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Why Moneyweb is right

The problem of paying for content online.

If you are, as I hope, a loyal Moneyweb reader, then you have no doubt heard that Moneyweb is suing Fin24 for alleged plagiarism due to Fin24’s habit of taking Moneyweb stories, changing a few lines, and publishing the resulting material as original content with a token link to Moneyweb. You’ve probably also heard that Fin24 has responded to the accusation by arguing that what it does is not illegal and is common practice online, in essence, that Moneyweb is out of touch with the times.  Pilfers versus old fuddy-duddies, you could say.

I’ve been thinking about this case a lot since the lawsuit was announced, because the underlying question it raises is probably the most important question facing contemporary media organisations: who is going to pay for quality content? I argue that Moneyweb has the right of it, that if we want quality content, that content must be protected by law so that people and companies can earn their living by producing it.

Let me start by laying out the basic argument in a game theoretic way. Imagine a universe with two media companies. The first company, let’s say, Moneyweb, hires a team of ten talented journalists and pays them a decent salary. These journalists write great stories. Moneyweb hopes that everyone who wants to read these stories will come to the Moneyweb homepage to do so. This allows Moneyweb to make money by charging advertisers to place ads on the site. The more people who visit the site, the more Moneyweb can charge for the ads.

Now, the second company, let’s say, Fin24, hires a team of three copywriters and pays them a decent salary. Those copywriters monitor the Moneyweb site for great stories, copy them, tweak them, and post them on the Fin24 page. The plan is that a proportion of the people who want to read those stories will read them on the Fin24 site, rather than the Moneyweb site. That way, Fin24 can capture some of the value of the stories by selling ads on its now well-trafficked site without bearing much of the cost – it takes about an hour to tweak an article that may have taken a month of work to research.

Obviously, the end game in this universe is mutually assured destruction. Moneyweb’s revenues fall because part of its potential audience is going to Fin24 to read Moneyweb-originated stories. Moneyweb retrenches most of its journalists. The quality of its stories declines. Readers, put off by the falling quality of Moneyweb stories and the related decline in the quality of Fin24 “stories” stop visiting both sites. Both close, leaving unemployed staff and unhappy shareholders, but the real losers are the citizens who were relying on these organisations to monitor their government, businesses, and economy. Everyone is poorer.

Clearly, allowing this to happen to the business of news, which is essential to a functioning democracy, is dangerous (although I also think it’s wrong to allow this to happen to other media producers, like musicians, who make a product that people love), and measures must be taken to prevent it.

Now, the real world is more complex, I’ll grant you. For example, in the real world, there are other media organisations (although the signs there are worrying too – witness the massive editorial layoffs at BDFM). And, as Fin24 justly points out, the law allows for fair use of news materials in recognition of the fact that throughout history, news organisations have picked up stories from one another.

But what we’re talking about here is not the old model. Thirty years ago, if a big news organisation broke a story, other news organisations would start to cover it, they wouldn’t just copy, tweak, and republish the original piece. They would assign their own reporters to the story, would add new facts or new perspectives, would add value. Readers would have reason to read both versions of the story, and everyone would win – the organisation that broke the news, the organisation that followed up on it, and the well-informed readers.

What’s happening today is that the artificial barriers that old technologies placed on the dissemination of information (that is, the cost of paper and ink and newsboys, or broadcasting equipment) are eroding. Information resembles a public good – one person using it does not consume it. It is also newly subject to some interesting principles, for example, once it is produced, it is virtually costless to reproduce it digitally. Writing and recording a song is expensive. Once it’s in digital format, though, it can be copied and disseminated endlessly and cheaply. And organisations like Fin24 and the Huffington Post are exploiting these changes to pursue business models that are ultimately highly destructive to the media industry (not to mention to individual creators as this article argues).

So the problem we have is: who pays for the expensive process of content production? Given the characteristics of information, there is no way to impose material barriers to ensure that the producers benefit from its value. (And, by the way, to those who argue that “If people really valued news/music/movies they would pay for them,” I suggest you ask yourself if the people who buy whatever you produce would continue to pay for it if they could easily get it for free. I suspect the answer is a resounding ‘no’.) Thus, the only effective way to make sure that media-makers capture enough of the value of their product to keep producing, is to use intellectual property law. That’s what Moneyweb is asking for. And Moneyweb, along with all other producers of original material, deserves that. 

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