Those Who Can't Innovate, Litigate

Looks like the Associated Press is the next in a long line of content providers who are finding it difficult to cope in the digital world. Quoted as being "mad as hell" about people linking, summarizing, or outright reproducing AP stories, it appears that they're going to start up the litigation machine to force aggregators to license AP stories.

Google has entered the foray with its own response from CEO Eric Schmidt. At an annual conference of the Newspaper Association of America he stated, "One of the fundamental problems with the Internet is that it doesn't respect traditional scarcity structures. It's very hard to hold information back...There's always a tension around fair use. Ultimately fair use is a balance of interests in favor of the consumer."

And that's where past business models begin to break down. It used to be that the media used to disseminate information was the barrier to sharing information. If you go all the way back before the advent of the printing press in the early 1400s, information was quite scarce and valuable because it was costly and time consuming to reproduce in print. Gutenberg turned the world upside down with the ability to reproduce works in a relatively quick manner, but it still required skill and capital to do. The Internet has been exponentially more impactful because reproduction requires no skill and almost no cost to do. It is as simple as a few key strokes and mouse clicks away.

Jason Holtman, director of business development and legal affairs for Valve Software, is quoted as saying:

There's a big business feeling that there's piracy, but the truth is: Pirates are underserved customers. When you think about it that way, you think, 'Oh my gosh, I can do some interesting things and make some interesting money off of it.'

It's those kinds of attitudes that find solutions to aging business models.

Eric Schmidt, in his aforementioned keynote address said that the presentation of news is so much better in print than it is online.If the AP start looking at the content as a commodity (which the Internet very well has made it), and now look at innovative ways of delivering it, then they can find new ways at monetizing it. Going to any print news outlet and reading its online equivalent is dramatically inferior inn both quantity and quality. How about improving that experience? For all those ever-increasing Kindle owners, why not create a subscription service to take advantage of the e-ink devices out there? Why not incentivize, instead of penalize, aggregators and site owners who drive people to your site?

There are no easy answers, but this much is clear: if the AP intends to pursue legal recourse for what they perceive is theft of content, perhaps they ought to ask the Recording Industry Association of America how well that has worked out for them. Those who cannot innovate, it would seem, litigate--and that itself is not a successful business model. Again, Eric Schmidt: "Think in terms of what your reader wants. These are ultimately consumer businesses. If you piss off enough of them you will not have any more, or if make them happy, you will grow them quickly."