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April 23 2012

15:37

Wall Street Journal dives into live, continuous coverage with its new Markets Pulse stream

The Wall Street Journal on Monday unveiled Markets Pulse, a platform for a continuous flow of news — including blog posts, articles, videos, tweets, photos, and other elements — that readers can dip into throughout the day from their computers or from a mobile device. The idea is to provide more choices to readers who are increasingly seeking news on-the-go.

Think of it as a daily liveblog of the markets: At this writing, Markets Pulse been updated 12 times in the past hour. Some of those are simply embeds of WSJ stories, which can be read in full without leaving the stream; others are updates of barely tweet length. (“Dow Down 150: All indexes are down more than 1.2%.”)

“This is just another way for them to access our content,” Raju Narisetti, managing editor of The Wall Street Journal’s Digital Network, told me. “Obviously, a lot of our readers are paid subscribers, so they should be able to get WSJ everywhere, wherever they want it.”

This isn’t the first time the newspaper has experimented with this kind of approach. It created a four-day stream for its Oscar coverage this February, and more recently it streamified its coverage of the presidential election in France. But Markets Pulse is built around an area of coverage rather than a finite event, which means it has the potential to be…neverending.

Creating an open-ended stream for markets coverage makes sense for a few reasons. It’s an area that a lot of Journal readers are already tracking, and one that lends itself to constant updates. “Markets is kind of an ongoing story all day, especially when the U.S. markets are open, and there’s an audience that follows it fairly religiously all the time,” Narisetti. “Rather than having to go to an article or a video in different, discrete places, this allows them to kind of have one place.” (It’s not for nothing that Bloomberg describes its terminals as a “massive data stream” — it’s a metaphor that works for the flow of a market day. Markets Stream would seem to be a decent candidate to be a second-screen companion to a Bloomberg terminal.)

Markets Pulse also includes an embed of the Journal’s video player right next to the content whenever a live show is on. With the newspaper’s big push in video, particularly live video, having a page that readers can treat as they’d treat CNBC — that is, always on — could help increase the return on that investment.

It also gives reporters a place to put all kinds of information — short updates, tweets, and other elements that don’t always fit in a traditional article. But the news stream approach is about more than creating a centralized hub of information. Streams are also about tailoring the experience to readers’ habits. When British network ITV unveiled its stream-based online redesign last month, ITV digital director Julian March described about the importance of recognizing the “skimming and digging” that people like to do online.

Here’s how he put it:

We think that roughly 80 percent of visits to websites are based on skimming behavior: You go to the news site asking, “Tell me what the news is today.”…Digging is where you come to the site and you’ve got a very specific kind of requirement: “I want to know what is going on in the Eurozone crisis,” or “I’ve just heard that Fabrice Muamba the footballer has collapsed, how is he doing?”

The format may also help drive traffic to Wall Street Journal content by fostering a habit of checking for frequent bite-sized updates the same way that people routinely check their email inboxes and Twitter feeds.

News streams also seem to have the advantage of stickiness — meaning readers spend time on streams longer than they do on traditional news sites. (Think of how sticky social streams like Facebook’s newsfeed or Twitter are, especially compared with traditional news sites.)

Narisetti, who started his job at the Journal in February after leaving The Washington Post, says there are more experiments like this one to come: “We’re going to experiment in multiple ways, and this just felt like one of the more interesting and fun ways to do it,” he said. The approach seems consistent with his mentality he described to us back in January: “I’m a big believer in newsrooms being in a permanent beta stage.”

August 28 2011

17:10

New York Times' DealBook: an investor perspective but for whom else?

New York Times :: When the world economic system shuddered and stock markets dropped, Arthur S. Brisbane, New York Times, was left wondering whether The Times should have spent its money not on expanding DealBook but on enlarging its stable of journalists aimed at the wider subjects of international banks and sovereign debt.

New signs of systemic disease emerged last week, particularly in Europe, where the European Central Bank rushed to shore up Italian sovereign debt. Although DealBook ran a couple of columns calling attention to this threat, the developments made clearer that this subject requires in-depth investigating of a complex ecosystem whose inner workings may be just as opaque as the derivatives-larded American banking network that imploded in 2008.

DealBook might help The Times build a niche audience online, but it isn’t designed to address broader issues like this. 

