Under Logic Of German 'Pay To Link' Proposal, If A German Publication Wastes My Time, I Can Send Them A Bill

from the logic-failure dept

For quite some time now, we've been following the bizarre effort in Germany to establish "neighboring rights." This was a plan, first floated a few years ago, to force aggregators to pay to link to news sources. This year, that effort has really ramped up. In March, news came out that such a proposal was being written, and the first draft was released in June, horrifying many who actually understand how the internet works. Basically, if you make money (say via some ads on your site) and link to a source with a short excerpt, you would have to pay. This includes those who do so via their own blog or social network site. Quote an article on a Facebook account, which you also use to make some money (say to promote your business) and you may have to pay.

As is described in a recent comment from Mathias Schindler, who has been attending the various hearings on these neighboring rights proposals, this appears to be a misguided effort by publishers, who have failed to adapt, to capture revenue from anyone who incidentally profits from the information they provide:
"The publishers argued that the bank consultant was only able to advise his clients because of the journalistic work in the published article. So that means the publisher deserves a fair share of any money made from that scenario. This was the proposal from the start."
We've seen this kind of thinking for years, and it really represents a fundamental misunderstanding of economics, driven by a variety of false assumptions, including the idea that the only way to determine value or benefits is through monetary transactions. This is obviously crazy when you put things into context. At the very same time that these publishers are demanding payment to link to their content, they and others are paying search engine optimizers to get more links, recognizing that such traffic is important. Basically, implicitly they recognize that traffic, absent money, is valuable, but they're now trying to add money on top of that.

One of the most misunderstood aspects of economics is the allocation of benefits. It's all too common for certain players in a market to assume that they should accrue money for anyone and everyone who benefits from their work. But that is not only impossible, it would actually massively limit growth. Such "externalities" or "spillovers" (depending on which economist you're talking to) have a major impact on economic growth, which often comes back to help the originator of the work, even if they don't directly receive payments for it. The research of the "new growth" economists over the past couple decades have really zeroed in on how externalities from information, such as third party benefits, are the key ingredient in economic growth. Clamp down on that, and you clamp down on the ingredient needed for economic growth.

Of course, if you want to demonstrate the fallacy of the publishers' argument, it's easy: just flip the situation around. If the publishers truly believe that anyone who uses information found in a publication to profit owes them a cut, then what if information leads to a loss? Say that I rely on information in a German publication to make an investment in a company that goes out of business. Should the publisher now repay me for my losses? Taken to the logical extreme, that's exactly what the publishers appear to be arguing. Take it one step further: let's just say that the article I read in a German publication wastes my time and provides no useful information. My time is valuable, and they've now wasted it. By their own logic, should I not be able to send them an invoice for wasting my time?

Somehow, of course, that flip side of the equation never gets discussed. Because this is not about logic. This is about publishers who don't want to adapt looking for protectionism on the upside only, against actual innovators. That the German government appears to be treating such concepts seriously suggests a significant risk for Germany to end up putting a massive chill on innovation and economic growth, by trying to tax the very beneficial externalities of information in a manner designed solely to protect one side of the market for a group of businesses who are trying to stifle competition and innovation. It's a dangerous move by a government who should be encouraging innovation and growth, not stifling it.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Aug 23rd, 2012 @ 8:08pm

    Wow this sounds utterly stupid. Whats with all these silly German proposals recently?

    Also having links to you only benefits you it seems utterly crazy to try and limit that.

     

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    MrWilson, Aug 23rd, 2012 @ 8:31pm

    "'The publishers argued that the bank consultant was only able to advise his clients because of the journalistic work in the published article. So that means the publisher deserves a fair share of any money made from that scenario.'"

    This argument taken to it's natural end would mean that anyone who does anything beneficial to anyone else should be compensated.

    The managers at the publishing companies should be paying residual royalties to the children of the teachers who taught them how to read and write because they clearly profit from being literate.

    Heck, children should pay their parents for telling them about the world and should charge them when the parents' teachings turn out to be false.

    I'm gonna make so much money off of my parents telling me about Santa Clause and the Easter Bunny...

     

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      jsf (profile), Aug 24th, 2012 @ 7:47am

      Re:

      Don't forget to include the company, or any subject, that an article was about. Because if the subject of the article didn't exist the magazine wouldn't have been able to write the article and make money. Thus any and all subjects of articles should be getting paid by the magazine publisher.

      Just think about how that would change the world of politics. Any time a politician was mentioned in an article they would get paid by the publisher. You would suddenly see a dramatic decrease in political coverage.

       

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    chad holbrook, Aug 23rd, 2012 @ 8:34pm

    Could this mean....

    ...that if I link to a German article and expand their readership and expose the article to a wider audiance... can I bill their advertising department for all the work that I've done for them? There is a service that I'm providing for them and I'm sure that my fees will be based on sound math and fairness, just like they have done here. Oh, and with the same amount of transparency.

     

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      Anonymous Coward, Aug 24th, 2012 @ 12:38am

      Re: Could this mean....

      this. It sounds exactly the same as ISP's demanding money from CDN's for their traffic, while the CDN's could just as well charge the ISP's for their content. Resulting in only losses for overhead.

       

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    Pixelation, Aug 23rd, 2012 @ 10:25pm

    What a train wreck.

    Next headline, "Germany cut off from the internet".

     

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      That Anonymous Coward (profile), Aug 23rd, 2012 @ 10:47pm

      Re:

      I was actually going to suggest that happen.
      They went after Google and other companies with these insane things, they make YouTube a nightmare for their citizens... the net might need to start seeing stupid as damage and route around it.

      Did no one learn anything from the newspapers in Belgium?
      They cried and cried Google was stealing money, so Google stopped... then they cried and cried that Google wasn't giving them traffic any longer. It really is time that court insist on actual common sense in these cases, rather than just embracing the idea that because someone on the net makes money they owe a cut to everyone else.

       

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      gorehound (profile), Aug 24th, 2012 @ 6:14am

      Re:

      +1

       

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    Jesse (profile), Aug 23rd, 2012 @ 11:43pm

    What a wonderful article. One of my favourites for sure. You really hit the nail on the head with the flip side.

     

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    Tor (profile), Aug 23rd, 2012 @ 11:53pm

    benefits

    "One of the most misunderstood aspects of economics is the allocation of benefits. It's all too common for certain players in a market to assume that they should accrue money for anyone and everyone who benefits from their work."

    I think this flawed principle is central to a lot of misunderstandings and ought to be highlighted more often.

    Btw. this idea that the producer of something should be able to reap the full benefits - isn't the logical conclusion of that also that we should give up any attempt at increasing competition since competition leads to lower consumer prices which means that producers receive a lower share of the benefits of their production.

     

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    TecoScr, Aug 24th, 2012 @ 1:06am

    Origin of the idea...

    Just for the record: the idea of charging search engines and others for linking to (newspapers') content actually goes back to Richard Posner:
    Online news is free for two reasons. First, in the case of a newspaper, the marginal cost of providing content online is virtually zero, since it is the same content (or a selection of the content) in a different medium. Second, online providers of news who are not affiliated with a newspaper can provide links to newspaper websites and paraphrase articles in newspapers, in neither case being required to compensate the newspaper.
    [...]
    Expanding copyright law to bar online access to copyrighted materials without the copyright holder's consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder's consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

    The Becker-Posner-Blog: The Future of Newspapers

     

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  • This comment has been flagged by the community. Click here to show it
     
    identicon
    Anonymous Coward, Aug 24th, 2012 @ 1:20am

    " Say that I rely on information in a German publication to make an investment in a company that goes out of business. Should the publisher now repay me for my losses? Taken to the logical extreme, that's exactly what the publishers appear to be arguing."

    You show an incredibly level of stupidity here.

    If you run a store, and obtain inventory from somewhere, you pay for the inventory and you keep the profits when you sell it. If you sell it for a loss, you don't get a discount on the inventory.

    Not everything in life is a perfect two way street. Your argument creates a strawman that makes absolutely no sense.

    Sorry Mike, but you are really having a bad week here. Try not to lose it on me, okay?

     

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      Goyo, Aug 24th, 2012 @ 3:15am

      Re:

      "If you run a store, and obtain inventory from somewhere, you pay for the inventory and you keep the profits when you sell it. If you sell it for a loss, you don't get a discount on the inventory."

      So I take the risk and the provider free-rides on me? How bad, let's change the law so I can get a fair share of the provider's revenue. That will save jobs.

       

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      Anonymous Coward, Aug 24th, 2012 @ 4:12am

      Re:

      Of course the argument is silly that's the point. You show an incredible amount of stupidity addressing it as if he was suggesting that's how it should actually work.

       

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      abc gum, Aug 24th, 2012 @ 4:37am

      Re:

      sarcasm - how does it work?

       

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      • This comment has been flagged by the community. Click here to show it
         
        identicon
        Anonymous Coward, Aug 24th, 2012 @ 7:00am

        Re: Re:

        Mike doesn't do sarcasm. He just does FUD.

         

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          velox (profile), Aug 24th, 2012 @ 7:29am

          Re: Re: Re:

          "Mike doesn't do sarcasm. He just does FUD.
          "
          Perhaps you can't recognize sarcasm here because all you feel is fear, uncertainty and doubt when you read TD.

