Providing a Foundation for Newspapers and Other Originators of Daily News Reports to Revive Their Abilities to Profit from Traditional Daily News Coverage Online

Abstract:     
So far, no business has shown that it profitably can produce the wide range of daily news reports solely online that newspapers traditionally produced every day in the "old media" world. In the meantime, despite millions of daily visitors to their web sites, newspapers are spiraling out of business or drastically cutting news staffs to try to stay in business, reducing the quantity and range of news available to the public.

This white paper, initally published online in 2009 and widely reported in the popular and trade press at that time, argues that the unique qualities of the internet have combined with the "fair use" doctrine of copyright, the absence of copyright protection for "facts," and the first amendment's protection of free speech to encourage economic forces that severely undercut the commercial viability of gathering and reporting the factual information that traditionally comprised news reporting throughout most of the 20th century. That changed early this century, after the internet became a popular and commercial vehicle for providing information to the public.

In the aggregate, firms entering the online news busines compete with traditional news organizations for advertising revenue, but rarely gather their own news. Instead, they rewrite news reports originated at great expense by their traditional competitors, and publish ther rewrites online at about the same time that the originating newsrooms publish their original reports online and in hard-copy.

Because the rewriters' costs are a tiny fraction of the costs of originating daily news reports, the rewriters enter the online news market to gain easy revenue at low cost, which contributes to a glut of advertising space tied to news. Because they compete with each other, the rewriting firms drive down the market price of that advertising space, helping to depress the market for online ad revenue to a level far below that required to sustain traditional news gathering.

The organizations that gather their own news rely chiefly on revenue from advertising to recover the substantial labor and other costs required to discover and present daily news reports, whose commercial value vanishes after about one day. Reduced ad revenue leads to reduced news staffs and reduced news coverage.

This white paper proposes to revive the common law doctrine of INS v. Associated Press, 248 U.S. 215 (1918), but not as a property right in news or as federal common law, but to invigorate its force and rationale as a species of state common law tort of unfair competition.

Much legal scholarshIp has commented on this white paper. The authors are now upating their thesis to address that scholarship and to evaluate the impact of tablets, such as the iPad, on the commercial viability of originating daily news reports online. The iPad entered the consumer market one year after the authors published this white paper.

Number of Pages in PDF File: 69

Keywords: Online news economics, newspapers, INS vs. Associated Press

JEL Classification: K00

working papers series