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					                          Hot news: The next bad thing
                                          By James Boyle

              Published: March 31 2010 23:03 | Last updated: March 31 2010 23:03

Entrepreneurs and venture capitalists spend a lot of time trying to figure out the next big thing;
the new trend, product or web service that will take us by storm. Intellectual property scholars
are a little different. We spend a lot of time wondering about the next bad thing.

What will be the latest empirically ungrounded expansion of rights, conferring monopoly rents
on market incumbents with scant regard to unintended consequences?

Recent hearings on the future of the news industry at the US Federal Trade Commission (full
disclosure: I was an invited participant) signalled the arrival of a new candidate. Newspapers are
lobbying for a new federal intellectual property right over “hot news.” European equivalents
have also been proposed.

Sadly, the “hot news” right is not as racy as it sounds. It does not offer legal protection for
scantily clad celebrities. This is a legal right that extends far beyond copyright law to cover the
facts of the news themselves; if I break the story, the hot news right allows me to stop
competitors from repeating the facts – at least for as long as the story has immediate currency.

The right has existed in US state common law since a 1918 case called International New
Services v. Associated Press. The British government did not like the sceptical coverage of the
First World War by US newspapers owned by Randolph Hearst (the real life Citizen Kane). It
banned them from using the transatlantic cables to report the news – an early 20th century
version of the Great Firewall of China. In the process, the British government conveyed an
effective monopoly of European coverage on the Associated Press.

Seeking to get around that monopoly, but also interested in making a buck, Hearst’s International
News Services resorted to getting early editions of AP newspapers, or taking news from bulletin
boards, collecting the facts and rewriting the stories with their own particular editorial slant.
None of these acts were violations of copyright law. The case went to the Supreme Court which
held that there could be a “quasi property right” (which is legal jargon for “we just made this
thing up”) in hot news, at least against AP’s competitors.

Holmes and Brandeis – two of the most famous Supreme Court Justices of the 20th century –
both dissented. Brandeis famously commented that the general rule of law was that knowledge
and ideas, the “noblest productions of the human mind” should, after voluntary communication
to others, be “free as the air to common use.”

Brandeis lost this one. Still, the effects were not huge. The hot news doctrine became a relatively
limited right in a few states – including New York. It was occasionally invoked, often to
obviously anti-competitive ends, such as unsuccessful attempts to claim that sports leagues
“own” the scores from those leagues and can prohibit others revealing them. But because of
constitutional limitations on what states can do to affect the choices made by Federal copyright
law, its impact was relatively small,

Fast forward 90 years. The newspaper industry is struggling in the online world. You might think
that it is not struggling because its content is being illicitly copied but because it has no good
business model to make money off entirely licit, legal uses of its content. The momentary eyeball
tracks across news pages just do not translate into enough subscriptions, advertisement clicks, or
classified ad sales. You would be right.

In some cases newspapers have lost business because other services now do things better than
they did – E-Trade, Edmunds.com or Zoopla provide more in depth information on mutual
funds, cars or houses for sale than the sections of the newspaper devoted to them ever could. In
the process, those sites take the lucrative targeted advertisements with them.

In other cases, the new services do things more cheaply – Craigslist classified advertisements is
an example. And finally, the method of delivery changes the time readers spend on the news
pages. Hal Varian – chief economist at Google – presented data at the FTC hearing showing that
people read the news largely at work, sixty or ninety seconds at a time, hardly long enough to
make much money with advertisements. His data also showed that the current collapse in
revenues from subscription and advertising is part of a long term trend that began long before the
web.

This is a complex reality. It may be that new business models – subscription sites, links to new
devices such as the Kindle and the iPad – can revive newspapers. It may be that we will develop
other methods to support investigative journalism – interesting experiments are already under
way. But it would be an enormous diversion to let these struggles somehow convince us that the
newspapers’ ills are the result of illicit copying and can be cured by yet another new intellectual
property right.

Yes, there are legal aggregation sites – such as Google news – which contain short snippets of
news stories. If newspapers want their content removed from these sites they can do so easily by
simply changing the data contained in something called the robots.txt file. Google or Yahoo will
no longer index their pages.

But the newspapers do not want to do this, because legal aggregators drive a great deal of traffic
to them. And in any event, they do not need a new right to stop the practice. There are also sites
that do illegally copy the entire contents, or the entire article. Their behaviour is already illegal
under copyright law. (And in any event has a small effect on revenues. Do you read the FT
stories at some shady site or at the FT?)

So the new right would have no effect on the real problem newspapers face. And it would give
them almost no protection that they do not already have either through law or technology. What
would it do? It would cast a pall of fear over free speech. Is my blog or twitter feed allowed to
say that there has been an earthquake or that some political scandal has erupted? Or must I buy a
license to say so? After all, in the new world bloggers are “competitors” as news sources.
In fact, the right would produce all kinds of effects the newspapers have not thought about. They
are assuming that this new right will only be wielded by them. Not so. Think of political activists
who break a story – for example the young conservative filmmakers who produced devastating
information on the operation of the organization ACORN. They are a news source. They might
think it was a great idea selectively to decide which news organizations got to report that story, at
least as long as it was “hot.” Does that sound attractive? I think not. And then think of the
difficulties of proof, the possibility of chilling of speech by wrongly claiming to be its source.
Implementation would be a nightmare.

So there it is. Our next bad idea. In some ways it shares many characteristics with other recent
expansions of intellectual property law. It is unsupported by data and it has unintended and anti-
competitive consequences. The sad difference is that newspapers truly do face a wrenching
future and the debate over how to pay for high quality investigative journalism is an important
one. Unfortunately, the hot news right would do nothing to help solve the real problems
newspapers face.

Instead, it would do much to impede the benign effects that the internet has on news gathering
and distribution and to chill the social media that will surely be part of the marketplace of ideas
in the future. The negative effects of a new legal monopoly without even the benefits to the
current market incumbents! Which is what makes the proposal all the more poignant

				
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