When NewsRight — the Associated Press spinoff formerly known as News Licensing Group (and originally announced by the AP as an unnamed “rights clearinghouse”) — began to lift the veil a couple of weeks ago, most of the attention and analysis focused on “preserving the value” of news content for content owners and originators. In the first round of reports and commentary on the launch, various bloggers and analysts quickly made comparisons to Righthaven, the infamous and all-but-defunct Las Vegas outfit that pursued bloggers and aggregators for alleged copyright violations.

But most of that criticism misses an important point: Would NewsRight’s investors, all legacy news enterprises, really invest $30 million in a questionable model just to enforce copyrights? Or are they investing in a startup that has the capacity to create revenues from new, innovative ways of generating, packaging and, distributing news content?

While some of the reactions point to the former, I believe the opportunity (and NewsRight’s real intention) lies in the latter: NewsRight has the potential to create revenue for any content creator large or small, and to enable a variety of new business models around content that simply can’t fly today because there hasn’t been a clearinghouse system like it.

(As background, here at Nieman Lab in 2010, I first described the potential benefits of a news clearinghouse months before AP announced the concept. Then after AP made public their plans, I described a variety of new business models it could enable, if done right.)

First, let’s have a look at some of the critics:

• TechDirt, disputing whether NewsRight would actually “add value,” asked: “AP finally launches NewsRight…and it’s Righthaven Lite?”
• InfoWars, posting a video talk with Denver radio talk host David Sirota, inquired: “Traditional media to bully bloggers with NewsRight?” In the interview Sirota said, “What I worry about is that it ends up being used as a financial weapon against those voices out there who are citing that information in order to challenge it, scrutinize it, and question it.”
• GigaOm’s Mathew Ingram pointed out that while NewsRight itself says it will stay out of pursuing copyright infractions via litigation, “one of the driving forces behind the agency is the sense on the part of AP and other members that their content is being stolen by news-filtering services…and news aggregators.” Ingram concludes: “What happens when an organization like The Huffington Post says no thank you? That’s when it will become obvious how much of NewsRight’s business model is based on carrots, and how much of it is about waving a big stick.”
• Nieman Lab’s own coverage by Andrew Phelps also focused on the tracking and enforcement aspects of NewsRight’s core technology.

NewsRight’s launch PR didn’t do much to dispel these concerns. CEO David Westin said himself in a video: “NewsRight’s designed…to make sure that the traditional reporting organizations that are investing in original journalism are reaping some of the benefits that are being lost right now.” And the company’s press release, quoting Westin, went no further that the following in hinting that there were new business opportunities enabled by NewsRight: “[I]f reliable information is to continue to flourish, the companies investing in creating content need efficient ways to license it as broadly as possible.”

Those traditional news organizations (29 of them, including New York Times Co., Washington Post Co., Associated Press, MediaNews Group, Hearst, and McClatchy) are the investors who scraped together $30 million to launch NewsRight. The Associated Press also contributed technology and personnel to the effort.

Given those roots — along with the initial PR, Westin’s own background as a lawyer, and the fact that NewsRight’s underlying AP-derived technology, News Registry, was explicitly developed to help track content piracy — it’s not hard to see where all the skepticism comes from.

But ultimately, if NewsRight is to be successful, it will have to create a new marketplace. It’s going to have to do more than trying to get paid for the status quo — that is, to collect fees from aggregators and others who are currently repackaging the content of its 29 owners. It can do that, but in addition, like any business, it will have to develop new products that new customers will pay for; it will have to bring thousands of content sources into its network; and it will have to enable and encourage thousands of repackagers to use that content in many new ways. And it will have to focus on those new opportunities rather than on righting wrongs perceived by its investors.

I spoke last week with David Westin about where NewsRight was starting out and where it might ultimately go. While he repeated the company mantra about returning value to the originators of journalistic content — “NewsRight is designed with one mission: to recapture some of the value of original journalism that’s being lost in the internet and mobile world” — it’s clear that his vision for NewsRight goes well beyond that. Here’s some of what we covered:

— NewsRight’s initial target is “closed-web” news aggregators. Media monitoring services like EIN News, Meltwater News, and Vocus provide customized news feeds to enterprise clients like corporations and government entities, typically at $100 per month or more. Essentially, they’re the digital equivalent of the old clipping services. Currently, these services must scrape individual news sites, and technically, they should deliver only snippets with links back to the original sources (although whether they limit themselves to that is not easy to monitor). What NewsRight offers the monitoring services is one-stop shopping that includes (a) fulfillment: an accurate content feed (obviating the need to scrape, and eliminating uncertainty by always delivering the latest, most complete version of a story); (b) rights clearance; and (c) usage metrics. The monitoring services will have the option to improve their offerings by supplying full text (or they can stick with first paragraphs); the content owners share the resulting royalties.

