CorpComms Magazine

It is only a dozen years since the popular view was that the Internet was a revolutionary new utility that, sadly, nobody could figure out how to make money from.

How times do and don't change. Apple, Google and Amazon.com are just three examples of leading companies now generating billions of pounds of revenues online but plenty of others are still searching for the right model to benefit from the biggest driver of 21st Century innovation.

Britain's national newspapers fall firmly into the latter camp. Most recent strategic moves relating to their Internet presence, from erecting paywalls around online material to launching iPad applications and even new online newspapers, are essentially about repositioning themselves from the industry's decision in the 1990s to give online content away for free.

So, of course, is the legal saga over the decision of the Newspaper Licensing Agency (NLA) to charge companies for licensing newspapers' online copy.

Perhaps that story should have started back in 1996 when the NLA was formed by eight UK newspaper groups to license the rights of their editorial print content, simplifying the previous system whereby each paper charged individually to agencies that cut out articles for PR departments and to companies buying multiple copies.

Fifteen years on, the NLA holds mandates to license the intellectual property for the printed content of 1,300 publications and 1,030 websites for national and regional newspapers.

Online content was not covered by the 1996 arrangements but this is now where the battle for dominance in the media monitoring industry is clearly headed, with fewer organisations now wanting to wait to receive press clippings in the post.

And, in the absence of licence agreements, a new generation of specialist web news aggregators such as Meltwater Group has entered the marketplace.

Founded in Norway in 2001, Meltwater's web aggregator news operation uses computer models to trawl news websites for free content, selling it on to 230 PR agencies and 60 in-house communications teams.

It managed this without challenge from the licensing body for nearly a decade. But in late 2009, the NLA unveiled a new online licensing system.

Based on the same two-tier system as the NLA's print content licences, it proposed separate licences for cuttings agencies and for their clients.

These new licences came into force in January last year and were taken up by some 20 media monitoring organisations, including Precise and Durrants, and 400 of their clients.

However, Meltwater was a notable omission. Instead, the company, supported by the Public Relations Consultants Association, took the NLA's new online licences to the UK Copyright Tribunal.

The tribunal, whose remit is to adjudicate on the terms of licences, ruled in favour of Meltwater and the PRCA in an interim jurisdiction question last March.

The issue of whether the NLA has the right to require online licences went to the High Court, which last November found in its favour but Meltwater appealed and a hearing is scheduled for June.

If Meltwater loses, the Copyright Tribunal will sit to assess the licence terms. All invoicing for the new online licences has been suspended until the appeal ruling.

Transforming the industry

The case has generated plenty of rhetoric. The NLA says it needs to act to protect national and regional newspaper members who together spend £1 billion a year in generating editorial content and that it simply wants the new breed of aggregators and their clients to operate on a level playing field with conventional media monitoring agencies and their corporate customers.

News International, which has introduced paywalls for newspapers including The Times and The Sunday Times, has blocked Meltwater's computers from linking to content on the paid-for sites. Some media experts fear that if Meltwater succeeds, national newspaper groups will follow the example of the Financial Times and each charge a separate fee to agencies.

Meanwhile, the PRCA has said that the new licences are 'essentially an illegal tax' that would land each agency with thousands of pounds of charges that would ultimately be passed onto their clients.

'Meltwater's intervention has transformed the landscape,' said PRCA director-general Francis Ingham in January 2010. 'The NLA's house of cards appears to be falling down and nobody will mourn its demise.'

Ingham is less forthcoming now, saying he is restricted by the court case, in which the PRCA is a co-respondent.

'It's a legal issue that's now up to the courts,' he says. 'All our statements these days get cleared by lawyers but we think the implications of the High Court case could undermine the free exchange of information that currently exists on the Internet.'

Richard Ellis, communications director at the PRCA, adds: 'A thriving press is in the PR industry's best interests and we respect existing collecting schemes and the use of paywalls.

