UK: Content Wars: Paywalls, Payment, Pay-As-You-Go Or Pay At All?

Last Updated: 8 April 2011
Article by Ivor Drake

The latest review of the UK's intellectual property laws announced by David Cameron in November 2010 proposes to "make them fit for the internet age". The review intends to look at a number of different areas, including, the barriers to new internet-based business models (such as, the cost of obtaining permissions from existing rights-holders). The review is scheduled to be completed by April 2011 and may shape the way the digital media industry in the UK develops with respect to the distribution of data, although previous reviews of the UK's intellectual property laws have had a restricted impact on the digital media industry to date.

A recent case highlights the tension between those who publish articles online and those who provide digital media monitoring services, which has put the focus back on the issue of content licensing and payment for digital content.

Meltwater case – A "Battle Royal"

In the case of The Newspaper Licensing Agency Ltd ("NLA") and others v Meltwater Holding BV and others ("Meltwater") [2010] EWHC 3099 (Ch), 26 November 2010, the NLA (an organisation which represents newspapers and collects royalties from newspaper clippings services) and 6 newspaper companies (the "Publishers") sued Meltwater (a digital media monitoring service which sends headlines, article excerpts and hyperlinks to articles in the form of an email to clients (the "Service")) for copyright infringement. This was on the basis that although Meltwater obtained a licence from the NLA to use the copyrighted information the end users of the Service did not have any licence to receive or use such information from the NLA. So the central question to be decided by the court was whether or not the end users of the Service required a licence themselves from the NLA to receive the copyrighted information contained in the Service.

Of particular importance to the NLA and Publishers was that the Service was a commercial operation as opposed to a free digital media monitoring service (such as Google News) some of which have separate arrangements with publishers for the dissemination of copyrighted information contained in news stories.

The NLA claimed that, in the absence of consent from it, the end users of the Service infringe copyright in the Publishers' headlines, and/or the Publishers' articles and/or the Publishers' databases either by:

  1. receiving and reading the Service and in so doing the end user makes a copy of it, and the copyright material contained in it, within the meaning of s.17 Copyright Designs and Patents Act 1988 ("CDPA"). The end user will also be in possession of an infringing copy in the course of business within the meaning of s.23 CDPA;
  2. clicking on a hyperlink contained in the Service to an article, the end user will make a copy of the article within the meaning of s.17 CDPA and will be in possession of an infringing copy in the course of business within the meaning of s.23 CDPA; and
  3. forwarding contents of the Service to clients an end user will issue to the public copies of the works within the meaning of s.18 CDPA.

The court found that when an end user receives an email from the Service a copy is made on the end user's computer and remains there until deleted. Further, when the end user views Meltwater news via Meltwater's website on screen, a copy is made on that computer. As such a licence to Meltwater to provide the Service might give rise to an implied licence to an end user to receive licensed material, but it could not result in an implied licence to make further copies of licensed material. Therefore, without a licence from NLA, the end users of the Service were infringing the Publishers' copyright in receiving the Service.

The court also examined whether the headline of an article could be protected by copyright. Following the ECJ ruling in Infopaq International A/S v Danske Dagblades Forening (Case C 5/08) 16 July 2009 in which it was established that text extracts as short as 11 words could attract the protection of copyright, Mrs Justice Proudman stated that:

"In my opinion headlines are capable of being literary works, whether independently or as part of the articles to which they relate."

She further explained that following the decision in the Infopaq case, the ECJ had made it clear that originality rather than substantiality was the test to be applied to the part extracted. Mrs Justice Proudman rejected the defendants' argument that a headline was part of the newspaper article and formed a single work and found that, based on the facts, the writing of a headline involved considerable skill in order to entice a reader by informing them of the content of the article in an entertaining manner and is therefore capable of attracting copyright protection.

Meltwater is set to appeal the judgment on the grounds that it "reaches a wrong interpretation of the law". Meltwater contends that the judgement means that simply browsing copyright protected content made freely available on the internet will infringe copyright if it is read without a licence. Secondly, using headlines of an article for bibliographic reference could also infringe copyright.

The decision in the Meltwater case runs in parallel with a claim made by Meltwater to the Copyright Tribunal which will rule on the reasonableness of the NLA's licensing terms for digital media content. Meltwater has challenged the NLA licensing scheme on two main grounds, firstly, that Meltwater's end users should not be required to agree to a licence in order to receive email reports containing hyperlinks to a news article, and secondly, that the NLA's licensing scheme (in relation to fee structure and terms) is unreasonable.

So the "Battle Royal" (as described by Mr Howe QC for the NLA and Publishers) between the parties is set to continue into 2011.

Digital Media Content Revenue Streams

Jeff Zucker (President and CEO of NBC Universal) famously said that "we can't trade analogue dollars for digital pennies" in 2008 and this statement was refreshed by Mr Zucker in 2009 when he stated "I think we are at digital dimes now". The statement expresses the view that the traditional media (broadcasters/print) has lost out in terms of a reduction in the number of viewers and advertising revenue, which is not being made up for on the digital side. Given the relative infancy of digital media when compared to traditional media, it is perhaps unsurprising that digital revenues lag behind the revenues of the traditional media. In addition, Mr Zucker's comments do not reflect that the cost of content distribution in the digital media space are reduced by having a low-cost delivery method (i.e. the internet) as opposed to the more costly traditional distribution methods of printing or producing CDs.

Revenue creating options for the receipt of digital media can be boiled down to: (i) subscription fees; (ii) micropayments; and/or (iii) advertising. Subscription and advertising based revenue models are well trodden paths. In terms of micropayments, PayPal suggests that its micropayment transaction rates are designed for businesses that process single purchases under £5, which are useful for digital goods, online gaming, music, media or software downloads1. PayPal has recently launched a micropayment solution for users of various websites (including Facebook) and the growing trend towards micropayments is likely to gather pace in the new year.

Conclusion

In line with the Meltwater case it is likely that digital content owners will become increasingly protective of their digital content both through licensing terms and litigious means as information licensing agencies and online publishers seek to protect their content and extract more revenue from their content.

The ever increasing consumption of digital media, the use of micropayments and the focus on extracting more revenue from digital media is likely to result in an increase in digital revenues, but it remains to be seen whether they will rival the so-called "analogue dollars" for media outlets.

Footnote

1 https://www.paypal-business.co.uk/take-micropayments-with-paypal/index.htm

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions