I’m no legal expert, but my general understanding is that companies aren’t allowed to come together and agree on pricing for their products. In some circles, that’s called price-fixing.
So it struck me as odd that News Corp is reportedly trying to enlist other media organizations in a consortium that would hide content behind a paywall. The Los Angeles times reports today that News Corp’s chief digital officer, Jonathan Miller, is “believed to have met with major news publishers including New York Times Co., Washington Post Co., Hearst Corp. and Tribune Co., publisher of the Los Angeles Times.”
Let’s forget the possible collusion that’d be occurring if these meetings were held in secret. Reporter Dawn Chmielewski doesn’t clearly state where her information comes from, but even if the news organizations were openly talking about setting a price on the news, legal questions arise.
I’m reminded of what happened in May, when newspaper executives quietly met to talk about content models. Notably, they brought an antitrust lawyer with them, and after the fact sent out a carefully-worded statement that avoided saying there was any sort of collaboration going on. No, it was just a meeting “to discuss how best to support and preserve the traditions of newsgathering that will serve the American public.”
At the time, Slate spoke to Kenneth Ewing, a partner at the law firm Steptoe & Johnson, who specializes in keeping corporations out of antitrust trouble. Ewing said companies should avoid even talking about pricing, costs or payment terms when they meet.
“It’s Antitrust 101,” he told Slate. “If you’re a competitor of another company, you violate federal and state law if you agree on the price or the general terms on which you are willing to compete.”
It looks to me like that’s exactly what News Corp is doing, but after talking to Ewing myself, it seems there plenty of scenarios in which News Corp and other companies could come together and charge for content without violating the law. “As soon as you say, ‘We’re going to build a consortium,’ that opens up whole bunch of possibilities that are not price fixing, and it all depends on what they have in mind,” Ewing said.
In one possibility, the newspapers could pool a portion of their stories into one online product. A more likely scenario would see the consortium setting up a unified system though which people can pay for the news. Both ideas could be legal, Ewing said, but the devil is in the details, and so far things are pretty murky.
As Ewing said to me, News Corp and the other newspapers involved probably have antitrust lawyers crawling over every possibility. I’m sure they’ll find a way to make this legal, but as many people have pointed out before me, that doesn’t necessarily make it a good idea.