Continue to read Arthur S. Brisbane, www.nytimes.com

August 12 2010

21:27

Marketplace brings a Twittery approach to the explainer

When you listen to Marketplace, American Public Media’s finance-focused show, you generally expect to hear expert, and even entertaining, takes on the day’s economic news. On Wednesday’s show, though, the typical quick-and-dirty met…quick-and-funny. Marketplace offered a segment pretty much summarizing the world financial situation…in pretty much three sentences. Listen to the whole thing — all two minutes of it — here; but the gist of it, per the transcript, is this:

Paddy Hirsch: People are worried about the local economy. They think gold is the safest investment, so that’s where they put their money.

I’m Paddy Hirsch for Marketplace.

Liza Tucker: Demand is way down for oil. That’s because some economies are shaky and countries aren’t using as much.

I’m Liza Tucker for Marketplace.

Ethan Lindsey: People are still scared about the economy. So no one wants to blow their savings on a house.

I’m Ethan Lindsey for Marketplace.

And the kicker, from host Kai Rysdall: “Y’know, it’s funny, our news spots are usually a whole lot longer than that. I’m not really sure what happened on those.”

Seriously, if you haven’t already, it’s worth a listen. It’s funny. Also, short. From the future-of-news approach, though: It was also a pithy (“pithy,” in fact, might be too expansive a term for it) explanation of the financial doldrums the nation — and the world — are currently experiencing. Sure, the topics covered are the stuff of dissertations/post-graduate programs/think-tank white papers; but they’re also, more to the point, the stuff of everyday life. People need to understand it. As Celeste Wesson, Marketplace’s senior producer, told me: “We are always trying, as a show, to think of more interesting ways to tell business stories. That comes with the territory of covering business, economics, money, etc.: we want to look at how it affects people’s lives, but we also want to make sure that we’re really clear — and really entertaining.”

A Twitterfied take on the ongoing financial crisis: Clear? Check. Entertaining? Check.

The idea came in Wednesday morning’s editorial meeting, Wesson told me. Marketplace staffers were talking about one of the big financial stories of the day — oil prices — and how best to explain it to listeners, when Liza Tucker, the show’s senior Washington editor and resident sustainability expert, finally said: “It’s easy. Demand is down, and that’s because economies are in trouble, and countries aren’t using as much oil.” And “she said it in the meeting,” Wesson says, “as if to say, ‘This is not a complicated story here.’” But “she did it like this perfect little tiny news spot.”

Everyone laughed — but there was something to the joke, Wesson realized. “There’s something we can play with there”: clarity by way of brevity.

“And then someone said, ‘Yeah, but we can’t do just one. So maybe we can do a mini news report with a number of them.’”

“Yeah — we probably need at least three.”

“Maybe we could do gold.”

“Oh, yeah, that would be good.”

Et cetera. “So we had this little, inchoate idea floating around the morning meeting,” Wesson says — which crystallized throughout the day, as producers refined it, into a segment. They tapped Tucker, who’d come up with the initial, off-the-cuff gem, to participate in the final product; then Paddy Hirsch, an expert in gold markets; then Ethan Lindsey, who came up with that “perfectly deadpan way” of talking about home sales.

“Really, it’s a group process,” Wesson notes. “All of us know that one of the things we need to do is make sure that we’re taking complicated things and making them clear” — and to explode the formula that’s all too familiar among lay consumers of financial journalism: incomprehension leading to boredom (laced, often, with frustration).

One way to do that: go simple. Really simple. In this case, “It just struck us as funny that sometimes these things are simpler than we think they are,” Wesson says. “And wouldn’t it be fun, in the middle of August, to break this up with something that’s fun to listen to, and catches listeners by surprise?”

July 26 2010

08:00

#Tip of the day from Journalism.co.uk – Advice on reporting statistics

Statistics: BBC College of Journalism reinforces the importance of getting the numbers right. First in a series of tips from the BBC. Tipster: Rachel McAthy. To submit a tip to Journalism.co.uk, use this link - we will pay a fiver for the best ones published.


July 16 2010

10:54

Finance story leads from the banking crisis – some tips for journalists

On the Reynolds Center for Business Journalism site journalist Jodi Schneider from the American Banker, has some tips for financial journalists looking for local banking stories in the aftermath of the credit crisis .

For local publications, community banks are a good source of stories and a way to localise the financial services story playing out on the national and world stage.

