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To Sue or to License… That is the AI Question

I announced some big news last week to the AMO Pro audience, and the response has been great. I will announce it to the full AMO audience tomorrow. Be on the lookout for my email.

I am very excited to host the first-ever webinar here on A Media Operator on May 21st at 1PM ET, sponsored by BlueConic. I’ll be having a conversation with Jeremy Feldman, Director of Digital Audience at Anchorage Daily News (ADN), Alaska’s largest news site and paper.

We’re going to dig into the tactics ADN has used to grow its subscriber revenue and learn how ADN leveraged its CDP to:

• Boost conversions with promotional offers and personalized messaging
• Retain subscribers through timely notifications and win-back surveys
• Save time by integrating with their ESP and other tools

We'll also discuss how ADN plans to use its CDP for future innovations, such as ad customization and content recommendations. 

Sign up for the webinar today. It’s going to be a great deep dive.

Last week, several Alden Global Capital-owned newspapers filed a complaint in the Southern District of New York against OpenAI and Microsoft for copyright infringement. According to Axios:

The lawsuit is being filed on behalf of some of the most prominent regional daily newspapers in the Alden portfolio: the New York Daily News, Chicago Tribune, Orlando Sentinel, South Florida Sun Sentinel, San Jose Mercury News, Denver Post, Orange County Register and St. Paul Pioneer Press.

…

A source familiar with the Alden subsidiaries that own the newspapers, MediaNews Group and Tribune Publishing, said that the papers opted to sue the two firms instead of attempting to negotiate a deal. (The Times tried to negotiate a deal with OpenAI and Microsoft for months leading up to their suit, which OpenAI said caught it by surprise.)

In essence, the suit is in response to these LLM platforms using media companies’ articles to train AI models. There are also some interesting parts about ChatGPT’s hallucinations, such as when ChatGPT said that the Denver Post published research saying smoking could be a cure for asthma.

But what I find particularly interesting about this is that Alden didn’t even try to negotiate, if the source can be believed. This makes very little sense to me because it would be short-term cash, which Alden has prioritized over the long-term growth of these brands. And so, there are likely two scenarios here:

If it’s that second scenario, then, of course, Alden had to sue. Since it knows it won’t get paid any other way—there was no licensing deal coming—a lawsuit might give it the leverage it needs to get a check.

It’s hard to say whether the same is true for The New York Times. It did try to negotiate, so it could be argued this lawsuit is just the next step in getting leverage. Or maybe it decided that it needed to sue on principle. Who knows?

But I was listening to an episode of the More or Less Podcast and thought this part was quite interesting.

Jessica Lessin: I’m here in New York and I am pretty distraught about the attitudes in the publishing industry of what to do about this. 6-12 months ago, the rhetoric was much more ‘how do we fight it? ‘And the rhetoric now is ‘how do we get them [OpenAI] to go from 2 million to 3 million’ for licensing it.

Brit Morin: Which will still not save your publishing business.

Jessica: Which will not save your publishing business, is the definition of insanity—and to be clear, not because, in the future there’s no deal that some publishers could do that is win-win, but right now there aren’t even products that consumers are using enough with news in them, there’s not even enough economics to share in the licensing of it, so it’s not the moment to do these deals …

In essence, Lessin argues that media companies have effectively caved and are fighting over pennies. But I think the question is whether fighting even makes sense. Should we sue or take the money?

I think it’s a question that suggests there’s any equality in these fights. Let’s not forget that the media industry has been beaten down over the last couple of decades, largely because of stupid decisions publishers have made. Few media companies have the resources to take this fight to completion. As the podcast hosts explain, it will take years; in the end, the outcome may not be what they want.

This doesn’t mean I think what these LLMs have done is right. I view it as theft, which differs significantly from the social contract between search engines and publishers. In that case, they crawled our sites and sent us traffic as compensation. The LLMs were entirely parasitic. They can monetize the content with almost no reference to the actual creators of the content.

Now, you could argue that the reason to sue is because these LLMs are looking to license the content. After years of stealing content, they are now trying to get a licensing deal, which may indicate they know that the law is not on their side.

But it begs a bigger question: what if the publishers win? What is the expected outcome? I don’t see OpenAI getting shut down anytime soon. I recently read Oppenheimer's biography, and one thing that became obvious is that after he invented the nuclear bomb, he wanted to disarm the world. And yet, proliferation was inevitable.

It’s the same with AI. The damage is done. Our governments are incapable of understanding this technology, let alone legislating it. And so, as publishers, we must focus on what we can control: serving our audiences. For most of us, there is no licensing deal coming. For IAC, Condé Nast, and many of the other big players, I expect them to take the money. Why wouldn’t they?

Toolkits has a good story on how the Financial Times has reoriented its business around a “global paying audience.” According to the story:

Its new “global paying audience” metric (GPA) reflects subscribers to the FT’s core digital product, but also factors in paying customers for its live events, subscribers to publications in its FT Specialist division, and print newspaper circulation. The company said it currently stands at a global paying audience of 2.6 million and expects to reach three million by 2028.

…

GPA tracks individual paying users across five parts of The FT Group’s business: FT.com’s paying digital audience; FT Specialist paying subscribers; FT Live paying attendees; FT newspaper circulation (retail and subscribed print sales) and FTChinese.com paying subscribers.

This is the right way to think about things. I think, too often, we get myopically focused on business models. And for years now, it has been subscriptions. But if we take a step back, what problem are we trying to solve when we push subscriptions? It’s two things:

Well, there are plenty of ways to do that. You can sell event tickets, as FT says. But you can also sell merch or commerce more holistically. Travel publication Skift also sells reports, for example. The goal shouldn’t be to purely drive people to a subscription model but instead to figure out a way to get them to take out their credit cards and pay for something. That solves both problems.

When the pandemic hit, media companies rushed to pivot all their in-person conferences and awards to virtual. Many of these virtual products went away when the world opened back up. But maybe that was a mistake.

AMO contributor Esther Kezia Thorpe investigated why making virtual events profitable was difficult for many. In some cases, they do make sense.

As one AMO Pro reader said in Slack, “For us, they [virtual events] work well on very niche topics, for scattered and remote audiences, and for more junior audiences that lack access to travel budgets.”

This is one way to think about it. In this piece, Esther explores several concrete steps to make virtual events work going forward. And to build on the reader revenue component, you should charge for them.

Read the whole piece here.

Thanks for reading today’s AMO. If you have thoughts, hit reply or become an AMO Pro member for an invitation to the private Slack and to never miss another piece again. Have a great week!