Amy E. Jensen, When News Doesn't Want to Be Free: Rethinking "hot News" to Help Counter Free Riding on Newspaper Content Online

• Publication year: 2010

WHEN NEWS DOESN'T WANT TO BE FREE: RETHINKING "HOT NEWS" TO HELP COUNTER FREE RIDING ON NEWSPAPER CONTENT ONLINE

ABSTRACT

Newspaper executives, facing dropping circulation and revenue, are fighting to protect their content from online aggregators that are siphoning off the newspapers' articles-and their readers. Many online-news readers have abandoned newspapers' own websites for the sites of aggregators who link to, copy, or repackage the content of traditional news organizations. In most cases, aggregators pay nothing for the use of this content. For this reason, content creators have accused aggregators of stealing their work by skirting the law. But as members of the new media point out, most aggregators are operating inside the parameters of the law as it currently stands.

This Comment first explores how copyright law fails to protect content creators from a number of online uses of their content. It argues that where copyright law falls short, the almost-century-old doctrine of "hot news" misappropriation can help content creators address certain types of unfair competition. A federal statute codifying this doctrine would ultimately offer the most protection for content creators. This Comment argues, however, that such a statute must be limited in scope, and thus its utility would be likewise limited. Ultimately, if news gatherers wish to survive, they must adapt to the needs of consumers and challenge the prevailing idea that those who collect the news and disseminate it online require no compensation for their work.

INTRODUCTION .............................................................................................. 539

I. THE FIGHT OVER NEWS CONTENT AND WHAT IS AT STAKE .............. 542

II. HOW COPYRIGHT LAW FALLS SHORT ................................................ 547

A. Provision Affecting News Organizations .................................... 548

1. The Originality Requirement ................................................ 549

2. The Fair Use Defense ........................................................... 550

3. The Act's Preemption of State Claims .................................. 553

4. The Impact of the Digital Millennium Copyright Act ........... 555

B. Proposals to Change Copyright Law ......................................... 556

III. THE PROMISE OF "HOT NEWS" MISAPPROPRIATION .......................... 559

A. Defining Hot News Misappropriation ........................................ 560

1. Development of the Doctrine ................................................ 560

2. New Life for the Doctrine: Barclays Capital Inc. v.

Theflyonthewall.com ............................................................ 564

B. A Promising but Limited Solution: Adoption of a Federal

"Hot News" Statute .................................................................... 569

1. Key Considerations for This Proposal ................................. 569

2. A Proposed Statute ............................................................... 570

3. Addressing the Realities of the Online World ...................... 573

4. Problems with a "Hot News" Statute ................................... 574

IV. EMBRACING THE PROMISE OF THE MARKET ....................................... 578

CONCLUSION .................................................................................................. 584

INTRODUCTION

[T]here are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production. . . . To be impolite, it's theft.

-Rupert Murdoch, chairman and CEO of News Corp.¹

It's understandable to look to find someone else to blame. But as Rupert Murdoch has said, it is complacency caused by past monopolies, not technology, that has been the real threat to the news industry.

-Eric Schmidt, chairman and CEO of Google Inc.²

As newspapers struggle to hold onto readers and profits, the debate over their future and who, or what, is to blame for their potential demise has been playing out online³and on the pages of newspapers across the globe. Circulation numbers have dropped as fewer consumers opt for the delivery of a daily newspaper to their front porch,⁴especially now that nearly every news organization has moved some of its content online. And on the internet, newspapers have faced new challenges as they battle increased competition from sites that gather and present news in ways unimagined in the strictly ink- and-newsprint days.

