Peretz v. Nesson

From Cyberlaw

Nesson: Black Turtleneck
Peretz: Crimson Turtleneck
Gong!

Contents 1 Backstory 2 The Issue 3 Tables Turned 4 The Wisdom of Dentists

Backstory

• Nesson assigned material relating to the Nuremberg trial. Wanted to address the question, "what is trial for?"
• Nesson chose a piece from TNR by Tamara Chalabi. He assigned a piece, and received an email pointing out that in order to reach the assigned article at newrepublic online, a student was required to register.
• Peretz: you used to be on the board of directors; Nesson: it's true; Peretz: but that's when we were friends, before we were antagonists; Peretz: it's true
• N: When did you become the man at TNR?
  • P: bought the TNR in 1984, immediately had an EIC merit contest, and chose himself. He's been in that position for 32 years.
• N: Are you in a business?
  • P: It's really not quite a business; most of the magazines in this area aren't businesses. It is the last remnant of personal entrepreneurial venture. These magazines lose a lot of money. Once the profit was so low that the party I gave to celebrate it put us in the red. Once, we made $250M, and another time, $40,000. The venture dips into the inheritance of my kids, and of other parties who I have enticed
  • N: I would like to say that I did not purchase my seat on your board
  • P: You also didn't give very good advice... You came on in the first week, and the bottom line has gone so far below the bottom line since then, but it's hard to attribute it to you.
• P: The National Review doesn't lose much money, since Bill Buckley raises $2.5M each year, and there is a non-profit that does things for the National Review. The Weekly Standard's losses do not have to appear in its books because while they are substantial, they fall below the line where News Corp. has to report them.
  • N: So what are you trying to say?
  • P: That TNR, the Nation, the Weekly Standard, the National Review, the Atlantic, are contributions to our culture.
• P: TNR was really founded by Justice Brandeis, before he was a justice. He populated the editorial board with a protege, Felix Frankfurter. And John Dewey, Walter Lippman, fresh out of Harvard ('10), and Herbert Crowly (EIC). Brandeis used to write memos when he was on the court that would turn out to be editorials. Brandeis was obsessed with Zionism, and was for a while the most important Zionist int he world. He set the line from the court. He paid Frankfurter to go to the Versailles peace conference.
• N: so it's a venerable institution with deep roots in HLS.
  • P: and Yale law school. Alex Bickel. (a great figure in Brown v. Board, a hero to intellectual lawyers in Nesson's generation. He coined the phrase, "the least dangerous branch.")
• P: there are larger magazines like the Atlantic, whose reason d'etre, I for one do not understand.

The Issue

• N: So come to my problem.
• P: I spent a decent amount of time tracking down Tamara Chalabi. I had read in the McMillan catalogue that she is publishing a book on the Shia of Lebanon. I knew that she was Achmed Chalabi's daughter. I knew that she was independent, and had read a few things she wrote in Slate. She is a very fine writer and a very careful observer. She notes the significant particulars. We also paid her money; otherwise in this world, there isn't academic privilege or....
• N: I should pause to introduce Terry Fisher to you...
• P: I want to do another part of the model. Charlie and Fern and I have a friend who owns US News and World Report (Mort Zuckerman). In the last couple of years, it's business has been cutting staff, as a way of mastering the model. You do not make money off your circulation. I don't know exactly what Mort pays for a subscriber. My guess is that it's $170-$210 a person. That means the person dies before Mort can make up that expenditure, becuase people want gifts if they're going to subscribe to magazines.... Harpers is owned by the MacArthur foundation. But Chalabi's piece cost me $1300, and I had to publicize it to get attention on the web, so I don't know how much that cost me, and I couldn't find the guy who could estimate it for me this afternoon. And then you, in the hauteur of a law professor of HLS decided that you would not make it free, but make it trouble free. It is true that when someone registers, he runs the risk of getting lots of annoying email from us, unless he takes his name off the annoying email list, but very few people do, because there is a prurient interest in... except that person, who is he?
• N: David Russcol. I'm going to award him a prize.
• P: He seems to me to be a spoiled brat; he wants something for free. It's because of him that the WSJ charges $290. That's the future of the successful publication. That's the way you withstand the tremendous upheaval of web publishing. Short pieces... although that's not true at TNR. At TNR, we measure every piece we run, and people are interested not in small notes, but in really long pieces. The most viewed piece ever published on TNR online was Zadie Smith on Kafka; it was 12,000 words, and we had 180,000 distinct visitors. You are, by not even allowing us access to Mr. Ruscoll, you are depriving us of the opportunity to at least try to persuade him that maybe he should pay $9.95 a year (not even hoping for the $49 print edition).
• P: I think that's about my case
• N: Yes, that's his case. He's yours to cross-examine.

