Part 1: General context

Is there a crisis in commercial news sufficient to merit intervention?

A majority felt that there were indeed significant difficulties in the commercial news industry. This is despite the fact that there is significant amount of money flowing into commercial news, for example to Buzzfeed and Vice News, and there have been significant mergers and acquisitions. It was argued that the existence of such investment does not necessarily rebut the idea that there is a crisis in the sector. This is because an influx of venture capitalist money, and the like, does not show that profits are being made. All it shows is that some investors think that profits may be made in the future.

It was also generally accepted that there was a need for commercial journalism in a democratic society. The fact that commercial journalism does not require subsidy helps protect the independence of its editorial line. It complements the subsidised journalism of the sort produced by the BBC – which is valuable, but not enough by itself for society’s needs.

However, some argued that it would not be damaging to democracy if some popular products of the commercial news industry ended, such as lifestyle supplements. The democratic case for intervention should not be confused with the commercial interests of news publishers. Moreover, it was argued that the audience might consider it good that the news no longer makes the very high levels of profit it did in the 1990s.

Against this, others said that it might indeed be bad for society if the commercial media were unable to use lifestyle content and the like to attract people’s attention for other material of more salience to democracy. Similarly, it was argued that society may suffer in the long run if the news industry is unable commercially to produce content.

Reasons for the crisis

The origins and nature of the crisis were discussed. It was observed that there are empirical studies that establish these sorts of phenomena, and their effect on revenues. These changes are likely to be permanent.

One significant feature was said to be that technology can provide advertisers with a much more efficient means of delivering advertisements than that offered by the news industry.

Another source of difficulty was said to arise from the unbundling – facilitated by technology – of the package of information contained in a newspaper. Technology increases the ability of people to select what to read, without being exposed to different types of content bundled up with the material they choose. This prevents the cross subsidisation of less popular by more popular content.

Other difficulties identified included changing habits of reading news, and generational changes in attitudes to news consumption.

It was also observed that the barriers to entry to the news publication market are now low, as it is no longer necessary to purchase a newspaper printing plant and distribution network to compete with news publishers.

An argument was advanced that any revenue derivable from copyright was unlikely to be enough to resolve long-term, structural and fundamental problems such as these. This could be proved by empirical work to establish the level of the financial difficulty facing the commercial news industry, which could be contrasted with the amount of any potential revenue a copyright intervention may create.

On the other hand, others observed that even if copyright wouldn’t provide enough revenue to resolve the difficulties facing the news industry, it would likely help. It should be seen as an ‘and-and’, not an ‘either-or’. Newspapers are not looking, it was said, for a magic bullet, but for help in areas that are ‘leaking revenue’.

Should one intervene to benefit the incumbents?

It was questioned whether there was sufficient reason for intervening in general to protect incumbents – the old news publishing industry – when this is likely to damage new entrants.

Against this, it was argued that the difficulties posed by the new environment are shared both by incumbents and new entrants. Intervention, it was argued, won’t disproportionately benefit established players, but will benefit both, given that they both face the same troubles. Ad blocking was mentioned as an example of this, as it was said to pose more of a threat to new entrants than it does to incumbents, who tend to have deeper pockets to weather the difficulties it creates.

It was also questioned whether any copyright intervention would comply with copyright law, given CJEU judgments such as Svensson (Svensson v Retriever Sverige AB C-466/12, [2014] Bus LR 259, [2014] ECDR 9). This was discussed later, as described in part 2, below.

Ad blocking

There seemed to be consensus that part of the problem highlighted by the development of ad blocking was bad quality advertising – if readers liked advertisements, they wouldn’t feel the need to block them.

Some thought the rise of ad blockers might be beneficial for the news industry. This is because it might cause prices to rise for good ads that get readers’ attention. Others thought this unlikely.

Some held that ad blocking is a publisher problem, not a problem for advertisers. This is because there is no charge to advertisers if ads get blocked, so it is less of a financial burden on them. The financial cost is borne by publishers, who suffer a diminution in their revenue.

It was observed that as a business model, ad blocking is open to abuse – the blacklisting and whitelisting of adverts can amount to something akin to extortion.

Some suggested that technological countermeasures could be an answer, but others thought they didn’t get to the kernel of the problem: unattractive adverts. Moreover, in the past in other areas, technological countermeasures haven’t proved to be effective, so there is reason to be sceptical that they will be effective here.

This led to a proposal that a solution should be to make the total product of the publisher – both content and advertisements – more attractive to audiences.