This move online has placed some old and new media at odds. Traditional news organizations have attacked internet news "aggregators"⁵for siphoning off their circulation by copying newspaper content for free and reposting this content on the aggregators' advertising-supported sites. Current and former newspaper executives have called aggregators and bloggers⁶"free-riders and pirates"⁷and "parasites living off journalism produced by others."⁸

The bloggers and aggregators, on the other hand, argue that evolving tastes and the nature of the internet, rather than their own behavior, have led viewers to their sites. They point out that their practices often add value to news content and even increase viewership of the originating sites.⁹As one aggregator wrote in an open letter to United Kingdom newspapers:

The truth is, if anything, it is the growth of the internet itself-not link aggregation-that has undermined your business by destroying the virtual monopoly that you once held over the mass distribution of written news. If you are seeking to blame something for your current predicament, we suggest you start there.¹⁰

No matter which side of the debate one is on, there is no question that newspapers have experienced a steep decline. By the end of 2010, a site tracking layoffs at U.S. newspapers had counted more than 17,588 jobs lost in

2009 and 2010.¹¹At least twelve metropolitan daily newspapers have closed since March 2007.¹²Eight other daily newspapers have scaled back their print editions or now offer their news exclusively online.¹³

Newspapers are posting decreasing circulations and revenues. Both of the six-month circulation reports released in 2010 showed declines in circulation for all but one of the top ten U.S. newspapers.¹⁴The Wall Street Journal, which has adopted a paid online subscription model, was the only newspaper to gain readers with a 1.8% rise in the period ending in September when counting print and online subscribers.¹⁵Among the top twenty-five newspapers, average weekday circulation fell 5% from the same period a year earlier.¹⁶Newspaper advertising revenue has also fallen precipitously. In

2009, the industry's advertising revenue dropped 26%.¹⁷The economic downturn drove down profits from display advertising in print editions, while websites like Monster and Craigslist siphoned off classified advertising.¹⁸At the same time, newspapers still earn about 90% of their revenue from print advertising because of the low price of online advertisements.¹⁹In the face of these realities, News Corporation Chairman Rupert Murdoch has gone so far as to declare the death of the advertising-supported model of newspapers.²⁰

News organizations, fighting for their share of shrinking advertising revenues, have become more concerned about keeping news consumers on their sites and finding ways to better profit from their content. They see news aggregators as posing one obstacle to this goal. One news executive has charged that aggregators "steal" his company's copyrights²¹or take more than what is "fair" under the copyright doctrine of fair use.²²However, few content originators have filed lawsuits, and for good reason: the law is not on their side.

Part I of this Comment explores what is at stake in the fight over the use of newspaper content and the arguments on each side. Part II describes how copyright law, which governs the use of written works like news content, falls short of giving news organizations the protection they seek. It then presents other commentators' proposals to change the law to aid newspapers and explains why these proposals generally fail. Part III discusses a more promising avenue of protection for newspapers, the state law doctrine of "hot news" misappropriation. The availability of this doctrine was most recently confirmed in the Southern District of New York in a case brought by financial firms against aggregator Theflyonthewall.com.²³Part III argues that a codification of the hot news doctrine as a federal law is the most promising legal solution because it could allow newspapers to counter egregious uses of their content that give the sources little credit or opportunity for profit. A statute must be limited in scope, however, and will therefore give newspapers limited relief. Part IV argues that due to a statute's inevitable limitations, ultimately market forces should be the main catalyst for change. Fundamental shifts in how news is valued and presented are likely to offer more success to news organizations in the long run. Market shifts are also more likely to benefit consumers by forcing the industry to adapt to new realities.

I. THE FIGHT OVER NEWS CONTENT AND WHAT IS AT STAKE

Numerous speeches, news columns, and internet pages have been devoted to the issue of when users should be able to copy or reuse newspaper content for free. The arguments rely on legal, moral, or capitalistic beliefs. As the debate continues, a yet unanswered question looms: What happens if traditional news organizations can no longer survive or thrive in the online world? This Part explores the arguments on each side of the debate over free use of news content and the benefits of maintaining strong traditional news organizations.

In their own publications and elsewhere, a number of news executives have spoken harshly of aggregators who repost news organizations' content on sites that profit from advertising revenue.²⁴Attorneys from Baker Hostetler, a law firm that represents a number of news...