While her advice focuses on American processes, the general ideas could be adapted for the UK banking scene.

Story tips include: looking at other areas of a local economy which are suffering and how they may impact on local financial institutions; or investigating banks’ capital levels to predict whether they may be in danger of regulatory action.

More general advice covers what to include in any banking story, from the size of the institution and recent earnings, to capital standings and recent regulatory actions.

See the full post here…Similar Posts:



April 14 2010

07:39

FT.com: Thomson Reuters’ video product Insider to launch on 11 May

Thomson Reuters is planning to launch a series of new web products and overhaul its markets division as part of plans to streamline the company and reach growing audiences of younger, web-savvy readers and smaller business customers.

Among the developments:

  • An “enterprise platform” offering faster delivery of data to clients and online training and customer service support to smaller customers;
  • The launch of online video product Insider on May 11, which it has been testing since last year;
  • A new desktop platform, Eikon, to launch in autumn, offering a wider range of data and personalisation features.

Full story at this link…

Similar Posts:



March 25 2010

15:00

The Barclays case: Will “hot news” limit the right to aggregate news?

[Sam Bayard, one of our friends down the street at the Citizen Media Law Project, has written the most detailed analysis I've seen of the Barclays v. TheFlyOnTheWall.com case. While focused on the work of financial analysts, the case could have serious impact on the ability of websites to aggregate and curate content. It also invokes the "hot news" doctrine that some news organizations have argued limits the kinds of linking other sites can do to their content. We're reprinting Sam's piece below; it's worth a read for anyone interested in how the new news ecosystem is evolving. —Josh]

In 2003, prolific legal scholar and 7th Circuit Judge Richard Posner published a law review article entitled "Misappropriation: A Dirge," which discussed — among other things — the continued viability of "hot news" misappropriation, a theory of unfair competition that dates back to the Supreme Court’s 1918 case, International News Service v. Associated Press, 248 U.S. 215 (1918), which involved unauthorized re-publication of wire service reports. Contrary to what Posner’s title might suggest, the article didn’t outright announce the death of the hot news doctrine, but it did paint a picture of a legal doctrine on the ropes — disdained by noted jurists, unwise as a matter of policy, and limited in practical significance. For better or worse, a decision issued last Thursday shows the doctrine to be very much alive and relevant. In fact, the case raises some disturbing prospects for news aggregation and sharing of information on the Internet more generally.

In Barclays Capital Inc. v. TheFlyOnTheWall.com, 06 Civ. 4908 (S.D.N.Y. Mar. 18, 2010), Judge Denise Cote of the United States District Court for the Southern District of New York issued a permanent injunction requiring the Internet-based financial news site FlyOnTheWall.com ("Fly") to delay its reporting of the stock recommendations of research analysts from three prominent Wall Street firms, Barclays Capital Inc., Merrill Lynch, and Morgan Stanley. The injunction requires Fly to wait until 10 a.m. E.S.T. before publishing the facts associated with analyst research released before the market opens, and to postpone publication for at least two hours for research issued after the opening bell.

The injunction is based on Judge Cote’s finding, after a bench trial, that Fly engaged in hot news misappropriation, "free-riding activity that is directly competitive with the Firms’ production of time-sensitive information, thereby substantially threatening their incentive to continue in the business." Barclays, slip op., at 87. Morgan Stanley and Barclays also succeeded on copyright infringement claims relating to Fly’s unauthorized copying and distribution of excerpts from their research reports for a few weeks in 2005, but the court awarded relatively minor damages on these claims and this doesn’t impact Fly’s current business practices, which no longer involve verbatim reproductions or close paraphrases of analyst research.

Background

Like other Wall Street firms, Barclays, Merrill Lynch, and Morgan Stanley produce analyst research reports on stocks. The firms distribute these reports for a fee to their clients, usually large institutional investors. The firms often release these reports before the NYSE opens for the day, and the reports contain recommendations (buy/sell/hold) that, according to the firms, often spur investors into making trades, usually through the firm that issued the report. As a result, the release of a report often has a significant impact on the market price for the stock in question.

The firms’ paying clients gain access to the reports through several means, including the firms’ password-protected websites, licensed third-party distributors like Bloomberg and Thomson Reuters (presumably also using some sort of password protection), and email messages. In addition, the firms host private conference calls or webcasts in which their analysts discuss their research reports and recommendations with clients. Access to these calls and webcasts is restricted to those with the required passcode or login.