           

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    Anonymous Coward, Aug 24th, 2012 @ 1:39am

    1)Mathias Schindler, who has been attending the various hearings on these neighboring rights proposals

    at least the discussions are 'transparent and not limited to just the side that will benefit the most

    2)suggests a significant risk for Germany to end up putting a massive chill on innovation and economic growth, by trying to tax the very beneficial externalities of information in a manner designed solely to protect one side of the market for a group of businesses who are trying to stifle competition and innovation

    now doesn't that sound very familiar? it's seems exactly what the entertainment industries are trying to do because of their 'failure to adapt' mentality

     

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    Anonymous Coward, Aug 24th, 2012 @ 1:39am

    The German economy is dead anyway.
    Its 'official' debts are around 1/50th of what it really owes, but this has been fudged to prevent mass panic and a general exodus from the Euro.
    They feed debts into other departments and expenses systems so it can be ignored when they talk about export/import debt and deficits.
    Same pretty much goes for France, the UK and several other major EU countries.

     

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      abc gum, Aug 24th, 2012 @ 4:41am

      Re:

      "Same pretty much goes for France, the UK and several other major EU countries."

      Have you overlooked a few ?
      Hidden debt ... off balance sheet budgets ... unfunded wars
      Sounds familiar somehow

       

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    Ninja (profile), Aug 24th, 2012 @ 4:16am

    I have this sudden urge to link to random German content just for the lulz.

    Considering Germany has GEMA I'm not surprised. Hope the Germans resist like the Americans resisted SOPA.

     

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    Ninja (profile), Aug 24th, 2012 @ 4:18am

    I have this sudden urge to link to random German content just for the lulz.

    Considering Germany has GEMA I'm not surprised. Hope the Germans resist like the Americans resisted SOPA.

     

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    John Doe, Aug 24th, 2012 @ 4:50am

    What about the right of first sale?

    If I buy a fleet of Ford trucks and rent them out, do I have to pay Ford for every transaction or just the initial purchase? Just the initial purchase thanks to the right of first sale. So if I buy a newspaper or subscribe to a website and then use info I garnered there, do I have to pay additional fees? What if I view a website for free but they are making money off my eyeballs for advertising? That is still effectively me paying for the content and therefore should be free to do with it what I want.

     

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    abc gum, Aug 24th, 2012 @ 5:22am

    If I respond to an advertisement offering 10% off, do I owe the publisher a cut of my "savings" ?

    Do coupon cutters owe the paper a cut of their "savings" ?

     

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    colin s, Aug 24th, 2012 @ 5:33am

    Paying to link

    Applying the publishers' logic: they each individually should be remitting a percentage of their annual incomes that are derived from knowledge obtained from their teachers.

    Pro rata of course. And to fairly allocate the remittance, their grade school teachers who taught them how to read, are core to that income stream, so everyone after them should be paying a percentage of what they receive from the publisher. This would recompense the grade school teachers for equipping the publishers for work.

    Never mind the accounting nightmare.

    IT'S THE PRINCIPLE THAT MATTERS!!!!

    Doh.

     

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    Anonymous Coward, Aug 24th, 2012 @ 6:43am

    If this passes how long until the professors in Germany start to demand a portion of every graduate's salary? After all it is their knowledge that was used to land that job. And it won't stop there either. Lawyers, doctors, scientists, etc all rely on each others work (lawyers read up on established case law, doctors read medical journals, scientists read published works of other scientists, etc.) The line of people demanding a hand out would be endless. You think a business has a hard time bringing a product to market now with all the patent trolls demanding a cut just image what that business would have to deal with if this passes and spirals out of control.

     

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    anon, Aug 24th, 2012 @ 7:51am

    Again..

    Sorry but if you put content on the internet that content becomes public, if you do not want anyone linking to your work then you should remove that content or put it behind a paywall. The internet is free to access and use and link to pages of interest. It is not like anyone is stealing there content it is linking , i.e sending people to there website to read there article and maybe see there ads if they are not using ad block software.

    If anything any website that does not want there content linked to they need to put up a big red banner on there home page so that people will know not to waste there time there, not that it will be necessary as those sites will quickly dissapear as nobody sees them on any of there much visited websites.

    Just look at reddit as an example of linking, there are times that so much traffic is sent to a site that they cannot cope with the traffic and the site implodes, who would not want this type of traffic to there website. I think that this is being done by people who seriously do not understand the principles of linking and if they get there way and do manage to monetise linking in Germany they are going to have many many news aggregaters refusing to accept links to there content.Germany could in fact become a no go zone for traffic with many sites blocking the ability to link to a German domain.

     

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    Thomas, Aug 24th, 2012 @ 9:33am

    Wouldn't this mean Google would have to pay money to every website on the planet?

     

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      That One Guy (profile), Aug 26th, 2012 @ 2:25am

      Re:

      Or just stop linking to the site(s) in question, and that certainly went over well the last time it was mentioned here.

      Was a delightful source of schadenfreude though.

       

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    slick8086, Aug 24th, 2012 @ 6:17pm

    How about instead of aggregating links from news sites, instead these sites write small advertisements for articles on the news sites and then charge them advertising rates.

     

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