Legal News

Come Together! On Newspapers? Big Antitrust Hurdle

By Ashby Jones

It’s no secret: The newspaper business is struggling. With that in mind, let’s ask a question: Can newspapers band together to demand payment from Web sites that use their content?

An initial response, at least to anyone who’s taken antitrust law, might be, “absolutely not! Such agreements are per se illegal!” But in today’s WSJ Law Journal column — which, we might add, has been churning out really good stuff every Thursday for the better part of a year — writers Russell Adams and Shira Ovide say the answer might be a bit more complicated.

To stay clear of the trustbusters’ sights, newspapers are looking to the music industry for guidance. They write:

Under the music industry model, a venue or media outlet that wants to use a songwriter’s work can purchase a yearly blanket license from the organizations that control the public performance rights to the compositions. The two largest organizations, the American Society of Composers, Authors and Publishers and Broadcast Music Incorporated, together represent the writers of millions of songs. Ascap and BMI distribute the money to songwriters and music publishers based on a complicated formula designed to ensure that a major television network pays a higher fee than a bar in Texarkana.

Click image for a chart of recent newspaper troubles

The news industry’s versions of radio stations and nightclubs are the Web sites that rerun stories, or big chunks of them, copied from newspaper sites. To follow in the footsteps of the music industry, news organizations would need an intermediary similar to Ascap.

Some antitrust experts think that, while hurdles might exist, this type of arrangement might pass muster. “My guess is it would go just fine in front of the courts,” says Herbert Hovenkamp, an antitrust professor at Iowa, who says the model could fly so long as long as there are no exclusive agreements and the arrangement accomplishes something individual publishers otherwise could not.

Newspapers don’t have the best track record at making joint-arrangements work. But if they can figure out a way that makes sense to the bottom line, they might have a sympathetic ear in Washington. The Federal Trade Commission, which shares oversight of antitrust enforcement with the Justice Department, plans to hold workshops later this year on the future of news organizations. The agenda includes the issue of whether “additional, limited antitrust exemptions may be necessary under these unique circumstances.”

Full post as published by Law Blog - WSJ.com on June 04, 2009 (boomark / email).