The firms take various precautions to ensure that the reports go only to paying clients. For example, they forbid employees from sharing the reports, their licensing agreements purport to forbid the clients from redistributing the research content, and licensed distributors like Bloomberg and Reuters contractually agree to maintain a "firewall" so that their media arms can’t obtain information from their research arms.

Inevitably, though, the research reports and the recommendations contained in them leak out, and Fly pioneered the business model of publishing this information for its own clients on a newsfeed over the Internet. The model has caught on, and, according to the court, presently "there is a crowded marketplace with small internet companies and major news organizations reporting the Firms’ Recommendations before and after the market opens." Barclays, slip op. at 35.

According to Judge Cote’s opinion, it looks like Fly’s operations have changed significantly over the last few years, largely in response to the firms’ lawsuit. Before 2005, Fly relied primarily on employees at the firms who emailed research reports to Fly after they were released to clients (this was pretty clearly a violation of the employees’ duties of loyalty and confidentiality to the firms). At that time, Fly staff would type the recommendation as a headline, sometimes accompanied by a verbatim reproduction or close paraphrase of a passage from the report explaining the basis for the recommendation. Id. at 32. Hence the copyright claims for Fly’s conduct in 2005.

As a result of the lawsuit, however, Fly apparently changed its information-gathering process. According to testimony from Ron Etergino, Fly’s president and majority owner, he "no longer feels free to look at the research reports, even if someone should send them to him," id. at 33, and he now gathers information about the firms’ reports from other sources:

According to Etergino, he checks first to see what Recommendations have been reported on Bloomberg Market News. Then he checks Dow Jones, Thomson Reuters, and Fly’s competitors such as TTN, StreetAcount.com, and Briefing.com. Next, he visits chat rooms to which he has been invited to participate by the moderator. . . . Etergino also receives "blast IMs" through the Bloomberg, Thomson Reuters, or IMTrader messaging services that may go to dozens or hundreds of individuals. Finally, Etergino exchanges IMs, emails, and more rarely telephone calls with individual traders at hedge funds, money managers, and other contacts on Wall Street.

Id. at 34. In other words, Fly acquires information about the reports through a process that looks a whole lot like good-old fashioned journalism. And it largely relies on information that is publicly available through mainstream and Internet media reports, IM blasts, and what appear to be open chat rooms. The result is a headline like this: "EQIX: Equinox initiated with a Buy at FofA/Merrill. Target $110." Id. at 27.

Hot News and Copyright Law

As noted, the main dispute in the Barclays case was not about verbatim copying, but about Fly publishing time-sensitive facts from the firms’ research reports — essentially, the buy/sell recommendations. Facts are not protected by copyright law. Feist Publ’ns, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 345 (1991). While the firms’ recommendations aren’t exactly facts in the same way as "hard news," the firms appeared to concede that they couldn’t stop Fly’s current reporting practices through resort to copyright law. Enter the hot news misappropriation doctrine, which is controversial precisely because it provides IP-like protection to facts despite copyright law’s bedrock policy that facts are in the public domain.

In International News Service v. Associated Press, 248 U.S. 215 (1918), the Supreme Court created the hot news misappropriation doctrine as a matter of federal common law, and some state courts, like those in New York, adopted it as part of state unfair competition law. The INS case arose after British and French censors barred INS from sending war dispatches to the United States because Hearst had offended the British and French by siding with Germany at the outset of WWI. See Posner, at 627. INS employees got around this problem by paraphrasing AP dispatches published in east coast newspapers and sending them by telegraph to the west coast for publication in Hearst newspapers. See INS, 248 U.S. at 231-32 (at issue was INS’ practice of "copying news from bulletin boards and from early editions of complainant’s newspapers and selling this, either bodily or after rewriting it, to defendant’s customers"); id. at 259-60 (Brandeis, J., dissenting) ("The means by which the International News Service obtains news gathered by the Associated Press is also clearly unobjectionable. It is taken from papers bought in the open market or from bulletins publicly posted.").

