internet community is usually one step ahead.
Enforcement Issues
Supposing a newspaper can provide an online version offering content that customers are prepared to pay for, how can it keep that content secure and what steps should it take to guard against the unauthorised distribution of its product?
The obvious analogy when one is considering the legal implications of online distribution is the music industry. However, this is perhaps a misleading comparison. Unlike the newspaper industry, ever since the birth of the internet, the music industry’s primary position has been that ‘official’ content must be paid for. Large portions of the legal profession have been kept very busy dealing with issues such as Digital Rights Management (DRM), file-sharing and content streaming, not to mention countless copyright infringement actions against companies and individuals throughout the world.
Sites such as Apple’s iTunes site demonstrate beyond doubt that there is a significant market for ‘official’ paid for music, but neither it nor the highly publicised and well financed enforcement programmes referred to above could be said significantly to have reduced the volume of illegal file-sharing that goes on worldwide.
The newspaper industry will face a similar range of problems and, generally speaking, the key will be deciding which battles are worth fighting. Do you spend time and resources suing the ‘facilitators’ of the infringement (the Napsters and the Pirate Bays of the new genre) or take and publicise smaller actions against individuals, thus sending a message to the public at large? Whatever the strategy, there are a number of other factors that may call for a different approach.
First, whilst not everyone knows how to stream files over the internet, the ‘copy and pasting’ of text is second nature to any computer user. The risk of an authorised subscriber sharing a story with non-subscriber friends (or posting it on a blog) is, therefore, quite high.
Secondly, news is, by its nature, more ephemeral than music. Yesterday’s news is of little value and one of the key drivers of internet-based reporting is the ability to get a story out without waiting for the next day’s print run. Individual pieces of content are, therefore, only ‘worth’ copying for a short period of time. Subscribers are not so much paying to read a particular article, but for the comfort of knowing that current and up-to-the minute news is available should they require it. Litigation may, therefore, focus on defendants who systematically copy content for the purposes of providing a rival news site.
On the plus side for content providers, it is easier to detect verbatim copying of text than the reproduction of music or video files. Sites such as ‘Copyscape’ (www.copyscape.com) already allow members of the public to search for plagiarism on the internet and it is likely that even more advanced tools will be at the disposal of the newspaper industry.
From a technical point of view, it is not difficult to make a web site available only to subscribers. However, one problem already faced by, amongst others, the Financial Times is that of ‘circumnavigation’. It was in the FT’s interest for its articles to be searchable by search engines, as this could serve to draw in interested readers. However, features such as Google’s First Click Free programme allow users to view a payment-protected article free of charge, requiring payment only when links on the same page to further articles are clicked on. As there was no limit to the number of ‘First Clicks’ that any user could carry out, a determined reader could read the entire site by simply returning to the search engine in between accessing each article.
Google has since modified the ‘First Clicks’ system so that a user can only gain access to a total of 5 pages per day and the Financial Times has recently blocked unregistered direct visitors to its site, while still allowing 5 pages to be accessed via Google searches. An alternative solution advocated by Google is for publishers to create a ‘preview’ of articles that can be searched by search engines in addition to the full ‘unsearchable’ article that is accessible only after payment.
Another battleground is likely to be in relation to ‘password sharing’. If more papers decide to move to a subscription model then it is likely that a primary market for subscriptions will be corporations seeking access for their staff. Whilst this may prove a valuable revenue stream for the papers, it is also open to abuse if a single username and password is circulated among multiple employees. Again this problem is not new and there are ways of policing password use (e.g. by detecting when the same subscriber is apparently logged on to a site via two or more computers at the same time). However, it is one that will have to be addressed.
The Effect on Advertising
It is difficult to judge how the move towards paid-for content will affect online advertising. It is unlikely that just because a site is making money from subscriptions it will turn its back on advertising revenue altogether. Indeed, advertisers will pay a premium if they know exactly who is reading their adverts (something which the subscription model makes easier). However, as explained above, the lack of advertising is in itself a selling point, so it will be for individual sites to try and strike a balance that works for them.
Conclusions
It is perhaps ironic that just as the newspaper industry is looking to move away from advertising-supported content to a subscription model, the music industry (through sites such as Spotify, which offers free access to an online archive of music, paid for by advertising) is moving in the opposite direction. Perhaps they are destined to meet in the middle.
Ultimately, the financial difficulties faced by most newspapers speak for themselves and sooner or later something is going to give. Perhaps the most compelling driver for paid-for content would be if there were no free alternative, but that does not seem likely in the near future.
It does seem clear that Rupert Murdoch is intent on trying to change things and if successful it may be that, with echoes of the Wapping dispute, where he leads, others will follow.
Tom Lingard is a Senior Associate and Theo Varcoe a Trainee in the Intellectual Property team at Stevens & Bolton LLP. Tom can be contacted at tom.lingard@stevens-bolton.co.uk. Theo can be contacted on at theo.varcoe@stevens-bolton.co.uk.
