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Interview, Steve Brill, Part I: 'We Shouldn't Sue, We Should Do It'

This story was written by Staci D. Kramer.
How did Steve Brill, Gordon Crovitz and Leo Hindery, Jr., wind up cofounding a venture to make online journalism pay? Or, in this case, Journalism Online, LLC. It dates as far back as the '90s when Hindery almost wound up owning a stake in Brill's CourtTV joint venture only to have the football yanked at the last minute by his cable mentor John Maloneand as recently as this February, when Brill saw a Wall Street Journal op-ed by former WSJ publisher Crovitz contending that newspapers should be charging for at least some content. That was the same view Brill, the founder of American lawyer, Court TV and media mag Brill's Content, expressed in his detailed memo on how to save the New York Times that made a splash earlier that month. Match that with Crovitz's strong make-online-pay resume at Dow Jones (NYSE: NWS) and Brill's belief that he has a model that can do just that across the news industry, add in Hindery's private equity firm Intermedia Advisors and here we are, a scant few weeks later talking about a new company called Journalism Online, LLC.

In the past three weeks, they've met with a number of news execs (no, they weren't part of the "secret" meetings in San Diego last week) but no agreements; then again, they don't have affiliate agreements to offer yet. The biggest surprise so far? Brill says that every publisher they've met with has asked about picking up an equity stake. Some edited excerpts from our conversation Tuesday as the news was going live:

Staci D. Kramer: Do you have a financial (funding) range that you can give me?

Steve Brill: Not that I want to give you but the whole idea here is we all realize this is simply stage one and it doesn't make sense to think about raising a lot of money right now until we've gotten our affiliation agreements in place and all our plans in place and then we think we won't have any trouble raising money thereafter.

One issue has come up, which I guess I should have expected, given the history of Court TV but I just didn't anticipate and that is I think, it is literally true that every publisher we've talked to so far has at least asked us about making an equity investment in in it.

Literally money for equity or equity in terms of letting you use them?

Equity for money, not John Malone kind of equity.

What we said the first time I was asked thisthinking fast on my feetis that our instinct is we would probably welcome it but it certainly would not be a condition of participation and we would not want our affiliate base to have control of the company. We think it's important for a whole variety of reasons that this be a third-party transaction.

I wonder how many of them had just read the article in the Boston Globe about the Globe turning down an equity stake in

(Laughter) I don't know

You can see at the time they thought they were making what was a pretty rational decision but isn't a lot of what we're dealing with now because a lot of people thought they were making rational decisions?

My background, if you go way back (to American Lawyer,  I'm very much aware of the stoy of Lexis vs. Westlaw and the guys who started Lexis originally went to Westlaw and the Westlaw people said, 'are you crazy? You're going to cannibalize all our books by putting this stuff on line? No way.' Years later, (an executive from) one of our legal newspapers called me complaining that someone was taking our court calendars that were in our newspapers and putting them online. He said we should sue them for that. I said, 'No, we shouldn't sue them for thatwe should do it.' There are always stories about the fear of cannibalizing and then you just let someone else be the cannibal.

Gordon stressed that this wasn't about consulting but about producte-commerce, data sharing and more. ... What are you going to do for the technical side of it?

We're talking to a whole variety of developers ranging from people who seem to have or say they have almost off-the-shelf stuff to people who create it. On the one hand, launching an e-commerce site is not rocket science any more. On the other hand,  this one is going to have a fair amount of complexity, including, for example, publishers who want to make sure their print subscribers get a discount or don't pay for the online subscription. That's a piece of it that is not a trivial exercise, the whole combination of things we're going to dothe micropayments for articles, the day passes, the monthly subscriptions, annual subscriptionsall of that stuff is going to take a lot of work.

Has anybody expressed an interest in the pass-along fee? (Brill suggests charging a user 5 cents to send a story to someone else.)

A couple of people but that feature is not in there. It's not that we're leaving it out but I didn't [want] to make the conversation even more complicated. I've raised it and people have expressed interest in it. I happen to think it's the one way for the Huffington Posts of the world actually to have a business model.

Do you mean for their own content? What if I pass along an AP story from Huffington Post or somebody passes along one of our stories?

That's a good question. That question is also complicated by the fact that if you start charging something for your stories how are they going to have them to pass along? All that stuff has to be sorted out.

By Staci D. Kramer

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