The INS Court acknowledged that AP had no copyright claim because it had failed to register and/or place notice on its news reports (no longer a requirement under U.S. copyright law), and because copyright law did not extend to the facts in the reports. But, the Court nonetheless enjoined INS from using AP’s news reports in direct competition with the news service, finding that the INS’s free riding "speaks for itself and a court of equity ought not to hesitate long in characterizing it as unfair competition in business." Id. at 240. Justices Holmes and Brandeis wrote powerful dissents, decrying the majority’s opinion as unprecedented, unnecessary, and unwise.

The main policy justification advanced by the majority, which remains the motivating principle behind hot news doctrine today, is that protecting hot-news-type information is necessary to preserve the incentives that drive economic actors to make the substantial investment required to produce a socially valuable product or service in the first place. Posner characterizes this policy impulse as protecting against the danger of "killing the goose that laid the golden eggs." Posner, at 628.

In the Barclays case, the idea is that Wall Street research reports are a social good — they help disseminate information important to the proper functioning of the securities markets that otherwise would not be produced. This may be a disputable proposition, but it’s one the court accepted. And, the theory goes, Wall Street firms like Barclays and Merrill Lynch won’t go to the expense of producing these socially valuable reports if companies like Fly can free ride off of them and undermine the money-making potential of the practice. Again, it’s disputable whether Fly’s conduct rather than other economic factors (like international economic meltdown) has hurt demand for the firms’ reports, but Judge Cote found as a matter of fact that Fly’s activities did create a substantial disincentive.

I’ll leave to the economists the question of whether or not all this is wise economic policy. But from a legal perspective, the hot news doctrine creates an obvious tension with copyright law because, as noted above, it creates a pseudo property right in facts that copyright law says are in the public domain. This raises the specter of preemption: that is, a situation where federal law displaces inconsistent state law under the Supremacy Clause. Judge Cote’s opinion in Barclays does a very thorough job on this issue and determines — rightly, in my view — that federal copyright law does not preempt hot news misappropriation, or at least a narrow version of it. This result was a foregone conclusion for Judge Cote because the Second Circuit Court of Appeals had already said as much in National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), which is controlling precedent in the Southern District of New York.

Under NBA, the narrow version of hot news misappropriation that survives copyright preemption has the following elements:

(i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant’s use of the information constitutes free riding on the plaintiff’s efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

Barclays, slip op. at 55 (quoting NBA, 105 F.3d at 845). Posner says that the "meat" of the test is in element (v), with (i) through (iv) describing a situation where (v) is likely to be satisfied. Posner, at 632. Therefore, "[t]he criterion appears to mean that states can protect fact gathering without running afoul of the preemption provision in the federal copyright statute only when unauthorized copying of the facts is likely to deter the plaintiff or others similarly situated from gathering and disseminating the facts that the defendant has copied." Id. The test is "alarmingly fuzzy once the extreme position of creating a legal right against all free riding is rejected, as it must be." Id. at 638.

In other words, hot news doctrine presents an inherently subjective and necessarily fact-specific standard, and one would expect courts to be cautious in finding it met, if for no other reason than to avoid the potential conflict with copyright law and to promote the public’s access to information. In Barclays, the firms convinced Judge Cote at trial that each element was satisfied, showing that, while it may take a unique set of facts, it’s not an impossible task.

What About the First Amendment?

Notably lacking from Judge Cote’s very thorough opinion is any discussion of how hot news misappropriation interacts with the First Amendment. This could be because Fly didn’t argue the point, at least not directly. While this post suggests that Fly’s lawyers "played the free speech card," it is hard for me to believe that Judge Cote would fail to address such an important argument if it were raised directly in the briefs. We have a student looking through the documents on PACER, which are pretty extensive, but so far we haven’t turned up any direct invocation of the First Amendment, except for an affirmative defense in the answer. As we’ll see below, though, Fly undoubtedly raised factual arguments that bear on the question.

The First Amendment issue is an important one because the Supreme Court didn’t address it in INS. Justice Brandeis’s dissent gives us a First Amendment tingle in his famous statement, "[t]he general rule of law is, that the noblest of human productions — knowledge, truths ascertained, conceptions, and ideas — become, after voluntary communication to others, free as the air to common use," 248 U.S. at 250 (Brandeis, J., dissenting), but even he didn’t seem to appreciate the constitutional implications of the case. It’s also an important question because First Amendment doctrine has developed considerably since 1918, and free speech concerns of which the Justices had only a vague inkling now have become an accepted part of the constitutional landscape.

