By: Entrepreneurship & Innovation Clinic Student
News aggregation services that are offered on smartphone applications or internet sites have recently become a popular startup business model. Thanks to open-source publishing platforms and inexpensive internet technology training services, most start-ups launch news aggregation services without much worries about operating cost. Companies such as News360, Flipboard, and News Republic are a few of the successful news media aggregators that began as a startup company and later attracted more than $100 million dollars in investments.
These startups typically provide features such as the ability to link to articles from other publishers and the ability to save the link for offline reading. In most cases, however, the service provides such features without getting any licenses from publishers for news clipping and link sharing.
Copyright of news articles and media content is protected under U.S. Copyright law. The Copyright Term Extension Act of 1998 protects the copyright life of the author plus 70 years. The Act also protects works of corporate authorship 120 years after creation or 95 years after publication, whichever endpoint is earlier. See 112 Stat. 2827. In other words, most news articles published in 1922 are still protected under U.S. Copyright law.
Fair use doctrine may be used to prevent copyright infringement claims. In determining whether the use in any particular case is a “fair use,” the factors to be considered include—(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. 17 U.S.C. 107.
News media aggregators have been relying on the “fair use” defense against claims of copyright infringement on the news articles. Copyright and cyber law regarding published material on the internet has been murky and without clear guidelines distinguishing copyright infringement from a fair use. After the 2013 Meltwater case where the Associated Press brought suit against Meltwater for news clipping and link sharing under copyright infringement, however, news media aggregators have faced difficulty using the fair use defense for providing search and link services. Associated Press v. Meltwater U.S. Holdings, Inc., 931 F.Supp.2d 537 (S.D.N.Y. 2013).
Providing search and link services without a license from the publisher may cause legal problems under U.S. copyright law, but not if a news hyperlink is used. Instead, copyright infringement issue would stem from the display of the headline, lede, and accompanying photos of articles. In the Meltwater, the court held that the Meltwater's copying of headlines, lede, and excerpt along with photos was not protected under the fair use doctrine and it was infringing on the Associated Press's copyright. In other words, using small portions of the lede or pictures from the article or the headline for the thumbnail could be considered a copyright infringement.
Storing the news media contents of other publishers on a server and listing it on a feed for offline reading without a license may also cause a legal problem under U.S. copyright law. The fair use doctrine already failed in the Meltwater case, and would likely fail to defend the business model of storage of offline reading as well.
The U.S. has adopted the “notice and take down” procedure, more popularly known as the safe harbor provision, through the Online Copyright Infringement Liability Limitation Act (1998). 17 USC § 512(c). Section 512(c) applies to online service providers that store copyright infringing material and provides limited liability for such online service providers.
AP and Meltwater settled before the final verdict, and the negotiated license fee was not disclosed. Despite the safe harbor provision under the Online Copyright Infringement Liability Limitation Act, most established online news aggregating companies start to negotiate the license with publishers. For instance, News360 launched the Publisher Partnership Program with 30 publishers, including the Chicago Tribune, CNBC, and Fox Sports.
Mark Potts, founder of Newspeg, said “start-ups are easy to do and very hard to do” as competition is fierce to attract a limited audience. News media aggregator startups try to distinguish their service from others by providing unique features like a customized view with thumbnails or offline reading. However, they must be careful not to ruin their business model after putting all of their effort into it. Conventional news publishers will come and demand their shares on the profit through copyright claims once news aggregating services start to make any profit. Obtaining a license is expensive for most startups. In the end, however, negotiating a license in the early stage may be more economical as a long term business strategy.