Tables Turned

• Fisher: Charlie, can I ask you some questions first? Marty suggested that it's an injury to him that people who gain access to stuff he has solicited don't go through the free but inconvenient registration. It's an unusual injury, in that it's not a reduction in profits but... You have to respond to this on two levels. (1) Why do you think its morally justified to facilitate this injury; (2) and the legal question -- is it consistent with copyright law to facilitate students' access to materials without going through the registration process?
• N: I'll accept that, if you insist, but what I was thinking is that we might pursue a kind of advocacy approach where the W is taken on direct and crossed, and I'm taken on direct, and crossed.
• P: You the transgressor stated the case; that's not ordinary either.
• F: I hope that you at some point in this question take on the responsibility of taking on these two questions.
• N: In that case, let me do it now. It's true that TNR is a venerable magazine. It's partly for that reason that I choose the article; it carries the authority of TNR; it has a measure of credibility. It's true as well that the request to register seems like the most minimal of impositions. I would grant that. At the same time, it's true that it's a pain in the ass for students, and if everything I assign comes with a flowering of permissions that my students have to navigate, each one opening them to any amount of Spam, then I start to feel an impediment to assigning the best possilbe material to you, in order to do the job that I have been given tenure to do. That's the first part. The legal part: the law is not this rock that's out there that just crushes you. It's a malleable thing. It works on good cases that are well argued. I look at this case and say, what would it be worth to Martin Peretz, who bought TNR, and who runs it as a charity, so that his view of the world can be projected as its chief editor, to have his work validated by being taught at HLS; is that a placement that he might like to have? I would think yes. And if my students are then given the choice of registering with the TNR or not, as they choose, rather than being mandated to register because assigned the link, then a impediment to education is removed and still TNR receives benefit. I feel a teacher's privilege; I feel a responsibilitiy; I feel that that's what I've been given tenure to do. And if someone wants to sue, hey, this is HLS
• P: Deep pockets.
• N: What do you think you can take us for, Marty?

• Student: does your website invite users to email this article to friends for free, and the recipients would not be required to register?
• Peretz: I don't know
• S: Maybe this pushes us away from the deeper principles, but if there were other ways, such as Westlaw, whereby we could get these materials for free...
• P: But they pay us
• S: So that's not an example of the prinple; but if you do the same thing that the website invites us to do, it doesn't seem as bad.

