Copyright 2000 John Zipperer.
tries plug a sieve with online credit effort
Vista UK managing director exits stage left
by Freelancers May Rewrite Online Reprint Rules
(8/16/00) Many content providers long ago got hip to a basic rule in the online world: When buying an article from a writer, include in the contract full Internet rights, because one never knows when the opportunity to repurpose print content for the Net will arise. But a new lawsuit suggests that these agreements are not enough for publishers that want to resell articles, and it may encourage many of them to grab the whole ball of wax at once and get total copyright over new articles they acquire.
On Monday, a group of freelance writers -- represented by Brobeck, Phleger & Harrison and Hosie Frost Large & MacArthur -- filed a class-action lawsuit seeking back payment for works that they say have been resold online without their consent. The suit charges the defendants with "systematic and intentional violation of the Copyright Act," for displaying, copying, selling, and distributing the copyrighted works without authorization from the copyright holders. Also, the plaintiffs are seeking an injunction barring the defendants from continuing unauthorized use of the writers' works.
The suit seeks class action
status on behalf of freelance writers whose
For example, when someone uses the Northern Light search engine, the search results will include various "special collection" articles, which the user must pay to read. Though many of these same articles are available elsewhere on the Web at no cost -- often from the same publishers who sold them to the databases -- users pay $1 to $4 an article if they find it through Northern Light. Call it the cost of convenience, but the writers are calling it theft.
"It's kind of like Napster, except the sites are profiting from this, whereas Napster makes nothing," said Tom Orewyler, communications manager for Brobeck, Phleger & Harrison. Online music site Napster has been in a life-and-death struggle with the music-recording industry over the use of its site by millions of consumers to search for and trade copyrighted music files without compensating the artists or the recording industry.
This is not the only case that has been fought over online reuse of content, and in the past, the online publishers have had to settle with the writers. One recent case, which may yet end up at the Supreme Court, is Tasini et. al. v. The New York Times et. al., in which freelancers sued the Times, Newsday, and other media giants. Though the freelancers' publication agreements didn't cover the Net, they claimed that their rights were infringed on by the republication of their articles in Internet media, said David Carlin, a lawyer with Loeb and Loeb, which represents Internet-media clients. Though the first federal court to hear the case ruled in favor of the publishers, this decision was reversed on appeal.
But the big media corporations don't pay all those lobbyists to do nothing. "The bottom line of all this is that the publications may get the copyright law changed for the future," Carlin said. Though any savvy publisher today includes the transfer of Internet rights in a publication agreement, the big problem may be the huge backlist of articles the publishers would like to sell online.
While publishers and writers await resolution of these cases, they would do well to take a look at their publication agreements to see if they include full Internet rights. "It doesn't have to be complicated; it can be simple," Carlin said. "You have a simple agreement that says that the freelancer transfers copyright of the article; specifically mention the copyright and republishing." Oh, and run it past your lawyer.
Toysrus to Launch Cobranded Toy Store
(8/17/00) Battered and bloodied in recent weeks by newly impatient analysts, Amazon.com's latest move seems designed to address concerns that it burns through money with no thought to slowing down. The online retailer Thursday announced a partnership with toy giant Toysrus.com to create a cobranded site to sell toys and video games, with a baby products site to follow.
The toys-and-games site, to debut this fall, will be developed by Amazon.com, which will also handle fulfillment, customer service, and the housing of the inventory in its U.S. distribution centers. Toysrus.com will select, buy, and manage the inventory. Users will be able to reach the site by going to www.toysrus.com or by clicking on Amazon's "Toys" tab.
The 10-year agreement provides for Amazon to be compensated through a mixture of fixed payments, per-unit payments, and a single-digit percentage of revenue. Amazon.com will also get warrants allowing it to acquire up to 5 percent of Toysrus.com.
The split in responsibilities suits each partner well, said one analyst. After Toyrus.com had well-publicized problems dealing with its crush of online orders last Christmas, it needed to team up with someone who had established online customer service. And Amazon isn't known for its toys and games offerings, said Kevin Silverman, an analyst with ABN AMRO. "It sounds like Amazon wants credibility in toys now, and you partner with Toysrus and bango, you have credibility in toys."
Though Amazon CEO Jeff Bezos stressed the ability of the partnership to provide a more diverse selection of toys, the deal points to a recognition by Amazon that to get credibility, it needs the knowledge and experience with the product line, as well as the relationships with the toy manufacturers, that a company such as Toyrus.com already has.
"Toy merchandising is not for kids; you need smart, experienced people," Silverman said, "and Toysrus has those kinds of folks." Each company will market the cobranded site to its own customers.
With better positioning against online toy rivals such as eToys, Amazon will remain a big player in that market without having to take the entire investment hit on its own, and that's likely to sit well with investors and analysts tiring of profits always glinting in the far-distant future.
