I get the feeling that you've got a mismatch between your market's expectations and what you're providing -- they seem to think of your service as an authoring tool that gives them rights to the generated results, whereas -- as I understand it -- you see yourselves as a service provider that retains full rights. Given how low your price points are, I wonder if this experience might suggest a change in direction; for example, a more expensive tier that allows a client to repackage content for distribution.
Finally, I'm going to risk being a bit stentorian here and say that ethics in business is a one-way street; it puts a lot of demands (quite rightly) on us, but doesn't help when someone acts unethically and even unlawfully towards us. When it happens -- and it will happen, repeatedly -- you have to put aside any moral indignation and just focus on turning the situation to whatever advantage you can wrest from it.
In this case, what's your BATNA -- your "best alternative to negotiated agreement?" If, for example, your clients, their reporters, and AJ all ignore you, what is your best option? What course of action protects your rights without damaging your prospects and incurring needless costs? That becomes your new baseline and, combined with the other players' BATNAs, becomes the context in which you try to build negotiations.
Now that you've knocked on the door of legal with a DCMA request, you need to have an escalation path. My experience is that legal action is generally used to force negotiations, not end them, and a DCMA request is actually a pretty canny way of starting the process since it's short of actually filing a lawsuit. But if this doesn't lead to getting everyone in a room to discuss options, then you'll need to determine whether you have to escalate or break off. Difficult problem, really.
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