Judge Sticks Fork In Righthaven-RJ Model Thanks To Stupid Shermy

I really should have known.

Last year, I took the unusual step here and in the Las Vegas Weekly of supporting something that now-disgraced former Stephens Media publisher Sherman Frederick was up to. It surprised many colleagues, but I thought it showed a certain imagination that was both surprising and admirable.

But I should have known. If Frederick was involved -- and especially if he related to the Internet -- then it couldn't possibly be executed properly. And because it wasn't, what could have been an innovative and valuable method of contending with rampant copyright theft on the Internet is probably dead. It is extremely unlikely others will try it now.

The general idea had been that R-J owner Stephens Media assigns over the copyright to R-J work and then this Vegas-based firm called Righthaven, run by public relations moron Stephen Gibson (left via CalvinAyre.Com), would file lawsuits seeking to punish folks all over the Web who believed that they could steal it and post it on their own sites without paying for it. Many whined that it was cruel, that the thieves deserved a warning to pull down the material before they needed a lawyer, and in many cases the lawsuits were filed against very small entities whose readerships were hardly any bigger than what mine would be if I cut something out of the paper and hung it on my fridge.

Still, as a freelancer whose work has been dramatically devalued by a Web culture that believes that anything anywhere is free, I admired the creativity here. The problem is just too extensive to be cost-effective to address internally, so Stephens Media created a profit motive for someone else to behave as their enforcer. Several lawsuits were ham-handed and Gibson never quite understood that a newspaper has certain unusual elements; you don't go suing people who give you terrific scoops just because they posted a copy of the scoop's story, for instance, and you lose the battle in the court of public opinion when you sue cat bloggers or people with mental disabilities.

But when other major news organizations or other journalists who should know better rip off your content, it seemed to be fair game. And it was because of me that we got some of the most entertaining wrinkles in this story, the wonderfully timed lawsuit against Sharon Angle and the efforts to go after several massive sites because of use of the awesome but utterly inaccurate Vdara Death Ray graphic.

Ahh, but I overestimated Sherman Frederick by a factor of many. He wanted to have his cake and eat it, too, and, as usual, everything he touches turns to sand. Good luck, Hawthorne, Eureka and Ely!

Yesterday, a Nevada judge pretty much pulled the plug, declaring that the whole arrangement had been unlawful and announcing he's considering fining Righthaven and Stephens for taking the courts and more than 200 defendants on a bit of a ride. The problem?

Well, Stephens never actually, truly and fully gave up the copyrights. They wanted to give Righthaven the ability to pursue these lawsuits but not real ownership over the material. And then Righthaven opted not to disclose in court that there was a profit-sharing element to these suits and that the R-J was a third, interested party. Here's David Kravets of Wired.Com with the explanation:

[The judge] suggested Righthaven likely duped other judges to allow lawsuits on behalf of Stephens Media copyrights to go forward.

“Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this district,” Hunt ruled. “Accordingly, the court orders Righthaven to show cause, in writing, no later than two weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the court.”

An internal agreement between Righthaven and Stephens Media gives the Review-Journal’s owner and Righthaven each a 50 percent stake in any settlements or verdicts. The accord said Stephens Media shall retain “an exclusive license to exploit the Stephens Media assigned copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to exploit or participate in the receipt of royalties from the exploitation of the Stephens Media assigned copyrights other than the right to proceeds in association with a recovery.”

So here's the thing: Holy shiz. What possible reason did Righthaven withhold that the R-J was interested party or what the business arrangement was? If I recall correctly, Gibson always claimed that such information was "proprietary," that it was the secret sauce of his business model. Except that EVERYBODY ALREADY KNEW that this was the arrangement, everybody except, officially, the court. And the financial deal turned out to be ... a 50/50 split. What's so secret about that? That's what everyone would have assumed, right?

So now, as a parting gift to Stephens Media, the disgraced former publisher Sherman Frederick has left a legal morass that may haunt the company for years and cost it considerably more in legal fees and potential judgments than this arrangement would ever have brought in. If I were allowed, I would honest-to-God consider flying in from my Michigan fellowship to see an inept Frederick fondle a coffee cup while being vivisected on a witness stand over this, so stupid a screw-up was this error.

And the saddest part is that copyright theft on the Internet is killing the media. It's very dangerous. The actual complaints being made by Righthaven, in many instances, were perfectly valid and I was glad someone was making them. This judge is NOT saying that they weren't meritorious.

