Firm Files Believable, Newsy Copy, for a Price

Smith and his counterparts contend that they're not trying to fool anyone. Few readers could mistake as serious journalism stories titled "SPAM Asparagus Spears Named New State Fair SPAM Champ" and "Don't Leave Home Without a Tweety Toaster," said Lisa Hawthorne of Associated Release Service Inc., one of NewsUSA's three main competitors and the source of those headlines.

But news placement services do not typically vet or fact-check the information they are given, nor do they explicitly say who paid to have the story produced, said Smith and others in the industry.

NewsUSA, for example, a few years back distributed a piece about a new stroke treatment called NovoSeven that was awaiting Food and Drug Administration approval. (It has since been approved.) The article's sponsor was the National Stroke Association. The article did not disclose that the association received financial support from the drug's manufacturer, Novo Nordisk Inc.

The article also quoted a supporter, Dr. Joseph Broderick, chair of the neurology department at the University of Cincinnati, who participated in a review of the drug's clinical trials. But it did not disclose who paid for the research. In an e-mail, Broderick said Novo Nordisk had paid for the study.

Diane Mulligan-Fairfield, a spokeswoman for the stroke association, said the organization works to keep stroke victims abreast of promising treatments and is able to do so, in part, because it does not face the same regulatory restrictions on communicating with consumers that drugmakers do. At the same time, she said, the association maintains a strict "firewall" between its financial sponsors and its policymakers. Novo Nordisk, she said, had no input in the NewsUSA piece.

NewsUSA's job, Smith said, is not to truth-squad its clients. "At some point someone has to let people know. Otherwise no one will know about any innovations," he said, adding that editors can change or fact-check NewsUSA's copy as they see fit.

Disclosure practices among editors vary. The Kansas City Star and the Tallahassee Democrat both run NewsUSA copy in special advertising sections, for example. The Kansas City Star clearly labels the sections as advertising and prints NewsUSA stories in a different font so there is no confusion, said vice president and editor Mark Zieman. The Tallahassee Democrat uses them in a weekly real estate section made up mostly of advertising, though it is not explicitly marked as such, said Advertising Director Barry Barlow. The Washington Post labels special advertising sections.

When Smith started NewsUSA in 1987, after building and selling a similar company in Canada, he initially worked almost exclusively with associations because he wanted to avoid the conflicts that can arise with companies. "I felt if I concentrated on working with associations, I would be putting out a more palatable message that would allow me to work hand in hand with newspapers. I wanted to take a quality approach," he said.

Over the past decade, the company has grown from 30 to 70 employees and spawned a sister firm that provides the same services to small and emerging companies in exchange for equity. The industry's biggest player, New York-based North American Precis Syndicate Inc. has about 140 employees.

During the mid-1990s, Smith tried to close the gap, buying two video news release firms and eventually occupying 18,000 square feet in Herndon that Smith dubbed the Taj Mahal. But the margins were not what Smith had hoped and about seven years ago he refocused on the core print and radio business. The company traded the Taj for a warren of cubicles off Lee Highway. But, Smith insists, that's how his customers like it.

"Our clients don't want to see us in fancy offices," he said. "They want value."