It’s No Longer ‘Content Is King’ But Instead ‘Ownership Is King’

Philip M. Stone November 16, 2007

CNN International has announced it has taken the near $10 million that Reuters wanted for its various services and has used that money to expand its own reporting structure. What it has done is give up an organization with 2,400 editorial staff in 196 bureaus in 131 countries in order to add 15 to 16 correspondents to its existing staff of 150, plus develop some of its digital infrastructure.

At first glance that doesn’t look like such a good “value for money” decision, but there is a big philosophical issue at stake here – by expanding its own news gathering opportunities CNN can use that material for whatever new media (digital) uses it can imagine, whereby if it uses agency material then the agency wants a say (translate: more money) for usage that goes beyond 30 days or on venues other than the television network.

Tony Maddox, executive vice president and managing director of CNN International, made clear the reason behind CNN’s expansion. “This is all about owning more content; these new resources will have a huge impact across all of CNN’s networks and platforms. Owning the content we broadcast, publish and make available to affiliates and other platforms is the backbone of this business. This multi-million dollar investment in staff and resources (will) give us the power to move swiftly into developing new business models.”

And the fact is that even in giving up paying for Reuters, CNN has shown it is not without Reuters access. On several breaking news events such as the demonstrations in Burma (Myanmar) CNN was extensively quoting Reuters.com, available to everyone for free on the web.

It’s that last point that really must be giving Reuters media executives some headaches, and it is something they are closely studying. Reuters, and other agencies, are trying to get the best of both worlds – charging their traditional wholesale clients a lot of money for their text and pictorial production while at the same time trying to make a bundle of money by placing much of that information free on its own advertising supported web site.

It’s a wonder that many other news organizations haven’t made the same decision as CNN – save the money but still have access to agency material via information available for free on the web.

Apart from the time element – just how quickly does Reuters’ own news appear on its own web site, how quickly does AP and AFP show up on Google under their new Agreements – the copyright lawyers will jump up and down about using such usage and usually at the end of each story there is a strong copyright notice warning of dire consequences if copyright is violated.

But as those copyright lawyers well know, you cannot copyright facts, only the way the facts are written so enter the rewrite desks,  and if a television network takes a headline and credits it to the news agency as it straps it at the bottom of the screen  is that copyright violation?

And it gets even more onerous for the news agencies if their news copy is actually translated into a foreign language – do copyright rules still apply?

It was about 10 years that Reuters led the way in the agency world by deciding it was no longer going to “sell” its various news products. It was going to “rent” them instead. In the past a user of news agency material could use that material whenever and however they wanted. Pictures, for instance, went to the photo archive to be used at will at any time. But the new Reuters policy was that material could be used only for a limited amount of time, and any usage after that would require further payments. And it was for use only on the primary function of the client – in CNNs case the TV network --- and if CNN wanted to use that material for mobile phone projects or other since digital products then there would be more to pay.

So the problem for CNN was not that it didn’t have the content – it did – but rather what it could do with that content. So it made the decision to dump Reuters, rely upon the AP as its primary news source, and then take the money it saved from Reuters and invest it into its own material. Sure, not nearly as much material as Reuters would have provided for the same money, but at least the material was its own. It could do what it wanted with that material, when it wanted, and no additional payments to the supplier.

The cry in the old days used to be “Content is King” but  in today’s new media world the cry really is “Ownership is King”.

In a previous life this writer ran Reuters media business in Europe. At that time Reuters was really trying to build up news sources  for its news archive (Factiva is now owned 100% by Dow Jones)  and there was a huge campaign to get Reuters media subscribers to allow their material to be stored by Factiva. Most saw this as an added way of gaining additional revenues and there weren’t too many issues, but the head of one European news agency was adamantly against doing so even though most of his colleagues had signed such agreements.

At a memorable lunch hosted by Sir Peter Job, the then managing director of Reuters, to mark the renewal of  text news contracts with many European news agencies, the “dissident” news agency director decided to make his point. In replying to Job’s welcoming speech, the agency director lectured on how “Content was King”, how opposed he was to what the other national agencies had done in giving Reuters the right to store their material, and by golly there never would be such an agreement signed by him. A couple of senior Reuters executives at the table tried to dissuade him, but there was nothing doing. He knew what his content was worth and he wasn’t about to let others make money off it – at least not for what was currently on the table. He understood it wasn’t just the content, but it was ownership, too.

(As an aside a few months later he did in fact sign an archive agreement for the same amount that had been on the table beforehand. What persuaded him? He was told, “Give it a try for 60 days, if you’re unhappy with the revenue you’re making then we’ll stop the contract.” In those 60 days he was happy with the revenue and that was that and the agency’s material is being filed daily into Factiva to this very day!)

In an early tug-of-war between the wholesale and retail business, when Reuters introduced its SportsWeb site in the 90s which contained just all about all the sports news Reuters produced, the European news agencies were not happy. They asked quite reasonably why they should be paying so much for Reuters text services when the sports (at least 15% of the total news flow) was available for all to see for free on the web with less than a two-minute delay. Eventually a settlement was reached but it was an early warning that wholesale and retail could have great difficulties living together and it is a wonder there have not been more such complaints by the wholesalers as time has gone on.

The fact is that a business model that might have worked 10 years ago doesn’t necessarily work today. For the news agencies, always looking for new revenue streams, CNN has fired a broadside that should make clear that business as usual between client and supplier has undergone a fundamental change, and business models need to change, if for no other reason than the client, CNN, is also looking for new revenue streams, too. 

And for how long can a news agency really keep a foot in the wholesale and retail side of the business?  How long can the “best of both worlds” continue? No doubt the Reuters accountants have their forecasts for what they project from their digital projects including reuters.com for the next five years and the big question becomes just how onside can the company keep the wholesale part of the business during that time that the digital side grows?

ftm Follow Up & Comments

Post your comment here