When music companies began howling about the illicit
pleasure of file-swapping networks like Napster Inc.,
Kazaa, and Gnutella.com, many in the newsletter
The publishers of the short,
tightly edited missives
with need-to-know information for niche markets had
been living with
the threat of copyright infringement since the
invention of the
photocopier and the fax machine.
But these yawns turned into gapes last October when a
Baltimore jury sided with the small, 70-year-old
Florida publisher of
Lowry's Reports, fining Legg Mason Inc. $19.7 million
for copyright infringement.
The jury decided that none of Legg Mason's propriety
mattered much and that the unauthorized copies were
just as much piracy as the acts of the teen-aged
music-file swappers on the Internet.
The laws passed
to protect the music industry also applied to text --
and that meant that
Lowry's, based in North Palm Beach, was entitled to
damages of $50,000 to
$100,000 per illicit
Fair use debate
The newsletter business is like a canary for the rest
of the world. While music and movie lovers debate the
copyright protection for the future, the newsletter
played out the scenarios through to the endgame.
They've tried the
different licenses, the red paper that turns
photocopies black and the
complicated stapling tricks.
They've worked through
the options and
learned that building a successful business is a
between making it easy for legitimate users to consume
while making it inconvenient -- at least -- for those
who'd like to steal.
"Our attitude has always been that we want to provide
a fair service, and we expect the subscribers to be
fair with us," said Paul Desmond, the president of
Lowry's Reports Inc. "That's all that we've
tried to do all along."
In the months since the verdict, Legg Mason has
declined to comment in detail on the ruling. "We are
appealing to the
fourth circuit, but I would not comment further
because it's a pending
legal matter," said Maura Fox, a spokeswoman for the
In court documents, Legg Mason's lawyers offered a
number of legal defenses, including arguing
that the copying was protected as "fair use" of their
In the end, the jury chose Lowry's definition that
"fair" meant one person reading one subscription. The
penalties were calculated using the newest copyright
laws passed at the behest of the large movie studios
and record companies.
The verdict sent newsletter publishers searching to
determine what the legal cudgel means for their
While the case is not final because of the
Legg Mason appeal, copyright owners gained additional
strength earlier this year when Judge William Quarles
Jr. refused to throw out the jury's verdict.
"There was evidence from which the jury could have
concluded that Legg Mason's employee's conduct was
unreasonable and in bad faith," the judge wrote
in February in an opinion validating the jury's
Extra copies discouraged
Some newsletter publishers, like Lowry's, are being
very conservative and
sticking with the
old business model -- where one subscription delivers
one copy for
one person. Each subscription must be bought by one
person, who is
told again and
again not to make extra copies for friends, relatives
"It would be complicated for us to do it any
other way," Desmond said. "We're
always getting phone calls from people who aren't
listed on our client
"We can't handle that volume," he added. "We want to
work directly with our clients."
Others, meanwhile, are pursuing new business models
with generous licenses
that make it
easier for large companies like Legg Mason to buy
their office without worrying that someone will
inadvertently make an
errant copy and trigger a multi-million dollar
'Newsletters are not donuts'
"Publishers should recognize that customers who buy
information products are paying to get answers and not
for the actual product," said Jakob Nielsen, head of
the Nielsen Norman
Group, a Fremont, Calif., consultancy. "In other
words, you subscribe to a business newsletter because
of the actionable information it provides -- not in
order to get the pretty pictures."
Many customers buy newsletters for their jobs Nielsen said.
"This means that once a company has paid for one copy, they
have really paid to get the answer to their question,"
Nielsen said. "It's fair enough to make them pay a
little more to easily distribute this answer around
the organization, but not much more.
"Newsletters are not donuts, where it definitely
should cost much more to feed 100 people than to serve
Nielsen's firm recently created a report on how newsletter publishers may better serve their customers. The report
costs $298 for the
first copy or $498 for the right to distribute
unlimited copies within an organization.
Michele Raymond, publisher of Recycling Laws
International in College Park, also is working to
balance the needs of her subscribers. Her newsletter,
which summarizes the regulations affecting large
companies, comes out six times per year.
Raymond also includes frequent e-mail updates and
access to Web site containing many articles about the
"We're pretty reasonable," she said. "People don't
want to buy separate subscriptions for each person. We
tried to come up with a global limited license that
enables them to do that."
Subscribers who upgrade from Raymond's basic annual
$477 level to the $998 "global" status receive such
extra features as a site license for five people and
the right to forward copies of up to five articles a
Raymond also has restructured her newsletter, moving
more details onto her company's password-protected Web
"I'm putting less and less in my e-mails in between my
newsletters, knowing that it can be so easily
forwarded," she said. "I'm just putting a brief in the
e-mails, and if you want to get the whole story, you
have to go to the Web site."
E-mails may be forwarded easily, Raymond explained,
but few people are willing to distribute a password to
a Web site.
A number of publishers continue to explore more
creative technical solutions for what the industry
calls "digital-rights management."
Such systems generally require special software to be installed on
computers, an often cumbersome and confusing solution
that may discourage more customers and thieves.
Regardless, the publishers agreed that it is important
to distribute their work in a way that makes it simple
to read and to use -- even if this means it can be
easy to reproduce.
Lowry's Reports, for instance, sends their newsletters
by e-mail because they are so time- sensitive. This
makes it easy for the subscribers to read, and to
copy. When Lowry's discovers any infringement, they
first try to warn readers of the crime.
"There are always small situations where someone makes a copy," Desmond said. "What we
do, we clearly warn them that we are aggressive in protecting our
copyrights, but we're not out to make enemies of our client base.
"This is the first time we've ever been involved
with initiating a lawsuit against any client," he added, referring to the Legg Mason case. "And we've been in
business for 70 years. It was the extreme copying -- and it was their
persistence after we had asked them to stop."
The rest of the industry appears to share similar mixed feelings.
hand, " We have to keep reminding the customers that the
only way we can stay in business is if they honor the copyright," said Raymond of Recycling Laws
But, she added, "To be honest, if I have to go to that, I don't want to
be in the newsletter business."