Newspaper Chain’s New Business Plan: Copyright Suits
Steve Gibson has a plan to save the media world’s financial crisis — and it’s not the iPad.
Borrowing a page from patent trolls, the CEO of fledgling Las Vegas-based Righthaven has begun buying out the copyrights to newspaper content for the sole purpose of suing blogs and websites that re-post those articles without permission. And he says he’s making money.
“We believe it’s the best solution out there,” Gibson says. “Media companies’ assets are very much their copyrights. These companies need to understand and appreciate that those assets have value more than merely the present advertising revenues.”
Gibson’s vision is to monetize news content on the backend, by scouring the internet for infringing copies of his client’s articles, then suing and relying on the harsh penalties in the Copyright Act — up to $150,000 for a single infringement — to compel quick settlements. Since Righthaven’s formation in March, the company has filed at least 80 federal lawsuits against website operators and individual bloggers who’ve re-posted articles from the Las Vegas Review-Journal, his first client.
Now he’s talking expansion. The Review-Journal’s publisher, Stephens Media in Las Vegas, runs over 70 other newspapers in nine states, and Gibson says he already has an agreement to expand his practice to cover those properties. (Stephens Media declined comment, and referred inquiries to Gibson.) Hundreds of lawsuits, he says, are already in the works by year’s end. “We perceive there to be millions, if not billions, of infringements out there,” he says.
Righthaven’s lawsuits come on the heels of similar campaigns targeting music and movie infringers. The Recording Industry Association of America sued about 20,000 thousand file sharers over five years, before recently winding down its campaign. And a coalition of independent film producers called the U.S. Copyright Group was formed this year, already unleashing as many as 20,000 federal lawsuits against BitTorrent users accused of unlawfully sharing movies.
The RIAA’s lawsuits weren’t a money maker, though — the record labels spent $64 million in legal costs, and recovered only $1.3 million in damages and settlements. The independent film producers say they nonetheless expect to turn a profit from their lawsuits.
“People are settling with us,” says Thomas Dunlap, the head lawyer of the Copyright Group’s litigation. The out-of-court settlements, the number of which he declined to divulge, are ranging in value from $1,500 to $3,500 — about the price it would cost defendants to retain a lawyer. The RIAA’s settlements, which it collected in nearly every case, were for roughly the same amounts.
But experts say that settling the Righthaven cases, many of which target bloggers or aggregation sites, might not be as easy. The RIAA lawsuits often accused peer-to-peer users of sharing dozens of music files, meaning the risk of going to trial was financially huge for the defendants.
The same is true of the BitTorrent lawsuits. The movie file sharers are accused of leeching and seeding bits of movie files, contributing to the widespread and unauthorized distribution of independent movies such as Hurt Locker, Cry of the Wolf and others.
But each of the Righthaven suits charge one, or a handful, of infringements. Defendants might be less willing to settle a lawsuit stemming from their posting of a single news article, despite the Copyright Act’s whopping damages. “You’d have to go after a lot of people for a relatively small amount of money,” says Jonathan Band, a Washington, D.C. copyright lawyer. “That is a riskier proposition.”
Gibson claims Righthaven has already settled several lawsuits, the bulk of which are being chronicled by the Las Vegas Sun, for undisclosed sums.
One defendant who is ready to settle is Fred Bouzek, a Virginia man who runs bikernews.net, a user-generated site about hardcore biker news. He was sued last week on allegations the site ran a Las Vegas Review-Journal story about police going under cover with the Hell’s Angels.
Even if he had grounds to fight the case, he says it would be cheaper to settle. “The only choice I have is to try to raise money and offer a settlement,” he says.
Bill Irvine of Phoenix says he is fighting infringement allegations targeting AboveTopSecret.com, the site he controls under The Above Network. The site is accused of infringing a Review-Journal article on the Gulf of Mexico oil spill. The site is a user-generated discussion on “conspiracies, UFO’s, paranormal, secret societies, political scandals, new world order, terrorism, and dozens of related topics” and gets about 5 million hits monthly, Irvine says.
Righthaven, he says, should have sent him a takedown notice under the Digital Millennium Copyright Act, because the article was posted by a user, not the site itself.
“In this case, we feel this suit does not have merit,” he says. “We are confident we will have success challenging it.”
Gibson says he’s just getting started. Righthaven has other media clients that he won’t name until the lawsuits start rolling out, he says.
“Frankly, I think we’re having tremendous success at a number of levels,” Gibson says. “We file new complaints every day.”
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