Proposed newspaper content licensing fees not wholly 'reasonable', Tribunal rules

Out-Law News | 16 Feb 2012 | 12:02 pm | 6 min. read

Business customers of online news clippings services will pay a lower fixed price licence to access newspaper content via those providers following an interim ruling by the Copyright Tribunal.

The Tribunal ruled that those 'web end users' should pay rates beginning at approximately 40% cheaper than the Newspaper Licensing Agency (NLA) had proposed.

The NLA plans to start charging "commercial end users" of Google News and Google Alerts, the Tribunal said.

Clippings service Meltwater, supported by the Public Relations Consultants Association (PRCA), took the case claiming that NLA charges for use of newspaper content were not reasonable.

Meltwater technology scans newspaper websites for words that clients ask to be notified of so that they can track the news on certain subjects.  It sells its services largely to PR firms who monitor news coverage related to issues or clients' businesses.

Last year the UK Court of Appeal ruled that the material on newspaper websites was protected by copyright and dismissed counter arguments made by Meltwater and the PRCA that exceptions to copyright law applied. The ruling meant that users of a clippings service must have a licence from newspaper publishers to click on links taking them to newspaper website pages to avoid infringing the publishers' copyrights.

The Tribunal had assessed whether the NLA's proposed licence terms were "reasonable" following this ruling.

The Copyright Tribunal reviewed the fairness of the licensing terms NLA offered. Meltwater had argued that the terms of NLA's licence constituted "unreasonable discrimination" because the trade body did not licence Google's news and alert services at all. It said that its customers should only have to pay "nominal" fees to the NLA as a result.

Under the Copyright, Designs and Patents Act (CDPA) a Copyright Tribunal is obliged to "have regard to the availability of other [licensing] schemes, or the granting of other licences, to other persons in similar circumstances, and the terms of those schemes or licences" when determining whether a licensing scheme or licence in question is "reasonable". The Tribunal has the power "to secure that there is no unreasonable discrimination between licensees, or prospective licensees, under the scheme or licence to which the reference or application relates and licensees under other schemes operated by, or other licences granted by, the same person," the Act states.

In assessing what fees were reasonable the Tribunal considered that Meltwater's business was in some ways "comparable" to that of press cuttings agencies (PCAs) and news and alerts services offered by Google. Google offers its services to consumer and business users for free, but PCAs charge businesses to hand-select articles they would be interested to access. However, whilst there already is a licensing system to obtain royalties from end users of PCA services, there is no such system in place for business users of Google News or Google Alerts.

The Tribunal said it would have been "unreasonably discriminatory" to charge Meltwater customers a fee that would "cut down drastically the number of links they send to their customers, for example by introducing a human cross-check of the kind offered by PCAs, without imposing the same thing on Google".

"We believe a significant reason why Google is not being made subject to a licensing scheme like the one before us is simply because the newspapers do not wish to take it on, despite the fact that it is using copyright material in exactly the same way as Meltwater. That is not a good reason for ignoring Google as a comparator altogether," it said.

It was also not right to force Meltwater customers and other 'paid for web aggregators' to pay the same as customers of PCAs because of the differences between the way the services work, the Tribunal said.

The Tribunal also said that a "material consideration in assessing a reasonable fee" was that most newspapers provide free access to their copyrighted content on the internet with only select publications using pay-walls and other systems to restrict that access.

Because PCAs and their customers are subject to NLA licences in the same way as Meltwater and its customers are the Tribunal said the rates regime had to maintain an element of "media neutrality". Whilst the Tribunal has set fixed-rate tariffs that were lower than that asked for by the NLA,  the NLA's proposed variable rate by which licensees are charged per link has been maintained.

"The overriding reason to take this course is to seek to achieve a fair result for the PCAs and to preserve the NLA’s entirely proper income stream from the PCA business. We perceive that existing business is largely conducted on the basis of the variable rate, i.e. a price per link and there is every reason not to interfere with it," the Tribunal said.

"We believe the [NLA's licence] scheme should have a fixed rate tariff available within it but it should be one which recognises the reality of the paid for [online media monitoring] market. Some licensees under the [NLA's scheme] charge their clients a flat fee regardless of the number of snippets provided. The service provided is not like the hand picked service of a PCA, it is a service in which not every link will be selected and clicked through to the newspaper’s website. Many links sent will be irrelevant and so the newspaper is not really losing a customer in such cases," it said.

In a statement David Pugh, managing director of the NLA, said the Tribunal's ruling confirmed the legality of its licensing.

“We are pleased that the Copyright Tribunal has upheld the principle and structure of our online licensing scheme, and confirmed that Meltwater is subject to the same requirements as media monitoring organisations’’.

“The judgment provides a measured, equitable regime that will ensure stability for both publishers and end-users alike: our customers will benefit from a transparent licensing structure and newspapers can be sure of a fair reward for their content,” Pugh said.

The Tribunal rejected Meltwater's claims that if it operated a 'headline only' service then its customers would not need a licence from the NLA. However, the Tribunal said that Meltwater was trying to argue a point it had previously lost in the Court of Appeal. The Court had said that headlines were copyrightable. The Tribunal said the fact a 'headline only' service may constitute less "usage" of copyrighted content than other services was a "less important factor" in determining the rate that would be due.

"End users of a headline only service should enter into the WEUL just like end users of the normal Meltwater News service of headlines plus extracts and should be subject to the same tariff rates. The reason for this is that a point which we have decided in Meltwater’s favour on the issue of the appropriate rate for the normal Meltwater News service (inc. search fee), operates against setting a different rate for a headlines only service," the Tribunal's ruling (66-page / 493KB PDF) said.

"The rate is a rate to give the copyright owners a fair share of the revenue generated by this service, which is indeed based on their copyright work but does not scale directly with the volume of copyright 'usage'," the Tribunal ruling said.

"Our decision in relation to Meltwater’s headline only service is that we reject the argument that requiring end user licensing under the WEUL, and at the same rates as the WEUL, is unreasonable. If Meltwater want to offer a headline only service to their end users they are free to do so but the service must be licensed in the same way as the headline plus text extract service," it said.

Meltwater said that whilst it was pleased that the ruling had "slashed" the licence fees that NLA had initially proposed, it said UK copyright laws need to be changed to reflect the digital age.

"It is clear that UK clients of online news monitoring services will need a license agreement with the NLA and pay copyright fees. This is also the case for commercial UK clients of any news monitoring vendor including Google News. During the proceedings, the NLA stated that it has been mandated by its owners and intends to pursue licensing of UK business users of Google News," the Meltwater statement said.

Meltwater has also issued a statement to issue its "surprise" at the news that news agency Associated Press (AP) has launched a lawsuit against it in the US. The company said that AP may have misunderstood the service it provides and that it was "confident" what it does complies with US copyright law.

AP has referred to Meltwater as a “parasitic distribution service" and said it had “built its business on the willful (sic) exploitation and copying of the AP’s and other publishers’ news articles for profit," according to a report by Reuters.