• N: But deep in your gut, aren't you pleased?
• P: Your stamp of approval doesn't mean that much.
• N: But let's say I was setting an example, and next thing you know, professors at Yale are assigning it.
• Luis Villa: but what if you're setting the example of sharing information? There is software out there now that can aggregate usernames and passwords. That software swears up and down that you should only use this for sites that do not charge for registration. This software will go to a website, grab a list of known passowrds and usernames and plug them in automatically. {steal someone else's.... borrow}. They swear that this should only be used for sites that don't charge, but that annoy. The precedent that you want to set is that no one should have to pay.
• P: What does TimesSelect do?
• V: You can now have two classes of login... I think the reason you get the best response for long pieces is that anyone can write a short article on Bush. But it seems that the precedent you're endorsing is that you can get things for free.
• Student: A compelling justification is that you wanted us to have access to information. But if we look at the number of pages we have to read in your book, it's 106 pages, and it's about $1 a page. So how does that differ from not having to sign up for TNR.
• S: If for example, someone was to scan your book in and distribute it by email
• [Nesson pretends to get shot by arrow, to great amusement]
• S: I actually did that. I copied your book and left it in my box, since $106!!! was a bit much.
• N: I think you deserve the David Russcol prize. I'm going to have to talk to my co-authors, but I'm never going to assign my book again.
• P: Just wait till they hear about that at U Chicago. There's an interesting question -- you know about Cass Sunstein. He writes as fast as people drink. He has a piece today on TNR online on Alito. He had a piece yesterday in U Chicago's "Faculty Club"
• N: It looks to me like you're in serious trouble, unles you can figure out some way that the audience of people who appreciate what you do, can support what you do. Do you see any way in this new environment that that could happen?
• P: There are, but many of them are accustomed to getting it for free, that is online. But there are some things you can't get unless you're a subscriber. We have about 15,000 people who pay us from $10-$20, and we hope to lift that to $50,000 in the next 2 years, and "the model" is that you can't get a subscription to TNR online unless you submit a credit card. That's a tremendous advantage. A large part of our costs... we would lose a lot of our expenses in an ideal resolution of this issue. And that's what a new investor who came in a few years ago thought.

Student: The article now is only available for paid subscriptoin. Would you remove it now that it's not free anymore? Or if you were to photocopy it, would you feel OK about handing it out?

• N: I did feel OK about it for years.
• P: And sometimes, Kinko's won't let you do it.
• N: They are certainly sticky.

• David Russcol: While I was annoyed by the registration requirement, what I actually complained about was giving my credit card number. What I intended is that an email be sent out saying that people should look on Lexis for it.
• P: That's surprising to me...
• N: Harvard has a subscription so that our students are introduced to these research worlds for free. I'll tell you a thought, though I don't know if it's significant to you or not. When you go to Lexis, you just get straight text; you don't get the image of TNR. And what I copied and gave them had the TNR logo.
• P: That's the least you owe me.
• S: If you think of the transaction cost involved in all these students spending all this time registering, that's a significant loss. They have already paid the fee. Why should they pay again?
• P: If they want to do it through Lexis, that's ok with me, since there been a transaction between Lexis and these companies.
• S: Do you get paid per click from Ebsco?
• P: Yes, but not from Lexis.
• S: Does it make any difference that this was an educational purpose, as opposed to Nesson sending it to 150 of his friends?
• P: No, it doesn't make a difference to me, because there is a public purpose in people at think tanks who subscribe to the magazine, or old people sitting alone, who need to fill their time -- the serious mazagines have a high skewing to the elderly.
• N: So you dont see any preference for students and learning?
• P: No.

• Russcol: What does registration get you? Do you care if people submit bogus information?
• P: We no longer solicit business in the mail (it was expensive). We don't get advertising based on our numbers. We use the information we get to solicit subscriptions. We also buy other lists, but we use our own, and our own is the most efficient list that we have available. So if you signed in, those of you who did, you will doubtless see, in the next few months (we try to give you a vacation after Christmas), newsletters, this, that, uh...
• N: Do you sell your lists?
• P: No. But a lot of other people do.

The Wisdom of Dentists

• S: Maybe it's just a difference of scale... but what if you have a dentist who has the print version. He has 150 dental patients who come in every day and read an article he recommends. Is there a difference?
• P: The dentist, or the psychiatrist, or the lawyer, or the hospital, does not pay for those magazines. The publisher pays to have them in the waiting room. It's a cost. You remember when there used to be magazines at the Shuttle? It was a fraud. We used to put 3000 magazines at Boston, NY and DC. We would pay for one arm of the airport to take it, and they would pay us for delivering it, so it was a wash. That dentist gets some income from us, and those people who use it. You can see when Time's advertising has fallen, they lift their circulation by doing a very energetic purchase of a place where you can't guarantee that anybody reads (?)

