Online Payola? Rocking the ASCAP Model

In the retail business, shrinkage — loss to shoplifting, employee pilferage and breakage — runs about 1.5% of sales. Faced with the choice of investing X dollars either to cut shrinkage in half or to build new locations or distribution channels with double-digit growth potential, a retailer’s choice is obvious: controlling shrinkage, while important, has limited bottom-line impact; growing the business is the real opportunity.
 
Newspaper publishers, faced with a similar choice on the digital side of their business, have been stuck on the shrinkage side, complaining about the perceived misuse of their content by aggregators ranging from Google News down to neighborhood bloggers. “We’re mad as hell and we’re not going to take it anymore,” Associated Press Chairman Dean Singleton declared last year. So publishers have turned to content-protection options such as AP’s News Registry and Attributor, which offers “anti-piracy” services by “enforcement experts.”
 
But the loss to content piracy — the shrinkage control opportunity — has been estimated by Attributor’s CEO Jim Pitkow to be about $250 million. That’s about 1% of newspaper revenue — hardly a potential gold mine. It’s worth paying attention to, but why not think bigger, as the retailers do?
 
Publishers also believe in confining news content to tightly controlled proprietary channels such as their own destination Websites and apps, in order to control monetization via advertising and direct user payments. This, too, is a narrowly focused approach that ignores the fact that content atomization means the content must be allowed to find its own audience.
 
Imagine how restricted the income of music composers would be if listeners had to visit the individual Websites of the artists to listen to their work, and pay for it there. Long ago, composers and musicians formed ASCAP (later followed by BMI and SESAC) so they could broadly distribute their music to performance venues, broadcasters and now to streaming services like Pandora, with royalties flowing back to them through these performance rights organizations, which annually collect about $2 billion on behalf of musical artists.

Similarly, the news industry’s focus on controlling access and preventing piracy should give way to the much larger revenue opportunity that can come from allowing unrestricted distribution of content across digital platforms, with methods of channeling payments from users, advertisers and syndicators back to the content owners and originators. With a pricing and payments clearinghouse similar to ASCAP, rather than having to attract readers to Websites or track down misusers, publishers will be able to liberate content to travel the Web in search of readers and still get paid for it.

This new ecosystem of news distribution will entail:

-- Semantic parsing and tagging of content to indicate the topics, people, places and ideas involved in each content unit  — something that’s already possible with microtagging systems including OpenCalais and hNews

-- “Paytags,” as suggested by journalism consultant Jason Fry: “bits of code that accompany individual articles or features, and that allow them to be paid for.”

-- Multiple distribution methods, able to read and process the semantic tags

-- Rights protocols that allow and encourage aggregators and other “re-mixers” to use tagged content on an established revenue-sharing basis

-- Real-time variable pricing algorithms, similar to Google’s AdSense auction, to determine ad revenue shares and content pricing to end users or end distributors

-- An identity-centric, platform-independent digital experience in which users consume content anywhere: mobile apps, Websites, browser add-ons, email alerts, text message alerts, Web-enabled TV, etc., all seamlessly matching user interests, locations and behavioral patterns with relevant content

-- Advertising content attached by the content originator, or added along the way, matched to content tags and user interests, preferences or demographics, delivered to users in a format compatible with the platform where the content is being consumed

-- An ASCAP-like clearinghouse to administer the pricing algorithms and share ad revenue as well as user payments (if involved) between content originators and the ultimate distributors or retailers of the content

Such a system is already evolving, but it needs consensus among publishers and re-mixers on tagging, algorithms and clearinghouses. How could that come about? Well, ASCAP got started in 1914 when Victor Herbert, the composer and an influential voice in the music world, with the help of friends like Irving Berlin and John Philip Sousa, detailed the need and evangelized the solution.

Today, perhaps a few equally influential voices in the news business can champion the next steps toward a digital ecosystem in which any publisher’s content, traveling through a network of aggregators and other re-mixers, can reach any reader, viewer or listener anywhere, on any digital platform, with prices set efficiently and on the fly, and with the ensuing revenue shared back to the content owner.

Martin Langeveld spent 30 years in newspaper management in western New England. He now is a marketing consultant, a principal in CircLabs Inc, a startup developing news discovery tools, and he blogs at NiemanLab.org, where an extended version of this proposal can be found.