News companies have notched a victory in their long running push to charge digital aggregators for curating their content. On Wednesday, licensing service NewsRight announced a deal that could be the first step in creating a major new revenue stream for companies like the New York Times (NYSE: NYT) and the Associated Press.
The deal in question involves a news monitoring service called Moreover which will pay NewsRight to license the content it now scrapes on behalf of its clients. NewsRight will in turn distribute the revenue to the 29 news firms that are its shareholders.
Financial terms were not made public but the parties say that Moreover will pay to receive a steady stream of licensed content along with customized analytics into how that content is used. It’s up to Moreover to decide how (or if) to pass the additional costs along to its clients.
The primary significance of the deal, however, is that it opens the door for NewsRight to approach other companies that use news as part of their operations. In a phone interview, CEO David Westin said there are a hundred or so other companies like Moreover that monitor and compile news clips for governments, corporations and other clients.
“If we are able to apply this throughout the subscription aggregation market, it will make a significant difference to the news industry,” said Westin.
While these modern day clipping services may represent a multi-million dollar market, the real white whale for NewsRight is likely to be large aggregation-based news services like the Huffington Post or Business Insider. Westin said NewsRight expects to announce a deal in another sector in the next 60 days, but would not say if it is a Huff-Po type business or another industry entirely.
While the Moreover deal is a definite win for old-line news agencies, the way forward is far from smooth. If NewsRight is overly aggressive about its licensing demands, it risks incurring a public relations blowback like the one faced by Righthaven, the ill-starred copyright troll.
Likewise, there are legal uncertainties surrounding just when a curator must pay to license a news story. While news companies won a UK decision that forced a company called Meltwater to license headlines, such a broad ruling is unlikely in America where the law of fair use is much stronger. In fact, Meltwater is now fighting the AP in New York over whether AP news snippets are covered by copyright and the “hot news” doctrine.
NewsRight has said in the past that it is not a “litigation shop.” And the organization is also carrying several carrots to go with its copyright stick. The most tempting of these appears to be an analytics tool that will help aggregator clients not just track stories, but discover how many people are actually reading a story (such a tool could be valuable for companies trying to calibrate a PR response to a negative story).
Westin added that a NewsRight license also provides clients with a wire-style news feed that makes it easy for them to identify and share the original source of a story that goes viral.
News companies will be watching closely to see if NewsRight represent a long-awaited new revenue stream to fund journalism — or if it will instead represent what critics have said is an ill-fated overreach.
Here’s a list of the companies that own a stake in NewsRight: Advance Publications, The Associated Press, Axel Springer Group, A.H.Belo Management Services, Belo Management Services, Business Wire, Community Newspaper Holdings, El Dia, Galveston Newspapers, Gatehouse Media, The Gazette Company, Hearst Newspapers, Journal Communications (NYSE: JRN), Landmark Media Enterprises, The McClatchy Company (NYSE: MNI), Media General (NYSE: MEG), MediaNews Group, Morris Communications, Morris Multimedia, NPG Newspapers, The New York Times Company, Ogden Newspapers, Pioneer Newspapers, Schurz Communications, Scripps Media, Stephens Media, Swift Communications, Times Publishing Co. and The Washington Post (NYSE: WPO) Company.