Friday, May 29, 2009

Newspaper Execs Ponder Charging for Online Content

Top newspaper executives gathered Thursday in Chicago in a semi-secret meeting to discuss charging for online content and tried to determine if they did, would they be violating antitrust laws.

John Sturm, chief executive officer of the Newspaper Association of America, which hosted the meeting, told Jennifer Saba and Mark Fitzgerald of Editor & Publisher that at no point was price discussed during the gathering.

At the meeting on Thursday were McClatchy chief Gary Pruitt, Dallas Morning News Publisher Jim Moroney, Lee Enterprises' Mary Junck and E.W. Scripps Mark Contreras.
Also in attendance were William Baer, a partner at the Washington, D.C., law firm Arnold & Porter and a former bureau director for the Federal Trade Commission.

“Everybody in the room is an adult," Sturm told E&P today. "Price was never discussed and there was no reason to discuss price -- it’s always a local decision.”

Northwestern law professor Fred McChesney told E&P that newspapers could collectively charge for online content. McChesney said the courts have upheld similar arrangements, including the 1979 Supreme Court decision involving the music license company Broadcast Music Inc. and the Columbia Broadcasting System.

In that case, he explained, BMI represented all the owners of music and sold packages to radio stations and other broadcasters. The individual owners of the music agreed to a pay structure; BMI turned around and sold blanket licenses for a single price. CBS, however, accused BMI of price fixing.

The high court decided that the BMI arrangement was allowable in that specific case because it was extremely costly for individual owners of the rights to negotiate individually with each station.

The court agreed it was a form of price fixing, but the alternative was so expensive for individuals it would never get done -- and in fact it would encourage people to steal the rights.

"Generally, newspapers are in trouble," McChesney told E&P. "It could well be that without this arrangement, newspapers are going to go out of business. That could be a point in their favor."

Zachary M. Seward, writing for the Nieman Journalism Lab today, had four observations about charging for online content that seem to be missing in the debate:

1. Newspaper companies that attempt a pay wall imperil their value.

2. Pay walls aren’t necessarily intended to generate revenue.

3. “It’s not pay wall/no pay wall.”

4. Even if pay walls are the future of newspapers, they aren’t the future of news.

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