The First Amendment issue raised by the case is one I’ve addressed before. A long line of Supreme Court cases hold that the First Amendment protects truthful speech on matters of public concern. See, e.g., Bartnicki v. Vopper, 532 U.S. 514, 527-28, 533-35 (2001) (First Amendment barred imposition of civil damages under wiretapping law for publishing contents of conversation relevant to matter of public concern); Florida Star v. B.J.F., 491 U.S. 524, 534 (1989) (First Amendment barred imposition of civil damages on newspaper for publishing rape victim’s name); Smith v. Daily Mail Publ’g Co., 443 U.S. 97, 103-06 (1979) (First Amendment barred prosecution under state statute for publishing names of juvenile offenders without permission of court); Landmark Communications, Inc. v. Virginia, 435 U.S. 829, 841-42 (1978) (First Amendment barred criminal prosecution for disclosing information from a confidential judicial discipline proceeding). Therefore, “if a newspaper lawfully obtains truthful information about a matter of public significance then state officials may not constitutionally punish publication of the information, absent a need to further a state interest of the highest order.” Smith, 443 U.S. at 103; accord Bartnicki, 532 U.S. at 527-28.

In Bartnicki v. Vopper, members of a teachers union sued a radio announcer under state and federal wiretapping laws after he played an unlawfully recorded telephone conversation on the air. The radio show host had received the recording from a third party who himself had received the tape in the mail from an anonymous source. The Supreme Court held that the First Amendment prohibited the recovery of damages against the radio show host for publishing the tape, explaining that “a stranger’s illegal conduct does not suffice to remove the First Amendment shield from speech about a matter of public concern.” Id. at 535. The constitutional principle in Bartnicki and other Supreme Court cases is not limited to traditional forms of media like newspapers and radio broadcasters. See Mary T. Jean v. Massachusetts State Police, 492 F.3d 24 (1st Cir. 2007) (First Amendment barred criminal prosecution for posting illegally recorded video online when recording made by third party, even if knowing receipt of the recording constituted a crime under Massachusetts law).

In Barclays, Judge Cote considered it unimportant that Fly obtained the information it published from other news services that were publishing the firms’ recommendations on the Internet in advance of Fly’s own publication. The court said that "the conduct of third parties is simply of no moment in finding Fly liable for hot-news misappropriation," and "it is not a defense to misappropriation that a Recommendation is already in the public domain by the time Fly reports it." Barclay, slip op. at 61. This may be a faithful application of the INS case itself — recall that INS involved taking facts from publicly available bulletin boards and published newspaper accounts — but INS never considered the First Amendment, so it can’t resolve the issue.

Under Bartnicki and the cases mentioned above, if Fly obtained the information in question through lawful means, then the First Amendment protects its right to publish that information. There is nothing inherently unlawful about Fly reading about a stock recommendation on a newsfeed provided by another news service or participating in a public chat room where Wall Street "rumors" are discussed (accessing a passcode-protected conference call would be another matter). The court says that Fly has engaged in "illegal conduct" by publishing the information it did, Barclays, slip op. at 61, but this label begs the question — that is, whether the state may constitutionally penalize publication of truthful information relating to a matter of public concern that was not obtained in violation of any other applicable laws.

To be sure, the person who originally leaks a firm research report to a news service or chat room participant may violate a legal duty owed to one of the firms, but "a stranger’s illegal conduct" is not sufficient to remove First Amendment protection under Bartnicki. The question is closer for Fly’s pre-lawsuit-era publication of reports received directly from firm employees who violated a duty of loyalty and confidentiality. It might be independently "unlawful" in the constitutional sense to knowingly induce a breach of these duties, but even in the trade secrets sphere this question has not been resolved with any clarity. Furthermore, I’m not aware on anything that would make it "unlawful" for Fly to communicate by email or telephone with firm clients who are willing to convey the substance of the recommendations, though this probably violates the client’s license agreement. Regrettably, the court did not differentiate between Fly’s different information-gathering tactics, and it enjoined publication of information obtained through at least some practices that clearly aren’t "unlawful" in any meaningful sense.

