AI Payments Divide Media After New York Times Lawsuit – The Hollywood Reporter

A highly amusing, albeit scathing New York Times restaurant review of Guy Fieri’s American Kitchen & Bar that went viral in 2012 is being used by attorneys acting for the Times in their lawsuit against OpenAI to illustrate just how destructive the new technology could be to the future of journalism. When prompted about the opening paragraphs of critic Pete Wells’ review, entire passages are lifted verbatim by ChatGPT. “Did panic grip your soul as you stared into the whirling hypno wheel of the menu, where adjectives and nouns spin in a crazy vortex?” Wells had written. Those sentences and several other paragraphs were copied directly from the pages of the paper and then regurgitated by the AI system, per the lawsuit.

Local news has been decimated in America, owing to a lethal cocktail of uninterested readers and greedy venture capital firms that buy local papers and then cut them to the bone in an effort to squeeze every last cent out of their investment. Now the news apocalypse is fast approaching national publishers, whose entire existence is under threat by artificial intelligence firms whose business model is predicated on scraping and sucking information and content from trusted sources such as The New York Times, The Wall Street Journal and The New Yorker, without properly compensating those news organizations for their copyright-protected works. “Their outputs could compete with our entire industry, which is why it is an existential threat,” says Danielle Coffey, president and CEO of the News Media Alliance, which represents publishers and is advising members on how to deal with the generative AI models. 

Publishers and CEOs across the industry agree AI is an existential threat to the future of journalism, and their businesses have spent the past year wrestling with a conundrum: Ink a deal with the AI players or fight it out in court. Do the CEOs and publishers of these trusted news brands prefer paying journalists’ salaries or attorney fees? “The core was our concern around protecting intellectual property rights,” Condé Nast CEO Roger Lynch tells The Hollywood Reporter, explaining that the company established its AI principles at the start of 2023, which were communicated to staff. Lynch traveled to Washington, D.C., in January to testify at a U.S. Senate subcommittee hearing about the future of journalism in a post-AI world and called on Congress to clarify fair use. “That ambiguity is inhibiting deals getting done,” Lynch says.

Last spring, Axel Springer, the Germany-based owner of Business Insider and Politico, embarked on what would be a six-month process to ink a deal with OpenAI for its content to train GPT products. The efforts were spurred by CEO Mathias Döpfner, owing in large part to having learned lessons after Facebook and Google years ago steamrolled publishers and in the process took their content without properly compensating them for it. “We want to explore the opportunities of AI-empowered journalism — to bring quality, societal relevance and the business model of journalism to the next level,” Döpfner said when revealing the deal, the terms of which were not disclosed.

Two weeks after Axel announced its deal, The New York Times took the opposing stance when it sued OpenAI and Microsoft for copyright infringement, among other claims. Along with the Fieri review, the Times’ lawyers at Susman Godfrey included several other examples in the lawsuit that bolster the point Lynch made to Congress that “current Gen AI tools have been built with stolen goods.” All sides acknowledge that litigation of this magnitude could take a great deal of time and money to work its way through the courts. And there’s a credible fair use defense that OpenAI’s legal team could deploy. But the mere fact that Microsoft and OpenAI are eager to ink deals is seen by some publishers as a sign of a guilty conscience. 

Just like he did when he led the charge against Google and Facebook over payments to syndicate content, Robert Thomson, the former editor of The Wall Street Journal, has been front and center in holding the AI firms to account — one alliterative, articulated quote at a time. “It is reassuring that certain digital companies appreciate the value of integrity, quality and creativity, and while certain other media companies prefer litigation, we prefer consultation, as the former is merely creating a gold rush for lawyers,” he told analysts on the News Corp. earnings call on Feb. 7. “Courtship is preferable to courtrooms — we are wooing not suing.” 

Notes IAC CEO Joey Levin, “I’d say this isn’t the first time the New York Post and New York Times offered a vastly different approach on the same issue.” IAC owns Dotdash Meredith, publisher of titles such as People, Better Homes & Gardens and Travel + Leisure, and is locked in its own negotiations with the AI companies. At a London event last spring, IAC chairman Barry Diller touted a consortium of publishers to take on the AI firms. “Our company, Dotdash Meredith, we are the largest, for my sins in this moment in time, print and digital publisher,” he told the event’s host, Tina Brown. “So we together with News Corp., Robert Thomson and Mathias Döpfner at Axel, and we will have others join us, but we’re leading a group really that is going to say we are going to work to change the copyright law, which is necessary. We are going to work to say to publishers you cannot take our material or we will litigate. So we are going to be very active.”

The headlines ricocheted throughout the media, but the group never got off the ground, and News, Axel and IAC have all forged ahead on their own terms. “It was just too complicated to keep everyone’s various agendas under one tent,” Diller tells THR about why the consortium never came to fruition. On the question of where IAC is at regarding discussion with the AI firms: “We are both still discussing and still contemplating litigation,” he says. 

Diller may have a secret weapon in his talks, owing to the fact that OpenAI CEO Sam Altman sits on the Expedia Group board, of which Diller is chairman. “We are paying attention. We are taking this seriously,” Altman tells THR, adding that he had not seen Thomson’s remarks. A rep for Microsoft, a named defendant along with OpenAI in The New York Times’ lawsuit, referred to an OpenAI post that says the paper’s complaint is “without merit.”

Lynch, the Condé Nast CEO responsible for brands such as Vanity Fair, Vogue and GQ, says they are inching toward making a decision about whether they take the cash or fight. “We would much prefer to get license deals done, but if we don’t, we will go the route of the Times,” he says. Or as Thomson might put it: This matter looks set to settle with a checkbook, in the courtroom, or continue as a conundrum. 

This story appeared in the Feb. 14 issue of The Hollywood Reporter magazine. Click here to subscribe.