• S: So offices are being paid to have your mazagine. So why aren't you paying Professor Nesson when he delivers this article to 100+ students? Is he really doing actual damage? Either way, you're benefitting.
• S: If you're not making money from advertizing or subscriptions, and you're trying to make money from the internet, then in some ways the real damage by what professor Nesson did is that he's depriving you of access from your market, since we are people that you want to be developing a relationship with.
• P: Subscribers are passive. It's hard to ferret them out. One article in TNR by Chalabi is going to do that?
• S: It seems that what you want is my email.
• S: But the harm is done to TNR, because it's their choice whether they want our school to be like a dentist's office. If he provides value to our education, shouldn't he be compensated? In the time it takes to do one version of text twist, you could have signed up for the article.
• P: We provided value to his class. He thought it provided value to his class. It seems that when you provide value, you should be paid for it. And not have to follow an uncertain tangent.
• N: That's a reasonable proposition, one that could lead to a technological solution that I could be happy with. If there were a tip jar that I could click on, when I wanted to give the article to 150 students, where I chose how much to put in the tip jar, I could charge it strait through to Harvard. Is it possible that there is some middle ground? You would love it if TNR was assigned in every university.
• P: This is a subject that John and you and Terry are going to have to figure out for us.

• N: do you know that in this room there is someone who assigns copies of your book, reproducing them and passing them out?
• Fisher: I hope so. The critical chapter of my book is available free online, without a sign-in.
• P: As a tease?
• F: No. I made special arrangements with my publisher to put that chapter online. Print magazines have long relied on business model that isn't going to survive.
• P: We have $1.7M income from advertising.
• F: Both of those are being eroded because (1) it's easy to access material (promiscuous reproduction); (2) the second will get a surge, but in the separation of content from advertizing means that this model as a mechanism for distributing content will also fail. Reinforcing this trend is a cultural phenomenon of expectation. The New York Times is dangerously bucking a trend. The WSJ succeeds becuase they have a narrow (and price-insensitive) clientele.
• P: And people are very dependent on up to date news.
• F: Reinforcing expectation. It will vary in speed, but every one of these institutions is going to die if it tries to rest on those legs. Either they will have to reinvent themselves, or we will see a reconfiguration of content altogether. Could abandon the attempt to charge for physical copies, and instead only for online. This will just be a stopgap. A more promising possibility = a business model depending on making your material available to large scale aggregators, who in turn work with aggregators of people, collecting a small amount of money from each of them, then transferring the content to you. Why will that work? (1) Students don't have any choice; (2) advantages of convenience. Critical for that model to work is for the clicks to be acounted for, so that the amount of eyeballs your content gets is tied to money. That is a mode of reinvention that's somewhat more imaginable. At the Berkman Center, we are working on a model of just that sort. But if it doesn't work, what's left over? Two routes: (1) all institutions of the sort you have so bravely preserved will die, and we will see the reconfiguration of content from the bottom up (blogging and voluntary contributions); (2) the govt takes a larger role
• P: Sort of like the CIA and Encounter magazine.
• F: That's the grim version of scenario 2

• N: So what would you advise me to do? Should I do the same thing next time?
• F: You should use the harvard resources to gain access to this stuff for free. But this is small scale with respect to revenue. It will not affect the tidal wave.
• P: I'm struck by the WSJ exception. I was the cofounder of thestreet.com. We have various deals with aggregators, who don't really make money off their financial services. The profile of an aggregator/consumer is too low for it to mean a lot monetarily. The Street is doinig pretty well. You put up a page, you get advertizing. That may just be becaue of the moment. Maybe the commercial model just survives in the financial world. I have friends who wake up for the London market, and there we are.
• N: And there we are. May I extend my apology to you.
• P: Accepted.
  • APPLAUSE