Former US Appellate Judge Richard Posner suggests on his blog that linking to copyrighted material should be outlawed. He says that is what is killing the profits of newspapers.
The crux of Posner’s blog argument is: "Expanding copyright law to bar online access to copyrighted materials without the copyright holder’s consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder’s consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion."
In 2000, Posner retired as Chief Judge of US Court of Appeals Seventh Circuit in Chicago. He now is a Senior Lecturer at the University of Chicago Law School. It is rumored that Posner was once considered a potential US Supreme Court nominee.
According to ex-Judge Posner his quote above would be illegal under his version of the copyright law. The really silly part of the ex-judge’s idea is he uses "TrackBack" feature on his blog. So in effect Posner is trolling for folks to link to his blog. Well it worked. Both TechCrunch and DailyKos picked up Posner’s blog and gave him far more coverage than he would have otherwise ever received.
Posner is not alone in wanting to ban linking. The Associated Press has a long history of charging a fee to nearly every news media outlet for linking to their articles. Earlier this month, they took on Drudge Retort for linking to their stories. Drudge Retort’s readers comments also used short quotations from AP. Drudge Retort is doing nothing different than what Digg, TechMeme, Mixx and dozens of other sites do. It is something the Internet community views as a helping hand, rather than a violation of a companies policy.
So what started the now-university-lecturer Richard Posner, on this quest to save newspapers by banning linking? We will speculate on some of the possible reasons.
First, is the high profile position of the Associated Press. Then, there is the well known history of newspaper management not changing their business plans as more and more people prefer to have the convenience of having the news on-screen.
Next is the supposed financial end of the world for newspapers. However, if you do some serious research you will find that there are about 1,400 newspapers in the US. Of those, the vast majority are still profitable. The major high-profile newspapers which have problems making money are often highly leveraged because of buyouts during the “buy up everybody” phase prior to the most recent world recession.
Between 2006 and 2008 newspapers had a 23% loss in advertising. That was their main source of revenue. The other big problem large newspapers have is they own a lot of real estate which has lost value. However, the majority of newspapers remain profitable, although not nearly as profitable as they once were. Some companies must make a profit to stay in business, others to pay off lenders (who are paid from operating profits). It is also important to sustain shareholders to slow the damage to stock price and company values.
Consider the local Chicago newspaper business world. As the old adages say: “All politics are local” and “Follow the money”. Posner lives in the Chicago area, and he probably reads the Chicago Tribune. "The Trib"(like McClatchy) is one of those highly leveraged newspapers.
The Trib has a special place in the infamy of leveraged newspaper buyouts. In December 2007, then US FCC (Federal Communications Commission) Chairman Martin spearheaded the lifting of rules regarding joint ownership of newspapers and TV stations in a local market. This allowed Chicago real estate magnate Sam Zell to buy the Chicago Tribune media empire for $1.6 billion (USD).
In early December 2008, Zell, publisher of the Chicago Tribune and the Los Angeles Times, filed for Chapter 11 bankruptcy protection. He loaded up the privately held publisher with about $8 billion in additional debt when he took the company private in a transaction largely financed by company contributions to an employee stock option plan and borrowing from future pension contributions. The Tribune which also owns the Baltimore Sun and the Orlando Sentinel newspapers, had $7.6 billion in assets and $12.97 billion in debt as of December 8, according to the bankruptcy filing. Additionally, the Tribune owns 23 television stations and the Chicago Cubs baseball team. In January 2009, Zell and the Tribune media empire sold the Chicago Cubs for $900 million.
So, Posner is probably watching his home town newspaper have huge financial problems. Obviously, the solution for ex-Judge Posner is to change the law so the newspapers get special treatment. Thereby, probably increasing the profits that most US papers already pocket.