The court might well respond to all this by arguing that the firms’ reports are not facts related to a matter of public concern like ordinary news, but rather "subjective judgments based on complex and imperfect evidence." Id. at 78. There may well be a constitutionally significant distinction between reporting the subjective recommendations generated by these Wall Street firms and objective, external facts that are discovered "out there" in the world. On the other hand, these subjective judgments have objective, real-world consequences, and the announcement of a recommendation is itself a newsworthy event because it may cause a change in a stock’s price. It strikes me as difficult, and potentially hazardous, to try to distinguish between reporting the "subjective" recommendations versus reporting the "objective" fact that they were made, especially when the publication in question looks like this: "EQIX: Equinox initiated with a Buy at FofA/Merrill. Target $110."

The court may have ameliorated some of the First Amendment concerns by clarifying that the scope of its injunction, like the scope of hot news misappropriation, is narrow:

[T]o the extent Fly alters its business and begins to engage in actual analysis of market movements, and refers on occasion after the market opens in New York to one of the Firms’ Recommendations in the context of independent analytical reporting on a significant market movement that has already occurred that same day, such conduct will not run afoul of the injunction.

Id. at 87-88. But, this description of speech activity (the court doesn’t frame it in terms of speech) that won’t be enjoined displays an obvious preference for original/sweat of the brow/"analytical" content-creation over the free transmission of facts and information, which is a lot of what happens on the Internet. This is a preference that hot news doctrine’s anti-free-riding purpose surely calls for, but I don’t believe the First Amendment shares this ideal. (Copyright sure doesn’t. See Feist, 499 U.S. at 359-60.) As I’ll touch on more below, the court’s logic here also has foreboding connotations for news aggregators and others who supposedly "free ride" by transmitting information to others over the Internet without engaging in "independent analytical reporting."

News Aggregators, Bloggers, and the Like

The $75,000 question is what the Barclays case means for other online news aggregators, as well as social media more generally. Will the major newspapers be able to use this case to revive a robust hot news misappropriation doctrine that will kill the news aggregators and lock down facts on the Internet? I have no doubt that AP lawyers are smiling to themselves this week, but I don’t think this decision spells doom for the Internet as we know it.

The bad news for aggregators, bloggers, and those who like to share news is that this is a detailed, thoroughly reasoned (with the First Amendment exception noted above) decision from a respected judge in one of the most prestigious federal district courts in the nation. And, the decision is the product of a full-blown trial, giving it a concreteness and specificity that other, Internet-related hot news decisions, like Associated Press v. All Headline News, 608 F. Supp. 2d 454, 458-61 (S.D.N.Y. 2009), lack. This will give the decision credibility and make it useful in the hands of future judges looking for direction.

Worse, there are moments when reading the opinion where one feels like Judge Cote might as well be talking about news aggregators or bloggers free riding on "original reporting" instead of equity research. The court’s concept of free riding (element iii of the NBA test) certainly sounds like it would apply to news aggregation or acts of curation more generally:

To the extent that Fly adds value through its collection and aggregation of information, however, the value reflected in that act of aggregation does not controvert the fact that Fly expends no effort to produce the Recommendations and does not contribute to the underlying research and analysis process.

Barclays, slip op. at 60. It’s not a huge logical jump to say that all news aggregators are "free-riding" because they "expend no effort" to produce original reporting, and therefore "do not contribute to the underlying [journalistic] process." But this logic vastly understates the social benefit contributed by news aggregators, as well as bloggers who curate and comment on the news without expending effort to create it, and it automatically tilts the scales in favor of content producers at the expense of informational services and commentary, without any real justification.

Also potentially troubling is the court’s willingness to attribute the firms’ disincentive to produce equity research to Fly’s online activities as opposed to global financial meltdown, a willingness we can only hope won’t be reproduced when it comes to evaluating the alleged contribution of news aggregators and social media to newspapers’ current financial plight. Courts need to take a very close look at what is causing newspapers to suffer hard times; increased competition and loss of monopoly advertising rents explain a lot more than headlines and ledes with a link back, but that’s a topic for another day.

In any event, on the all-important fifth element (killing the golden goose), the Barclays case is easily distinguishable because the firms made a good (if not bullet-proof) case that production of high-quality equity research implicates a special need for time-sensitive exclusivity so that firm clients can feel they uniquely benefit from the recommendations and so that these clients can place trades with the firms based on them. Most regular news doesn’t share this rivalrous character, and it may be extremely difficult for newspapers to show that news aggregation or blog commentary ultimately hurts their bottom lines.

