Media war

On May 22 – just two weeks before TIME Inc went public in New York – America’s largest publisher decided to run small ads on the covers of two of its most famous titles, TIME and Sports Illustrated.

The miniature banners – sponsored by Verizon Wireless – broke with a longstanding tradition that has kept magazine covers free of advertisements.

Internet publisher Mediabistro boldly proclaimed it was “the day the magazine cover dies”.

“Old media” firms are striving for inventive ways to stay commercially relevant. Their battle began in the late 1990s, when newspapers and magazines began publishing content for free on the web. In most cases going online boosted their share prices in the short run.

However, it also helped the growth of content aggregators such as Google.

Enter the era of social media, and it looks like Chinese publishers are keen not to commit the same mistake.

That’s why conventional news providers have launched a joint campaign against a new competitor they claim is free-riding on their content.

Their target is the mobile news app Today’s Headlines. It aggregates news from major newspapers across China and in May was the third most downloaded social media app in the country.

Since its 2012 launch, the app has garnered 120 million unique users.

Today’s Headlines was founded by start-up Beijing Bytedance, but boosted its financial firepower after private equity firm Sequoia Capital invested $100 million in June. This third round of funding put its valuation at about $500 million.

But Today’s Headlines soon found itself hitting the headlines, rather than just aggregating them, when the National Copyright Administration said it was investigating it for copyright infringement.

The probe came after complaints by traditional media outlets. Beijing News, for one, has accused Today’s Headlines of stealing its content, while Dayoo.com, which is authorised to publicise content from Guangzhou Daily over the internet, filed a suit against Bytedance alleging copyright infringement.

As the name suggests, Today’s Headlines lets users skim through headlines quickly. Clicking on a headline allows users to read the full text from the original provider or they can have the article read to them.

The app also filters content automatically by analysing data obtained from their social networking accounts and reading habits.

The problem? By reading the first few paragraphs on the app, many readers don’t feel the need to go to newspaper websites.

Even more controversially, in its early development phase the company’s programmers found a way to grab newspaper content and reformat it into a mobile-ready version, where advertisements were sometimes omitted. These reformatted pages are mostly stored in the app’s servers, so the original websites see no increase in page hits for their content either.

But Zhang Yiming, the company’s founder, told Southern Weekend that in 70% of cases his service directed traffic to the original sites rather than use the reformatting technology.

Bytedance told the magazine that that it isn’t breaching the regulations. “Strictly speaking, the services that we are providing are just a collation of news links, and we don’t plagiarise any content,” insisted Zhang.

Others have challenged this view, claiming that Today’s Headlines edits the information, making it a content provider instead of a search engine.

But before copyright regulators come up with a verdict, the company seems to be working to resolve some of the disputes with the traditional media outlets. It has agreed that more of the clicks on the app will go directly to the original sites, for instance, and that it will minimise reformatting of content pages unless it is technically unavoidable.

Dayoo.com and Guangzhou Daily are also said to have withdrawn their lawsuit after sealing a content-sharing agreement. Similar contracts with other news organisations may follow.

---

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.