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Not since the arrival of the printing press in the 15th century has the publishing world gone through such profound change. Before the invention of the printing press, it might have taken a year or more for someone to hand copy a Bible. With the Gutenberg press, it became possible to create several hundred copies a year. Works that once circulated only among a privileged few could now be copied and distributed and put into the hands of ordinary people.

Now the Internet and digital technology are once again wrecking the old, tried-and-true business models. With the push of a button, news articles, books, and even entire libraries can be copied and distributed throughout the world in seconds.

"One problem it (the new technology) is creating is it makes it more difficult for publishers to protect their work product, their intellectual property, particularly their copyrights," says Chad Milton, senior vice president, national practice leader for media liability with broker Marsh & McLennan. "The stuff is so readily copyable by others."

Like the music and movie industries, publishing is facing a big challenge as a result of new technology.

"The thing that joins all of those three industries is that their worlds are being rocked, in different degrees, by digitization of technology," says John Palfrey, executive director of the Berkman Center for Internet and Society at Harvard Law School.

INTELLECTUAL PROPERTY

Copyright laws are part of a larger body of laws that are designed to protect intellectual property, including trademarks and patents.

"The core is purely economic," says Ken Richieri, deputy general counsel for the New York Times Co. "It is to incentivize people to create works of arts; as well as inventions, which are patented, and to market them under unique brands, which is trademarks. That's what the IP laws are designed to do. That principle is something that made sense in the 1700s, and it makes sense now."

The original Copyright Act granted authors 14 years of exclusive control over their works. The term has been extended--it is now life plus 70 years for individual authors and 95 years for corporations, according to "Copyright and Digital Media in a Post-Napster World," a white paper put out by GartnerG2 and the Berkman Center.

Although copyright laws have long been used to protect works of art, music and writing, the law also allows for fair use of the copyrighted works, so that the public interest also is promoted.

This has raised questions, however, about what constitutes fair use. It's one thing to make a copy of a song and give it to a few friends. But when Napster turns everyone with a computer into your closest friend, then technology has destroyed the limiting principle that made copyrights work, Richieri says.

The recording industry may have won its fight with Napster, but it faces even more difficult challenges with newer versions of file-sharing software that allows users to swap hundreds of songs and which aren't as easily contained.

And as ever-higher-speed Internet services make it possible to transfer not just short clips but whole movies over the Web, the film industry is facing a similar battle as the music companies before it.

In the publishing industry, the battles are just beginning because things like blogs, podcasts and RSS (Really Simple Syndication)--a format for distributing and gathering content from sources across the Web--are only just catching on with the general public. And as the technology advances and use of it becomes more widespread, expect more lawsuits.

The Authors Guild, for instance, has filed a suit against Google claiming massive copyright infringement because of Google's plans to copy all of the works in several major libraries. Google plans to copy the works and then make snippets of them available to the public over a searchable database. The authors say it is not right for Google to copy the works in the libraries without first obtaining the permission of the copyright holders.

The biggest battles, however, are not expected to take place over book publishing because so far e-books have not been very popular with consumers.

BUSINESS MODEL CHALLENGE

The big issue is for newspaper and magazine publishers who are seeing their entire business model challenged.

"Magazines and newspapers are a totally different ball of wax," Palfrey says. "The threat is much more real, and more immediate in both instances. I would characterize it as part copyright-related matter, but it is much more about the extent to which individuals or small groups or nontraditional publishers can put content out on the Internet and syndicate it very easily and cheaply to a worldwide audience in a way they couldn't before," he says.

Because magazines and newspapers are advertising supported, the threat comes not so much from copyright violations, but from competition from online news sources and a shift in customer habits.

"I don't think, as we sit here now, copyright violations on the Net pose the threat to advertising-supported publishers that they have posed to the business models of the music and movie industries," Richieri says.

But, instead of buying the morning newspaper, more people are logging on and checking out the headlines on so-called content aggregators such as Google News or Yahoo and then they are scanning blogs for insight and analysis. Or they are using RSS to set up their own customized home pages.

Many news and magazine publishers have made some of their content available to content aggregators, allowing them to post headlines so long as the links to the full article brings the reader back to the original news site.

The New York Times Co., for instance, sends Google a feed of its headlines. Readers who click on those headlines on Google, however, find themselves redirected back to the New York Times site, Richieri says.

As a result, there is no real copyright violation that is taking place. The problem is not copyright infringement but the technological innovation that has created new competition.

"What it is doing is establishing Google News as a brand, as an aggregator brand that many people are looking to for their news," Richieri says.

These new technologies have created competition for publishers that could take away readership and advertising dollars.

"There's a huge swing in advertising dollars right now," Palfrey says, noting the growing popularity of things like blogs and podcasts. "This is not the hugest business in the world yet, but it's happening."

WHAT'S ON THE HORIZON

What then can publishers do to protect their intellectual property?

Although copyright laws tend to favor the copyright holder, the laws are outdated and have not kept pace with the new technologies.

"The publishing industry is finding out what the music industry found out a long time ago and that is that technology will always outpace copyright law and the ability of copyright law to stop that change," says Mike McGuire, research director with Gartner's media industry team.

There have been some proposals to change current laws to reflect the changes in technology. But there is tension between users of the new technology who are eager to have access to more information and publishers who want to protect their works.

There have been suggestions, for instance, to redefine fair use to make clearer sense of the public's rights, which could be more digital friendly, Palfrey says. On the other hand, courts have also strengthened protections for copyright holders by extending the duration of copyright protections.

Copyright laws may help to slow the digital revolution, but they are unlikely to stop it.

"The point is you don't have a lot of time to fight it," McGuire says. "You fight it too long and you end up missing a business opportunity."

Technology also can be used, not only to copy and distribute works, but to protect them from being copied and distributed. Digital Rights Management, for instance, refers to the use of technology to manage how copyright holders' intellectual property such as songs, movies, pictures and text can be used, according to the Gartner/Berkman Center white paper. Although these technological restrictions can help prevent works from being copied, DRM is not a simple answer either.

"Nobody believes there is a foolproof or crackproof DRM," McGuire says. Even if it were possible, he says, it would then be so onerous that consumers would never use it.

"The notion of investing in better locks is a losing game," he says.

Insurance can be used to protect companies from liability associated with inadvertent copyright infringement. Publishing companies, for instance, sometimes infringe on copyrights and insurance can help protect a firm from the cost of a lawsuit as part of a media liability insurance policy.

In New York Times vs. Tasini, for instance, the newspaper was sued because it had republished articles in electronic databases such as Lexis/Nexis without the authors' permission. Although the New York Times lost that suit, it and other news organizations have adapted by simply changing the language in its contracts with the authors to include that right.

But insurance can do little to protect publishers from the way new technologies are changing their business.

So what to do?

"You get in front of the mob and call it a parade," Palfrey says. "I think there are ways you can adjust what you are doing that will result in an offering that is more in step with what the public is looking for," he says.

Apple Computer Co., for instance, figured out a way to make money off the Internet revolution by developing its iTunes service and selling songs for $0.99 cents each--an approach the music industry had failed to develop on its own.

Some publishing companies have been hard at work trying to find ways to use the technology to their advantage, Palfrey says, while others have their head in the sand and are hoping it will all just go away.

"It's requiring a whole lot of rethinking for anyone who is meaningfully a publisher," Palfrey says. "My guess is some publishers will get it and some won't."

PATRICIA VOWINKEL is a frequent contributor to Risk & Insurance®.

November 1, 2005

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