It Used To Be Media News Agencies Were the Wholesalers and Broadcasters Were The Retailers

In other words, as news organizations continually search for more and more ways of making money from their “create once, sell many times” products, the dividing line between wholesale and retail is crumbling.

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But nothing is ever as simple as it appears on the surface. Take, for instance, the CNN and ABC video deal with Yahoo. Will that video supplied to Yahoo be just that produced by its own news crews? If so, it’s no problem. But what if the video contains clips from other news suppliers such as Reuters Television or APTN? Do CNN and ABC have the rights to use that video when selling their products via a third party (Yahoo)?

It all depends what their current contracts say, but if CNN or ABC are allowed automatically such third party sales then that’s a new development in the news agency contractual world. In the past if a news agency subscriber wanted to use news agency material for sale within its own product via a third party then there needed to be an agreement in place between the news agency and that third party for a share of the revenue.

Both Reuters Television and APTN are very protective of their intellectual “rights”. Under contract, the CNN International service, for instance, has to credit either agency whenever more than a few seconds of its video is shown on screen, and their creditlines are seen many times during a newscast. CNN says that under its Yahoo agreement it will provide extensive world news video which means that much of that video will emanate from Reuters and APTN.

"Working with Yahoo! puts CNN.com's video in front of millions of additional Internet users," said Susan Grant, executive vice president of CNN News Services. "This agreement gives us another opportunity to extend our brand and expand CNN's online audience."

Reuters Television and APTN are both active with their own online web activities. They each have an agreement to provide Yahoo with their video products and that may mitigate how they respond to their own material possibly being used by ABC/CNN in such a competitive situation. It would be unusual, however, if they did not insist on some cut of the financial pie if the CNN and ABC products contain some of their video, and it will be interesting to see if they seek additionally onscreen credits to bolster their own brand campaigns.

If the ABC/CNN deal does mean that some news agency video might be included and the deal had been with an organization that the news agencies did not already have a business relationship then they certainly would insist on a contractual relationship with that third party in order for the deal to go through.

Similar situations arose in the past when making news alerts, headlines, and text available on mobile phones. To a news agency, telecoms were a new business sector to offer a news wholesale product. But then the likes of CNN and other retail organizations came along wanting to sell their new mobile products to those same telecoms. And did those alerts, headlines and text contain news from the wholesaler?

It’s those types of new business opportunities that keep the “rights” lawyers working late into the night, and why contract language continually changes.

On the other side of the coin, Reuters is making no secret of its desire to build its brand into a household name and create a media powerhouse via its reuters.com web site. And to do that it has been canceling some lucrative agreements with such thirds parties as Yahoo (Reuters was one of the original investors in Yahoo), preferring to keep certain products exclusively for its web site.

It’s a policy that makes sense. Advertising is increasing by some 30% annually on the Internet, the major news sites are continually increasing their rates as media houses come up against a scarcity of inventory for the top sites, and the more that Reuters can build up the unique visitors to its site (currently it doesn’t show in most top 10 news lists) then the advertising dollars should flow.

The loss of revenue from the canceled third party agreements and the new revenue from increased advertising have so far been about a wash, but that should bode well for the future.

But it’s a difficult line to walk upon being both wholesaler and retailer. Reuters first media effort at doing this was several years ago when, in Europe, it established a sports Internet site called sportsweb.com. It contained basically all the sports news that Reuters was then currently supplying to its wholesale clients. In Europe the major national news agencies were not amused and neither were the Reuters media sales people in the US who were making a packet selling to web third parties during the dot.com boom.

Why, the European national news agencies asked, should they continue paying premium rates for Reuters news, when the sports component was being provided for free on the web to the general public at no charge?

It was a fair question, and not one easy to answer, but in the end the two sides came to a negotiated settlement without Reuters losing revenue, but is has always been a wonder at how adeptly the media news wholesaler has been able to juggle such business without further complaints from wholesale subscribers.

It goes to prove just how much value there is in a brand, and the more highly your clientele values it, the more you can get away with that others probably could not.

It Used To Be Media News Agencies Were the Wholesalers and Broadcasters Were The Retailers. Now Each Wants Their Cut of the Other’s Pie.