Aggregation

It was suggested that a significant cause of difficulty for news publishers has been the development of aggregators. This was argued to be the case, because aggregators exploit the content of news content producers without incurring the costs of generating that content: the charge being that of free riding.

Some disagreed with this analysis. First, they observed that many ‘free to air’ aggregators do not make money from advertisements placed against news: more lucrative adverts are those placed against search and social media. If that is true, the argument went, it is not accurate to say that aggregators divert advertising funding from news publishers. If mere aggregation is not lucrative, the charge of free riding is not established.

This was countered by the argument that, even if aggregators do not divert advertising revenue, they divert audience attention. And this attention has a significant financial value to aggregators and news publishers.

Second, it was argued against the case of free riding, that some publishers actively seek out aggregation and the like as a means of disseminating their content. Not everyone sees aggregation as a zero sum game, where one group benefits, and others lose. Reference was made to the argument that aggregators drive traffic to news publishers’ sites, as – it was argued – is evidenced by the Spanish experience. This was discussed in more detail later. But it was mentioned that when Google withdrew Google News Spain, the evidence seemed to show there was a significant decline in traffic to publishers’ sites. Hardest hit were the smaller, less well-known news publishers.

Against this, it was observed that some empirical studies show there to be very low levels of traffic driven to news publishers, in comparison with the traffic drawn to news aggregators. Some studies were cited that showed it to be as low as 5%.

Moreover, brand loyalties seem to be less fixed than in the past, which exacerbates the problem, as people are less likely to seek out content published by a news brand they follow, but just rely on aggregated news.

Even if, which some present did not admit, the case of free riding is not cogent, it was observed that there were other problems with aggregators. One is that they facilitate the disaggregation of content. This makes is difficult to sell the bundle of content that comprises a traditional newspaper. Bundling of content is useful in economic terms, because the popular content subsidises the generation of the less popular but more worthy content. It is also useful socially, as it means people get exposed to material they might not seek out, but which is beneficial for society for them to know.

Some argued that this observation means that the most likely route to success for commercial news publishers is to reconnect popularity with success, and to deliver a popular bundle of content for which people are prepared to pay.

Content farms

Content farms, which copy content wholesale and reproduce it with new advertisements, were described as a significant concern. Some of these were abroad, notably in the Ukraine.

Even within the UK, there is evidence of widespread and extensive republication of content from news publishers’ sites. But some doubted whether these activities, while to be deprecated, pose a systemic threat to the industry.

Moreover, it was argued that copyright as it already exists could be used to restrain this sort of action. The existence of content farms does not, by itself, suggest that copyright law should be altered. That said, it was observed that there were significant difficulties in bringing copyright actions, and enforcing them, against content farms.

Search

Some highlighted a problem for news publishers that arises from Internet search engines. The process of search frequently entails the complete copying of material on websites, as this is required for the preparation of the indices used by search engines.

This is not necessarily published, so some questioned whether this reading and copying by a machine caused harm to news publishers. Others observed that the mere coping of the material by itself presented problems, and also expressed concerns about how the copied material might be exploited in the future.

Social media and mobile

It was observed that aggregation is no longer the only, or even the most significant problem from the point of view of news producers. Social media is increasingly the means by which people find their news. Moreover, mobile viewing of news is more important than desk-top viewing. Publishers of news who, in the past, have attempted to grapple with making money from news in the open web, have been hamstrung by this move to the closed web. Their techniques for existing on the open web work less well where social media is an increasingly important portal for attention.

Subscription and sales as a source of revenue

Subscription and sales as a source of revenue were discussed. It was reiterated that one solution is to have an attractive bundle of content for which people would pay commercial rates. The link between popularity and financial success should be re-established.

Counter arguments were advanced. Some thought this only viable for specialised, and in particular financial news. Some that technology has facilitated the unbundling of news, and it is difficult to put that genie back in the bottle. Some, that it was difficult to establish what ‘popular’ is in this context – whether it’s a broad but shallow engagement, or a narrow but deep engagement.

It was suggested that a fundamental problem could be that – as has been shown by empirical research – consumers are frequently not prepared to pay for news. The evidence also shows that while people read news out of interest, there is little evidence that they would pay if they could get it for free. This is particularly true of younger people. However, the methodologies of the studies that arrived at this conclusion were questioned.

The ready availability of news from other sources, such as the BBC, was identified as a problem for those who sought subscription revenue. It was noted that the BBC could offer material to local publishers, and this could help commercial news publishers. Others felt this was a form of subsidy, and as such did not resolve the core problem of how to ensure the independent viability of commercial news.