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The Demise of Newspapers: Economics, Copyright, Free Speech

By Jack M. Balkin

In my last post, I reported on newspapers' likely demise and argued that blogs can act as an important supplement, but not substitute for the fourth estate functions of the traditional press. Here I want to say something about the economics of newspapers' demise and how that is relevant to copyright law and our system of free expression.

Newspapers are in decline for two basic reasons. First, the days in which daily newspapers held virtual monopolies over print news and classified ads in many cities are over. The Internet offers competition from many sources, all of which erode newspapers' (and TV networks') market share. Even papers that successfully transition to the Web face far greater competition for eyeballs than in the print era. And, to add to that, the Internet has decoupled classified ads from newspapers, thus eliminating an old stalwart of newspaper revenue.

Second -- and here is where copyright might come in -- many Internet competitors build on the content and value that newspapers create. The Google News news aggregation site is essentially a combined digital news clipping service and news reader search engine. The Google News home page displays headlines, photos, and story leads from newspaper, news agency, and TV news Web sites (as well as some blogs). It also siphons off ad revenue from those sites. Likewise, news and opinion blogs are largely (but certainly not entirely) parasitic on the institutional press. They copy, quote from, discuss, and criticize stories reported in the press far more than engaging in original reporting or linking to other blogs. And just like peer-to-peer traders of music and movie files, online readers copy and distribute stories from newspaper Web sites to their friends via email and social network sites. Especially for the young, trading copies of newspaper stories often substitutes for visiting the paper's Web site.

Newspapers thus suffer from the classic public goods problem. Producers of quality journalism invest heavily in investigating, reporting, editing, and fact checking. But once they make their work product available, they cannot prevent many others from copying from and reading their work without payment. In the long run, they will lose out to competitors who build on their investment in quality journalism without making a similar investment in original reporting. In fact, newspapers? public goods problem extends even wider. We all benefit from a society in which quality reporting is produced and disseminated even if we don?t actually read that reporting ourselves.

The traditional means for addressing the public goods problem facing creators of original expression is by giving them exclusive rights in their work product. That is largely the province of copyright, but copyright is limited to the literal form in which ideas and information is expressed; it does not give newspapers the ability to capture the social value of the information they produce. To remedy that gap, some states have recognized, and in its much discussed 1918 decision in International News Service v. Associated Press, the Supreme Court gave its imprimatur to, a newspaper's "quasi-property right" to prevent competitors from appropriating hot news. Following on that legal regime, a number of news agencies have sued Google News for copyright infringement, asserting that Google's copying of news story headlines, photos, and story leads infringed their copyrights in expression. (The primary US case settled.) And one could imagine copyright and hot news misappropriation claims asserted against other Internet "competitors," both commercial and noncommercial.

That aggressive propertization of newspapers' work product would pose significant free speech concerns. It would also run counter to our nation's information policy extending back to the Founding. The first copyright act, the Act of 1790, did not accord copyrights in news stories. In fact, far from recognizing intellectual property rights in news stories, the early federal government subsidized newspapers' sharing of their content. It provided free postal delivery for newspaper publishers to exchange their papers with one another, largely to facilitate editors' common practice of using nonlocal news items from other papers to fill their columns.

But in the digital age newspapers are far more vulnerable to massing copying. And, like Google News, some competitors reap some of the value of newspapers' work product without engaging in original reporting themselves. So what is to be done?

One answer, of course, is nothing. Google News argued that its copying is noninfringing fair use. That is a solid argument under current copyright law. And bloggers who quote from or link to news stories without copying the entire story have an even stronger fair use claim. Perhaps newspapers need to take their lumps and, along with all other traditional media, seek to reconstitute themselves and find new business models suitable to the digital age.

The Pew Research Center?s Project for Excellence in Journalism argues in contrast that news providers should create consortia to "charge Internet providers and aggregators licensing fees for content." As the Project recognizes, "those fees would likely add to the bills consumers pay for Internet access. But the notion that the Internet is free is already false. Those who report the news just aren?t sharing in the fees."

To my mind, giving news providers a proprietary veto over online news aggregators', Internet providers', and bloggers' referencing of news stories would impose an unacceptable burden on speech. I argue in Copyright's Paradox that, all in all, holding such referencing to be fair use or otherwise noninfringing of copyright is the best solution. But I can see advantages to imposing some sort of statutory license or levy on commercial Internet service providers and news aggregators who profit from news providers' investment. Newspapers should not have a veto over who references their stories or how. But ensuring that they receive some compensation for their investment in quality reporting might be our only hope for maintaining that investment and the vital fourth estate benefits that flow from it.

Full post as published by Balkinization on May 05, 2008 (boomark / email).