— While NewsRight currently must individually negotiate content deals, it’s working toward a largely-automated content-exchange system. Clearly, as NewsRight grows, there will have to be an automated system with self-service windows. “I hope that’s right, because that means we will have been successful,” Westin said when I suggested that would have to happen. The deals with private aggregators being worked on now all require one-off negotiations for each deal, both with the aggregators and with the content suppliers. That’s marginally possible when there are 800 or so content contributors to the network, but to be a meaningful player in the information marketplace, the company will need to grow to encompass thousands of content creators, thousands of repackagers, republishers, or aggregators of content, and many millions of pieces of content (including text, images and video) — requiring a sizable infrastructure and high level of automation.

— Any legitimate news content creator can join NewsRight for free for the duration of 2012. “Anyone who generates original reporting, original content, can benefit from this. We’re open to anyone who’s doing original work.” Westin says. That includes not only newspapers and other traditional news organizations — it can include hyperlocal sites and news blogs. Basically, that free membership will bring you back information on how and where your content is being used. NewsRight’s system is currently tracking several billion impressions for its investor-members and is capable of tracking billions more for those want to use the service. (All this is rather opaque on the website right now, but if you’re interested, just click on the “Contact us to learn more” link on their homepage, and they’ll get back to you.)

— Down the road, NewsRight is looking for ways to create new content packaging opportunities. Westin: “There is a large number of possible businesses [that we can enable]. We don’t have any of them up and running yet; it’ll be a better story when we’ve got the first one up. But I do envision a number of people who might say, ‘I wanted to create this product, dipping into a large number of news resources on a specific subject, but it’s simply been too cumbersome and difficult to do’…We should be able to facilitate that.” What he envisions is something that reduces the friction and the transaction costs in setting up a news feed, app, or site on a niche topic and allows a multiplicity of such sites to flourish — “new products based around the content that don’t exist now.” That includes personalized news streams — products for one, but of which many can be sold: “As we continue to expand News Registry and the codes attached to content, it makes it possible to slice and dice the news content with essentially zero marginal cost.”

— While the initial offerings to private aggregators carry a price tag set by NewsRight, in the ultimate networked and largely automated point-to-point distribution arrangement — individual asset syndication — NewsRight will likely stay out of pricing. The “paytags,” or the payment information embedded in the Registry tags, will be able to carry information on a variety of usage and payment terms — not only what the price is, but nuanced provisions like time constraints (e.g. this can’t be used until 24 hours after first published), geographic constraints (to limit usage by regional competitors), variable pricing (hot news costs more than old news), and pricing based on the size of the repackager’s audience. Content owners would likely have control over these options, but there’s also the potential for a dynamic pricing model — something similar to Google’s auction mechanism for AdWords — in order to optimize both revenue and usage.

— The NewsRight network could make it possible to monetize topical niche content that’s too difficult to syndicate today. There a lot of bloggers, hyperlocals, and other niche sites today that earn zero or minimal revenue and are operated as labors of love. The potential for NewsRight is to find new markets for the content of these sites. And general publishers like newspapers might find it profitable to jump into specialized niches for which there’s no local audience, but which might generate revenue via redistribution through NewsRight to various content aggregators.

Could that grand vision come to fruition? As I’ve pointed out before, a very similar system has worked very nicely for ASCAP and BMI, the music licensing organizations, which not only collect royalties for musicians but enable a variety of music distribution channels. (This is on the performance and broadcast side of the music biz, not the rather broken recorded music side.) Both AP CEO Tom Curley in launching NewsRight and Westin in discussing it refer to ASCAP and other clearinghouses as models — not just for compensating content creators but for enabling new outlets and new forms of content. NewsRight’s is purely a business-to-business model — it doesn’t involve end users. So the traction it needs will come when it can point not just to compensation streams from private aggregation services, but to new products and new businesses made possible by its system.