Disruptors disrupted, part two (updated)

The NLA and Meltwater multi-pronged litigation passed a new milestone today. To remind yourself of the last one, and to get a bit more background on the case, have a look at a post I did previously.

This time the it was the copyright tribunal’s turn to issue a decision.

Meltwater were quick to claim victory. They called it “…a major decision in favour of Meltwater in the UK”. Elsewhere they said that they had been successful in reducing fees which would otherwise have been over £100 million over the next three years.

It’s a funny interpretation of victory. It’s hard not to think of the Black Knight in Monty Python’s Holy Grail, gamely fighting on with no limbs left. Meltwater’s position has at various times been to deny that they need a licence, deny that their clients need licences, deny that what they do infringes copyright, state that what they do benefits newspapers because of all the traffic they get and variously claim that this case criminalises web browsing.

They forced this issue to litigation in the first place, by refusing to take an NLA licence and making a referral to the copyright tribunal. That litigation has now taken them to the high court, the appeal court, the copyright tribunal and is still lumbering towards the supreme court. Costs run to millions of pounds.

So far no court or tribunal has agreed that they don’t need a licence, no court or tribunal has accepted that their clients don’t need licences, no court or tribunal has backed their view that their business exploiting other peoples property doesn’t require the agreement of those whose property they exploit.

So they resort to digging deep into the details of the copyright tribunal’s ruling to find a scrap of respite, something they can claim as victory, from this relentless failure to obtain backing for their stand. For what it’s worth (and I can assure you it’s not worth £100 million), they find it in the tweaks the tribunal has made to the NLA’s tariff (see Paragraph 260 for a summary of the whole decision or for a very detailed analysis of the thinking on fees start at around paragraph 183) which prevent the NLA from making planned increases in the next three years.

But if we’re rummaging around in the tribunal decision, and you should certainly read the whole thing not least because these snippets are selective, a few other points jump out at us.

For example, Meltwater claimed that they were sending out between 1 million to 5 million links per year to their clients (paragraph 78). Subsequent information (paragraph 80) revealed this to be about 70 million in reality.

Meltwater has also claimed on various occasions that their service benefits UK newspaper publishers by sending them traffic which they can then profit from.

In the tribunal it emerged that in 2009 Meltwater provided 94,000 click-throughs to UK newspaper websites (paragraph 86). “Not insignificant” they claimed.

When you consider that the top 5 UK newspaper websites currently reach about 170 million unique users per month it doesn’t seem particularly significant either. Even if you assume each of these only generates a single page impression each (in other words, dramatically underestimate their actual traffic), 94,000 click-throughs is, according to my dodgy maths, somewhere under a hundredth of one percent of their current annual traffic. Probably not the most enormously profitable opportunity they have, and a strong indication that Meltwater clients get most of what they need direct from the extracts Meltwater supplies.

This is significant for a number of reasons, not least in the light of another tribunal revelation. Meltwater claimed that NLA content is only responsible for 4% of their UK revenue (paragraph 77). The tribunal judged (paragraph 89) that 30% was a “much closer approximation”. And since Meltwater’s UK revenues are measured in millions of pounds, their argument that they should pay next to nothing, seems a little tenuous.

The reason I mention these is to highlight the point that some of Meltwater’s figures seem to be dramatically skewed to help them paint a picture. Or, in the words of the tribunal (paragraph 35) referring to Jens-Petter Glittenberg, Meltwater’s Founder and Director:

Either Mr Glittenberg genuinely had no idea about these numbers and was simply guessing wildly, which we find hard to believe, or he genuinely believed his estimates and therefore does not have much of an idea about his own business, which we also find hard to believe or he was simply deliberately seeking to withhold information to further his cause. We cannot resolve which it was and will not do so. However it does mean that we will treat Mr Glittenberg’s evidence with caution.

The tribunal found themselves “…not impressed with Mr Glittenberg as a witness” (same paragraph).

So with that in mind lets turn to one of the claims Meltwater has been making in the aftermath of the decision. They have saved UK businesses, they say, £100 million over the next three years. If true, this is a dramatic and impressive number. But where does it come from?

That, I’m afraid, I can’t answer. I simply don’t know. Not the NLA, I am sure. They currently raise £20m or so from licensing in general, of which this is a tiny proportion, and they have been talking about much lower figures. In fact according to the NLA it would take more like 50 years for the saving from the tribunal ruling to add up to £100 million. Nor can I find the basis for the claim made in various places that Meltwater won on “seven out of nine” points it put to the tribunal.

UPDATE: the NLA has published their own analysis of the Meltwater claims

So it would seem that the victory Meltwater are claiming is that a huge and seemingly made-up cost, which would never have been charged anyway, will now not be charged. It’s a far cry from their lofty ambition to effectively get the NLA licences abolished.

Finally a word about some of the other claims Meltwater have made. The quote at the start of this post, claming a major decision in their favour, comes from a longer article about a lawsuit filed against Meltwater in the USA by Associated Press to add to the ones they’re already fighting in Norwary, Canada and the UK. Valentines day 2012 probably won’t go down as the happiest in the Meltwater household.

But they are bullish. It appears AP “misunderstands” how the Meltwater service works, according to their statement. Their service is “complementary” and “directs users to publisher websites”. Meltwater is “just like any other search engine”. Meltwater “respects copyright”. They are “confident” that their service “is compliant with US law”.

It all sounds a bit familiar. It takes a lot of chutzpah, for sure, to make statements like that on the day when similar assertions have been so humiliatingly deconstructed in another tribunal.

I have a suggestion.

Perhaps Meltwater should stand back and think before spending yet more of their millions on yet another lawsuit. Perhaps they’re wrong. Perhaps publishers do, and should, have a right to say how their content is exploited. Perhaps setting up a company which treats other peoples property as a free resource is just not reasonable OR legal. And perhaps the courts will keep disappointing them,

Maybe what Meltwater ought to be doing is asking itself what a fair deal would be, sitting down and negotiating it with content owners who are willing, and operating a service everyone is happy with.

Just an idea.

Disclosure: I used to be Chairman of the NLA

Comments

6 Comments so far. Leave a comment below.
  1. Hugo Drayton,

    Well-written piece, Dominic – illuminating and highly readable.

  2. Alex,

    It’s a well-crafted article, Dominic, but you’ve rather missed the point. Regardless of how embellished some of Meltwater’s figures are, the fact remains that this tribunal has succeeded only in upholding an antiquated and unsustainable business model. I have no argument against MMOs having to pay the NLA a license fee – that’s fair enough – but the end users too? How long does the NLA think it can keep fighting the natural ‘grain’ of the internet? The fact it now has Google News Alerts in its sights lays bare its flawed, out-dated ethos. That’s the crux of the issue, and that would seem to be the thrust of Meltwater’s argument.

    • Thanks Alex. I think you make an interesting observation, and it opens up the real issue. I don’t thinking missed the point, though, and I don’t agree with your gloomy assessment that the internet is beyond hope. I am an optimist, and I think there are better ways as long as we don’t just accept as the status quo a manifestly unfair state of affairs which leads to perverse outcomes.

      I feel another post coming on, to expand on this theme…!

      Dominic

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