News America Marketing must pay damages to a newspaper coupons company after losing law suit
A News Corporation subsidiary was yesterday ordered to pay a newspaper coupons company $300m (£182m) in damages after it lost a law suit in the US.
A Michigan court judge awarded Valassis Communications the damages after the firm filed a lawsuit against News America Marketing alleging that it had engaged in unfair competition and “tortious interference” (when an individual or company wrongfully interferes in the business interests of another firm).
A jury in the Wayne County circuit court in Michigan found News America Marketing liable on both counts, Reuters reported Valassis as saying.
News America Marketing will appeal the decision. Chris Mixson, the company’s president, said. “We are disappointed with today’s decision, which rewards a company that turned to litigation as its business strategy rather than compete,” Mixson added.
Mixson said the jury was “hampered” by the court’s decision not to allow News America Marketing to introduce to the court a Federal Trade Commission analysis that Valassis had made an “effort to induce collusion” when it announced a new pricing policy in a conference call with investors.
“This information would have shown that this lawsuit was merely part of a larger strategy to get News America Marketing to raise its prices, a move that would have affected both our clients and their consumers by reducing the number of coupons available – a consequence that would be extremely unfortunate in this economy,” he added.
Valassis also has lawsuits pending against the News Corp subsidiary in a federal court in the eastern district of Michigan and the California supreme court in Los Angeles.
The company’s share price jumped as much as 64% in morning trading after the court decision was made public in the US yesterday before slipping back to 45% higher by the afternoon, according to Reuters.
Valassis shares were up $3.17 to $10.20 on the New York Stock Exchange, while News Corp shares were up 3.1%, at $9.97 on the Nasdaq stock market.
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Free for all?
The debate about media revenue models is certainly creating revenue for some content – the thoughts of pop culture theorists
If you want to deepen your confusion over the future revenue models for media content, then look no further than the staging of the paradoxical debate between pop culture theorists Chris Anderson and Malcolm Gladwell.
Gladwell’s review, commissioned and published in a magazine you have to buy, is freely available online. Its subject, Anderson’s book Free: The Future of a Radical Price, could equally have been titled $26.99: The Price of Hardback Hyperbole. There’s nothing “free” about it, except perhaps its composition. Anderson has already had to apologise for lifting unattributed chunks of Free from Wikipedia including, irony upon irony, the entry on “free lunch”.
But the battlefield for this looking-glass war is the pricing of information, or what everyone is now obliged to call content. Information wants to be free, says Anderson, who elevates it to a principle, and says that free will be the business model of the 21st century.
Gladwell says information doesn’t know what it wants, but digital corporations do, and they want information to be free (from publishers and content creators) in order to make more money.
One of the examples of Anderson’s “free” thesis is YouTube:
Still, as Anderson admits and Gladwell takes pleasure in ramming home, YouTube doesn’t seem to make money from the new “free” business model.
Anderson’s book began cooking before the credit crunch took hold. For a new media dispute this one doesn’t just founder on irony. It also plays out in the past. Anderson’s Free has all the limitations of a timely book which was dated almost before publication. Gladwell’s review was commissioned on the New Yorker’s print lead time.
This is clear when both Anderson and Gladwell ignore the latest analyses of YouTube and its role in its parent company Google’s grander strategy. YouTube’s losses are likely nowhere near as severe as Gladwell portrays. Google can well afford them.
Price-cutting, and giveaways have long been a favoured, and rather unradical, business strategy, as Rupert Murdoch deftly demonstrated in building up the Times in the 1990s. Murdoch, too, knows the power that comes from owning apparently loss-making businesses.
There is a big change coming, and for businesses it isn’t one of the “free” business models that Anderson cheerleads. Content aggregation and distribution is in the process of becoming a global digital utility. The social and political consequences go far beyond pricing and the tech utopianism of Anderson. The point Gladwell makes in passing is in fact the most important – in whose interest will that distribution process work?
There is nothing free about server farms. Google’s digital factories may be hidden in Iowa and Finland but their management lies at the heart of its success. And in the meantime that success is having an impact on content creation at the micro-level. Yes, the writer. There is something very old-fashioned about a literary dispute.
Anderson makes – reportedly – a couple of million dollars a year in speaking fees. Gladwell has re-invented the book promotional tour as a paid-for event. A ticket to see Malcolm Gladwell Live! costs more than the book that the show notionally promotes.
So if the Anderson/Gladwell debate has a future, it’s one in which you’ll pay for ringside tickets to see them engaging in the intellectual equivalent of the Worldwide Wrestling Federation or, to be kinder, heavyweight boxing.
And perhaps a little feuding might add to the showmanship. Don King could probably advise. Still, live performance is once again a business model for writers. There might even be a book in it.