No, he's saying something worse, that Sherm and his partners were sloppy idiots who failed on a major technicality. And I guess I should've known they would.

There is one promising post-script, however. The Review-Journal, which had really only covered their own unique copyright lawsuit campaign when they sued Angle, did cover this decision. You know, like a newspaper should. And, as of this writing, it's the second-top story on their website, so they're not burying it. Carri Geer Thevenot even got sniveling comments from Gibson such as:

"It's important to recognize that Righthaven respects the judiciary and respects judicial decisions."

Also:

"We certainly hope that we will be given that opportunity with respect to the other cases that have standing at issue. But that is with absolutely no disrespect to Judge Hunt and his decision."

It's quite unlikely that Thevenot would've been able to cover this quite so properly if Sherm were still in charge. So there's that.

The R-J's "Successes" Enumerated

I'm in the midst of a debate with a journalist friend who finds it ridiculous that the mighty Stephens clan would bother sucking up to the most powerful senator in America after the largest newspaper they own went on a years-long jeremiad to get him fired. What a crazy idea, huh?

Well, I've listed the other possibilities. But click on this to read it more easily:

That's a scan of a full-page ad the R-J has been running for a few weeks. If these things were true, then the Frederick-Mitchell tenure at the newspaper would not possibly be viewed as anything other than an unmitigated success. It claims the ReviewJournal.Com enjoys the biggest monthly uniques and pageviews, that the paper is read by 720,000 different people a week, that their total monthly online and print audience is more than 3.25 million people. There's been very robust increased web traffic, according to this, to several different R-J-related web properties.

They use the phrase "No one else comes close" after every claim. ("No one can do more" was already taken.)

Perhaps the claims in the ad are suspect -- I understand that part of the R-J's readership spike comes from links from the Drudge Report, which means a huge portion of the audience of is of absolutely no interest to local advertisers anyway -- or there are other things going on here.

Review-Journal Publisher, Editor AND GM Are Out

News just broke that R-J publisher Sherm Frederick is stepping down as publisher of the newspaper and as CEO of Stephens Media and Thomas Mitchell is out as editor. And yet, there's even more to it than that.

Not in their story? Allan B. Fleming, the Review-Journal's general manager, is also out. And Mitchell is getting a new gig created for him, some sort of senior editorial page editor role.

The article published by the R-J announcing this posits that Sherm is leaving for health reasons, and he certainly has had a rough year with surgeries for prostate and heart ailments this summer.

But the real explanation of what's happening here? Harry Reid won.

An extremely knowledgable source at the paper called this move a "shakeout" and a "head slap" from the top, meaning the owners back in Arkansas. He reminded me that the Stephens family are big Washington D.C. players, with banking interests and other issues to deal with in Congress. They may have supported Republican candidates, but the over-the-top efforts by Sherm Frederick and Thomas Mitchell to support Sharron Angle and unrelentingly beat up on the Senate Majority Leader was exceptional. It was nasty and personal and harmed the reporters' ability to have their work taken credibly, but even more importantly, if the Stephens clan wanted to make nice with Harry Reid, the only way to do it was to get rid of Frederick and Mitchell.

It's entertaining that the newspaper tried to soft-pedal this news, leaving out the Fleming angle and reducing to the very last paragraph the fact that Mitchell was also departing from his role. Those are the clues that this is a much bigger change than just an ailing publisher choosing to reduce his stress load.

Two of the announced changes, though, look like Titanic deck chair shuffling. The company's chief operating officer Michael Ferguson ascends CEO of Stephens Media and advertising director Bob Brown will be publisher of the R-J. Brown has no significant journalism experience, and what this paper needs is someone in control of the purse who understands why they need more reporters and more resources. I fear an ad guy won't have that sensibility.

Still, there is one huge reason to be encouraged: They're going out looking for a replacement for Mitchell as editor. That means that for the first time in a couple of decades, that newsroom's leadership will have some serious new energy and ideas.

The stagnation has been crippling. If Stephens is courageous, they will bring in someone young and sharp from the outside who understands (or at least doesn't openly despise) the Internet, who can give that rudderless features section a solid redo, who can advocate for more resources so reporters can spend more time digging into important stories.

Plenty of questions left:

* Will Sherm, who will retain his Sunday column, keep up the feud with the Greenspuns and the Sun, or is there a chance for a little class and maturity to break out in Vegas newspaperland?

* Will the dramatic efforts to sue to protect copyrights continue via Righthaven?