Amazon's shares lost 44 cents on Thursday, closing at $30.44.
Takes Stake in NorthPoint, Plans to Make DSL Respectable
(8/8/00) Local-service phone company Verizon announced an agreement to purchase a controlling interest in DSL provider NorthPoint Communications, one day after it announced its agreement to purchase OnePoint Communications. The latest deal is intended to blend the two companies' DSL efforts.
Verizon will invest $800 million in NorthPoint, $350 million of which will go to NorthPoint shareholders, with the remainder going to capital expenditures and operations intended to improve its service delivery and product suite. The transaction is expected to close by summer 2001.
Verizon claims the OnePoint acquisition will speed up high-speed Net access to multiple-tenant buildings, such as apartments or office buildings. Financial terms were not disclosed for that transaction.
When it became clear that cable and DSL were shaping up to be major broadband players, it was the cable TV representatives that were nearly laughed off the field as people noted the horrible customer service reputation of that industry. But today, horror stories abound of delayed and incompetent DSL installation, and the formerly trustworthy phone companies are left looking like they overpromised their capabilities.
The "new" NorthPoint could address some of those deficiencies, at least if things go as planned. The combination of the two companies' assets give the new entity the potential to "rapidly scale in an increasingly competitive broadband market," in the words of NorthPoint CEO and president Liz Fetter. She also promised that by being a better-positioned rival to cable, NorthPoint's consumers would gain, getting more innovation, choice, and improved service.
That provides a bit of deja-vu: When the heads of America Online and Time Warner spoke before a recent Federal Communications Commission hearing on their plans for cable broadband services, they promised much the same thing (see July 27 IWN). After DSL had begun to look like a lame also-ran, its proponents look like they may yet make it a real race. The new NorthPoint estimates that it will have more than 600,000 DSL subscribers by the end of the year.
It's been a busy week at Verizon, which is several days into a strike by about 86,000 employees. In addition, Verizon and NorthPoint both announced second-quarter results Tuesday. Excluding one-time charges, Verizon reported a profit of $1.97 billion, or 72 cents a share; analysts polled by First Call had expected 83 cents a share. NorthPoint's losses widened in the quarter, reaching $112.1 million, or 85 cents a share, compared to $37.9 million, or 44 cents a share, in the year-ago quarter. Verizon's stock fell 11 percent on Tuesday, closing at $42.38. NorthPoint lost 5 percent, closing at $14.25.
Servers Charge Microsoft Browser Patch with Discrimination
(8/3/00) Imagine the confusion in the Microsoft boardroom. First, the company gets into trouble with the Department of Justice's antitrust division for trying to take over the tech world. Then the company tries to be good, announcing a patch for its Internet Explorer 5.5 browser that would let users reject third-party cookies. And what does that get it? The ad-serving industry is up in arms, complaining that Microsoft is shutting it out of the ad-serving market.
The argument of these advertising networks goes something like this: Cookies sent to a computer from a third-party ad server would be more likely to be blocked by consumers using the patch than would cookies sent to a computer from a first-party advertiser. Microsoft, which itself is a first-party ad server for its Microsoft Network of Web sites, would seem to have an advantage over those ad servers competing with MSN.
For its part, Microsoft said it is just trying to help. "Microsoft's perspective is to give consumers notice when cookies are being placed on or read from their machine," said a Microsoft spokesperson. "And education is part of that."
The patch was an unwelcome surprise to some in the ad-serving community, who at the time were negotiating self-regulatory data-collection policies with the Federal Trade Commission. Last week the FTC approved those policies, which were proposed by the Network Advertising Initiative, an industry association that includes ad giant DoubleClick. Under the proposal, the companies agree to safeguard the information they collect from Web users, keeping personally identifiable information separate from information that is not personally identifiable.
Though IE competitors Opera and Netscape employ various methods of handling third-party cookies, IE is the market-share leader. In addition, it's the browser's new default handling of third-party cookies that riles the ad industry, which is concerned that it will result in users selecting to reject these cookies. The security alert dialogue box that pops up asks users if they want to allow a cookie, and if they want to make that answer ("yes" or "no") the default so they won't be prompted again.
Before Microsoft announced the patch, the company had been in contact with ad-industry representatives and expect this discussion to continue. "We're confident we're going to get Microsoft to change this," said Jeff Connaughton, of Quinn Gillespie & Associates and an NAI spokesperson.
Now is the time for Microsoft to show backbone. The NAI's proposed self-regulation scheme is a prime old-paradigm solution. Come up with a plan, get the authorities (the FTC) to accept it, and if the masses object, hide behind the plan's "official" status. Asked if consumers were likely to accept this "trust us" self-regulation, NAI's Connaughton replied that his group was relying on the government and its acceptance of the plan. "We'll see if consumers have confidence in it," he said.