'Our issue is with the structure and terms of this new scheme. We do not believe our members need a licence to receive an email containing a link to a website. This proposal puts the fundamental right of users to freely browse and share publicly available content on the Internet at risk.'

Unsurprisingly, Meltwater has a similar view, arguing that the seismic change in the media landscape over the last few years has profoundly changed the way publishers report and created a really challenging time for newspaper publishers.

Rather than add to their pain, it claims to want to work with them to create a 'symbiotic relationship' whereby its service continues to drive customers and readers to newspapers' websites, adding to the page views that drive and sustain advertising rates.

The NLA's scheme, it adds, is potentially harmful to the newspaper industry, with its requirement for end users to pay simply for a link to be sent to them being likely to significantly reduce traffic to publishers' sites, as well as going against the basic principles and fair use of the Internet.

Director of business development Jens-Petter Glittenberg, says: 'Our Meltwater News service is in no way substituting publishers' websites. We simply provide our users with hyperlinks to relevant content on these websites.

'We are not news aggregators. We do not store any content, but analyse content. We do not distribute articles themselves, but drive traffic to content that is on a public, free-to-access website.

'We also respect paywalls and do not enable end-users to bypass paywalls but instead direct them to the paywall where they have the option of paying a one-off fee for that particular article or paying a subscription.

'This is the case, for example, with the Financial Times, with whom we have in place a mutually-beneficial media partnership and act as an extension of their sales and marketing teams.'

It is tempting to dismiss both sides' rhetoric as subjective claims to support arguments that only the courts can determine but at least some of it is having an effect in the battle for hearts and minds.

One major City financial PR agency contacted for this article estimated that if the NLA wins the case and implements its online licences, its current annual bill of £500,000 for media monitoring will rise by one-third.

That's nonsense, says NLA managing director David Pugh, stating that the average online fee among the 400 clients who have registered for the new licences amounts to just £450 a year.

he licence fees are variable to reflect usage and size but Pugh says the highest so far costs £20,000, while the lowest is £58.

By way of comparison, the average NLA licence for print copies is £2,500 and he says that only a couple of organisations pay fees that run into six figures.

'Anybody in any doubt about what it might cost to have a web licence can give us a call or use our self-calculating website to find out,' says Pugh.

'Meltwater would have to pay a fee of £10,000. Meltwater is a $100 million turnover business with something like 2,000 customers in six countries. It seems reasonable that they should have a licence to use content that's subject to copyright, just as their competitors are prepared to do.'

The Meltwater/PRCA camp retorts that the NLA's current figures are misleading, claiming that the proportion of the media monitoring value chain that will be accounted for by licences is set to increase from an initial 16 per cent to 17 per cent of revenues to 60 per cent to 70 per cent within four years.

Reserving judgement

Others are watching with care. Chartered Institute of Public Relations president Kevin Taylor said 18 months ago that proposed NLA charges were 'nonsensical' but the organisation's new chief executive Jane Wilson says she is taking a balanced view and her members will respect the court decision.

Jerry Ward, managing director of news monitoring and intelligence agency Press Data, says he has no objection to online licences in general but believes the NLA does not currently have the right model. Ward also observes that Google is not covered by the proposed tariffs, though it is the biggest free news aggregator.

'This issue reflects the enormous success that some organisations have had in generating revenues from the Internet,' he says. 'But it has created this problem.'

Jeremy Thompson, managing director at Durrants, which has signed up for the NLA's new online licences, says he recognises that newspapers are struggling to monetise their online content and is happy to pay to distribute the material.

However, he disagrees with the NLA's proposal to require end users to pay for online licences, arguing that newspapers should not have the right to charge people for reading information that they could access without charge on the papers' own websites.

'I suspect that the High Court will allow the NLA to issue licences to media monitoring agencies but not to end users,' he says. 'The NLA's licences are very complicated and not very well set up. If they started from scratch, they would probably do it differently. You could collect more money from aggregators and spare the end users.'

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