Bad News Day For Amazon Stock (AMZN) as it Pays $25M a Year in NY Times Deal
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According to an article in the Wall Street Journal, the annual payment will amount to nearly 1% of the Times's total 2024 revenue. Amazon stock dropped 0.4% in early trading.
Content Deal
Back in May, the two companies announced a multi-year licensing agreement that will bring Times editorial content to a variety of Amazon customer experiences.
'This broadens the companies' existing relationship, and will bring additional value to Amazon customers and bring Times journalism to wider audiences,' the companies said in a statement at the time.
With this agreement, Amazon is licensing editorial content from New York Times, NYT Cooking, and The Athletic for artificial intelligence-related uses. This will include real-time display of summaries and short excerpts of Times content within Amazon products and services, such as Alexa, and training Amazon's proprietary foundation models.
It was the first AI-related licensing pact for the Times and Amazon's first such agreement with a publisher.
Thorny Subject
According to WSJ, the financial terms of the multiyear deal, which haven't previously been disclosed, offer a window into how publishers and artificial-intelligence companies are valuing news as consumer habits and technology changes.
Other examples of this include OpenAI, which has a deal with the WSJ parent company News Corp (NWSA) worth over $250 million over five years, and Business Insider owner Axel Springer.
What everyone is trying to avoid in this new AI paradigm is copyright infringement when training chatbots and AI models.
This can be a thorny subject with tech giants such as Meta (META) already being accused of knowingly using pirated versions of copyrighted books to train its applications.
In addition, a U.S. court this week ordered OpenAI to preserve all ChatGPT user conversations, including deleted ones, amid a copyright lawsuit by The New York Times.
That is increasingly why legal and regulatory issues represent a key risk for U.S. tech firms like Amazon.
Is AMZN a Good Stock to Buy Now?
On TipRanks, AMZN has a Strong Buy consensus based on 44 Buy and 1 Hold ratings. Its highest price target is $305. AMZN stock's consensus price target is $259.39, implying a 12.70% upside.
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