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July 31, 2014

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copyright law:

Are website copyright violations hurting newspapers’ bottom line?

Steven Gibson

Steven Gibson

Righthaven LLC CEO Steven Gibson says the real story about Righthaven is not the controversy over its lawsuits, but that it’s a fast-growing technology company with a bright future in Las Vegas — a city that certainly needs the jobs.

Righthaven now employs about 10 people tracking down and suing copyright infringers and is growing as it has found additional media companies to partner with, though Gibson didn’t want to name them.

The company has a bright future because the newspaper industry — hit hard by bankruptcies, layoffs and the closures of papers — needs its services to stop the diversion of newspaper website users to infringing websites, Gibson said.

Because Righthaven is privately owned and doesn’t disclose basic financial information — like what it pays Review-Journal owner Stephens Media LLC for copyrights and whether Stephens shares in lawsuit revenue — it’s impossible to say whether it will be a successful business model.

Gibson and R-J Publisher Sherman Frederick are not alone in their worries about copyright infringement.

At the Las Vegas Sun and other Greenspun Media Group publications, copyright infringement is dealt with by asking infringers to comply with the Greenspun Media policy allowing links and text totaling as much as 100 words or 10 percent of the story, whichever is less. These requests are accompanied by a stern warning about noncompliance, said Rob Curley, senior editor, digital.

But as newspapers work to protect their online content, there’s little information about how copyright infringement of the type being prosecuted by Righthaven has affected newspaper finances.

On March 14, the Newspaper Association of America, representing the interests of more than 2,000 newspapers in the United States and Canada, submitted a report to a White House group working on copyright infringement issues. The report backed up the assertion that news piracy is affecting the industry’s finances.

“Unauthorized use of newspaper content on the Internet imposes an economic cost to the industry and to the U.S. economy, including with respect to the creation and maintenance of jobs,” said the NAA report presented to the Office of Management and Budget.

The NAA noted that in 2009, some 40,000 people worked full time as reporters and editors — down 27 percent from 2006.

No one has quantified, however, how online news piracy may have contributed to newspaper closures, layoffs and industry bankruptcies.

The print side of the industry has been in decline for years. Newspaper paid circulation has dropped about 22 percent since 1990 while print and online advertising revenue tumbled 44 percent from 2005 to 2009, to $27.6 billion.

But despite the recession, newspapers’ online advertising revenue is rebounding toward 2007 levels of $3.2 billion or more.

And Nielsen Online reported newspaper websites attracted 71.6 million unique visitors per month on average in the first quarter of 2010.

That’s more than one third of all Internet users and a number in line with newspaper website visitorship numbers dating to June 2009 that have ranged from 74.8 million visitors per month to 69.2 million monthly visitors.

These numbers indicate the online side of the industry, the side potentially most affected by the types of copyright infringements cited by Righthaven, is doing fine despite the concerns about copyright infringers pushing more newspapers into bankruptcy.

Still, the NAA report noted a December 2009 study documenting rampant news piracy by Attributor Corp. of Redwood City, Calif. — a company that like Righthaven believes there’s money to be made by tracking down copyright infringers.

Attributor, in its watchdog role, doesn’t sue the infringers. Rather, it works with them to drive some of their advertising revenue to newspapers, magazine, broadcasters and other sources of content.

“Attributor uses its proprietary software program to track online uses from the newspaper content feed, and provides services in the licensing and enforcement of intellectual property rights. Newspapers may respond to unlicensed, apparent infringing uses in a variety of ways, including license proposals, cease-and-desist letters, or ‘takedown’ notices under the Copyright Act,” the NAA report said.

Attributor launched the Fair Syndication Consortium last year to provide what the NAA called “an easy and reasonable way for advertising networks to ensure that newspapers receive a share of advertising revenues from websites that display unlicensed newspaper content.”

In their December report, Attributor and the Fair Syndication Consortium said that for the first time they had quantified the extent to which U.S. newspaper content online is reused by unauthorized websites.

In reviewing some 100,000 articles published by 157 U.S. newspapers, more than 75,000 unlicensed, or unauthorized websites reused those newspapers’ content in November alone — with many of the infringing websites supported by advertising.

“Attributor’s tracking technology detected 112,000 unlicensed, near-exact copies reproducing more than 80 percent of the original article; 163,000 uses of less than 80 percent and more than 125-word excerpts of the article; and 357,000 uses of headlines and up to 125 words of the original article, such as verbatim use of the story headline and lead,” the NAA said.

Despite this rampant piracy, Fitch Ratings analyst Mike Simonton in Chicago said little information is available about whether bloggers and small websites — the type targeted by Righthaven — collectively are significantly reducing viewership for newspaper websites. And, he said, the issue hasn’t come up in industry earnings reports and conference calls.

Copyright infringement, for instance, isn’t even mentioned as a threat in the 2009 annual report or most recent earnings reports by the nation’s largest newspaper chain, Gannett Co.

At debt-rating agency Standard & Poor’s, the issue of websites stealing content from newspapers and broadcasters also wasn’t mentioned in its latest industry report card July 14. While some newspaper print operations may be hurting, S&P said newspapers’ online ad revenue will continue to pick up throughout the year from the 5 percent first-quarter growth rate.

At The New York Times Co. alone, executives indicated online ad revenue would increase in the high-teens percentage in the second quarter — hardly, it seems, a trend indicating small websites are threatening that company’s finances.

A May 27 report by Standard & Poor’s did note newspapers face both opportunities and risk from news aggregators like Google, Yahoo and Microsoft’s MSN portal. Gibson, at Righthaven, says these big aggregators aren’t going to be sued by Righthaven since they follow the copyright rules.

“Opportunities to benefit from aggregators stem from the increased traffic driven from aggregator sites where only news headlines are presented,” the Standard & Poor’s report said. “Such aggregator sites could help generate interest in the news and lead to increased readership of newspapers’ websites.

“News aggregation sites that provide both a link through headlines and a summary of the news story pose a threat to newspapers. Publishers believe such sites not only drive less traffic to newspaper sites, but also depress traffic (and advertising dollars) as readers no longer feel a need to visit newspaper sites directly for news information,” S&P’s report said.

Despite the threat of copyright infringement, the privately-owned R-J apparently isn’t one of the newspapers in financial trouble.

Little Rock, Ark., billionaire Warren Stephens, whose family purchased the R-J and the rest of Donrey Media Group in 1993, told Forbes last year that with no debt, the Stephens Media papers are in no danger of going under.

“If you don’t lever (leverage) up in good times, you won’t be hamstrung in bad times,” Stephens told Forbes.

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