As for blogs, Twitter, and other types of social media, Barclays is further distinguishable because of the direct and obvious competition between Fly and the firms, which will be lacking in all but the most unusual cases. When it comes to Google News, which may be a real competitor, the ability of news organizations to opt out using robots.txt makes it extremely difficult to argue that Google is free riding, much less that it is destroying all incentive to engage in original reporting.

Finally, I suspect that the move from the financial sector to the general news sector will brighten and clarify the First Amendment issue discussed above, making it harder for courts to ignore that hot news doctrine plainly contemplates restricting the publication of truthful information on matters of public concern, regardless of how that information is required.

February 22 2010

15:00

Footnoted.org: A solo investment news site gets acquired, but its founder says the web’s no sure bet

Michelle Leder likes to joke that she is the first journalist to have been fired by email. In 1998, her editor at the Poughkeepsie Journal shot her a note to say that her job on the business desk would not be waiting for her when she returned from abroad.

Since then, she’s been a pioneer in other trends in journalism — and her outlook on the field has stayed equally dry. In 2003 she launched what has become a popular investment site, Footnoted.org. She runs posts on nuggets of interesting information pulled from the fine print of securities filings for valuable investor news. This month Morningstar purchased the site for an undisclosed sum. Leder will continue to run the editorial side and contribute content. Morningstar will sell subscriptions to her premium content (some content will remain free). And the site’s staff is already starting to grow post-acquisition; Bloomberg’s Theo Francis just announced he’s joining the staff.

The investment research firm sees value in her investigative work, particularly Leder’s ability to find useful, “actionable” information. “I think there’s been a discussion about whether information has been commoditized or not,” Morningstar’s Kunal Kapoor told me. “Some news may have been, but that’s just half the story.”

From covering acquisitions to being one

As for Leder’s story, it’s an Internet startup fairy tale of sorts: a journalist’s hobby site grows into a relevant read and a someone swoops in with a checkbook to buy the place up. Leder can hardly believe it herself. But she hesitates calling it the type of model that can be easily recreated.  She mentioned attending a recent Jeff Jarvis lecture where she thought he overstated the sustainability of an ad-only model for new blogs, and the number of bloggers who have been successful running ad-only sites, pulling in $100,000-$200,000 a year. “I just think that’s delusional.”

Leder, who has always run her site from a spare room in her house, said a startup like hers needs a safety net, in her case, it was her husband. “It obviously helps if you have a spouse or a significant other with a steady job…There were some months I made next to nothing.” Leder says the job involves no “fancy lunches” and she says if you don’t need office space, don’t get it. “Keep your expenses low. You’re going to really need that money.” In the summer of 2008, Leder hired her first (and until now only) employee, a researcher, Sonya Hubbard.

Leder launched the site as a promotional companion to her book, Financial Fineprint. “It was a way for me to continue that discussion,” Leder said of the site. The blog’s readership grew as she continued posting new content, attracting an audience ripe for advertisers, including hedge fund managers, and other investors. It was then she saw the site as a business opportunity in itself, and she turned to advertising. Soon after, she added on a syndication model, selling reprints and original content to places like the New York Times’ DealBook and Minyanville.

Trying a freemium model

In October 2008, Leder took a gamble on a new business model. “It became clear to me that advertising was never going to sustain the site,” she explained. While keeping a portion of her content free, she launched a secondary product called FootnotedPro, which contains exclusive information for investors. The 40 issues per year’s price: $100 per month, $1,000 a year or a la carte $250.

Her goal was to sign up 100 subscribers. She said that she fell just short of that, but did pretty well. (She would not disclose her exact number of subscriptions, citing an agreement with Morningstar.) ”You can’t be afraid to take that leap,” Leder said, “You need to be thinking about the business side. You’re the publisher. You have to do it.”

Still, she says she’s looking forward to letting Morningstar handle selling the subscriptions from now on. “I’m really good at reading SEC filings and finding nuggets. I’m not really good at selling subscriptions,” Leder laughed.

She hopes over the next year she’ll hire one or two more business journalists (she’s got 20 years of business journalism experience under her belt) and perhaps an analyst. ”There’s so much content out there,” Leder said. “People recognize quality.” High quality includes authenticity, which she said matters to her readers.

Her most important words of advice: ”Have a backup plan.”

December 02 2009

09:45
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