* What becomes of "Director of Visuals" Al Gibes, City Editor Mary Hynes, Features Editor Frank Fertado and Managing Editor Charlie Zobell, all of whom have been in their posts for unusually long stints?

* If Mitchell had been outright fired, would he have filed for welfare unemployment benefits?

Forbes: R-J Parent Is Debt-Free

A commenter, SG, mentioned that the Review-Journal has no debt and clearly that's looking like a better model these days given the bloodbath yesterday at the Sun as well as other waves of layoffs within Greenspun Media Group. The R-J has done some belt-tightening -- pay freezes, slimming the newspaper's width and bulk -- but not any serious layoffs that I've heard.

I asked SG how he knew. But someone else sent along this link to an August 2009 piece in Forbes about Stephens Media Group and its frugal approach. It's worth reading, but here's the part that backs up SG's comment:

One of Stephens' private equity investments is a conglomeration of 40 newspapers, including the Las Vegas Review-Journal and the North Little Rock Times. It's not a lovely business these days, but it has side benefits. Warren, a McCain supporter, last year penned an editorial in his Las Vegas paper condemning Democrats' plans to raise taxes on the wealthy. With no debt, Stephens says, the papers are in no danger of going under. "If you don't lever up in good times, you won't be hamstrung in bad times," he says.

Huh. Of course, if nobody had ever levered up, Vegas would still have 200,000 people and nobody would've ever heard of Steve Wynn. Just saying.

R-J's Parent May Buy Austin Newspaper

Stephens Media, the parent company of the Las Vegas Review-Journal, is in serious talks to buy the Austin American-Statesman according to staffers who have written to VegasHappensHere.Com asking me to tell them what sort of management the R-J has and what they might expect. The staffers said their owner, Cox Enterprises, has been open about it and, in fact, there was a Feb. 13 piece in the American-Statesman itself describing four groups looking at buying the newspaper.


To answer the question, I needed to assess what the AAS is. The paper has about the same circulation as the Review-Journal, about 175,000, and serves a metro area of similar size, about 1.7 million people. The AAS, however, has long been a far more ambitious newspaper, with bureaus overseas and reporters embedded with troops in Iraq. Those bureaus have been closed as their circulation has plummeted. The AAS looks like it has about double the staff of the R-J.

So what, my AAS colleagues, might you expect from the insightful leadership of Publisher Sherman Frederick? Well, it is hard to tell because I can't remember Stephens ever buying a paper this large or with this good a reputation before, one that could actually outshine the R-J as the company's flagship.

Still, if this is any indication, Frederick led a newspaper whose circulation was stagnant at best for a full decade despite an influx of more than 1 million new residents into the readership area. The R-J is a newspaper with several excellent but criminally overworked journalists who are far too busy getting the next day's news out to think in broader strokes. Investigative reporting over there, probably because of how much everyone has to do, is usually reduced to grabbing some public documents and writing about them. The R-J has never aspired to be more than what it already is. It's evidently a sound business plan, if not one likely to produce Pulitzer Prizes.

I hate to be the bearer of bad news, but I don't see any way the Stephens crew won't immediately lay off bunches of journalists and perhaps cut benefits, regardless of what reassuring pfaff Frederick may say when/if he picks up the keys. I have to assume that Sherm is looking at the AAS and thinking, "Why would they possibly need a team of education writers? Why, back in Vegas we only have one hardy soul covering the nation's fifth largest school system and we do just fine!" If Frederick wants to buy it, it's because he thinks that it could be making more money with a few sacrifices here and there.

On the other hand, the AAS has been in an apparent circulation freefall for quite a while and just had a round of buyouts. The Review-Journal appears to be largely financially healthy, with some cost-saving measures -- benefits cuts -- that are modest given the state of the national and local economy. No layoffs or buyouts have come along yet here. That's nothing to sneeze at; Las Vegas' economy has been harmed far worse than the Austin metro area's in the past year or two. Maybe mediocrity is the path to fiscal stability for the news business!

The biggest weakness for the R-J is their web operation, with its baffling and counterintuitive website and a "web guru" who seems mostly to discover new applications a year or so after everyone else but with breathless excitement when he does. The purchase of the AAS might even change that; maybe Frederick sees that the AAS site is more user-friendly and modern (although nothing all the special from what I can see) and could task their web people with improving the Review-Journal.

Hoo-boy. That was a good one, huh? Sherm learning from others? Hah!