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over TV file swapping
Networks' suit to do Napster number on ReplayTV
By Kevin Downey
If you thought the music industry’s fight with Napster was heated, sit tight. Buy some popcorn.
Things are about to get much hotter as the television industry wages its own battle against free distribution of copyrighted material over the internet.
At stake are billions in advertising dollars and subscription fees, which is more than enough to get TV’s biggest players marching into court.
And indeed it has. Earlier this month, NBC, Disney, Viacom and others filed a lawsuit claiming copyright infringement against SONICblue’s ReplayTV, which until recently was a bit player in the digital video recorder industry.
DVRs have been a concern of the TV networks since the late 1990s when ReplayTV and TiVo were introduced, with the capability to skip commercials.
But ReplayTV 4000, which is set to hit stores in time for Christmas, raised the stakes exponentially. With the new device, users can automatically skip commercials and swap recorded programs through a broadband internet connection.
For the TV networks, that means a loss of fees for programs that people would otherwise pay to see on cable. And it means that ad rates could fall if a sizable audience were to suddenly swap commercial-free broadcasts.
"This potentially threatens the very lifeblood of how television is funded and how it’s used for marketing and advertising," says Tim Hanlon, vice president and director of emerging contacts at Starcom MediaVest Group.
"That having been said, it’s our opinion that you need to rethink the way you use television. A lot of people, though, haven’t gone that way. They say, ‘it’s a threat and we need to take steps to prevent this from happening.’ One way to do that is through lawsuits."
The TV owners filed suit in the United States District Court in the Central District of California.
At the heart of the matter are two features on the ReplayTV 4000 system.
The first is called AutoSkip, which is used to bypass commercials.
The second is called Send Show, which can be used to share files with other ReplayTV subscribers.
The suit was filed even though ReplayTV 4000 is programmed to limit the number of times a file can be shared to fifteen, and it has Macrovision software built in that can prevent files from being shared if the networks imbed a code into their transmissions.
"As a technical matter, nobody minds if you record a film off of television or cable or pay-per-view," says Howard Shelanski, professor at the Berkeley Law School and former FCC chief economist.
"The idea is, it’s for your own use and you don’t have access to a broader market. What’s of concern here is that you automatically have access to thousands of people with whom you can immediately swap files."
But the lawsuit is considered by many media analysts to be a means to slow down the progression of file swapping over the internet, as opposed to stopping it, which is probably futile.
The TV owners are striking back now because the DVR industry still has only a few hundred thousand subscribers.
But Paul Kagan & Associates projected recently that some form of DVR will be in about 30 million homes in the next five years and in more than 66 million by the year 2010.
And the TV industry is striking while many of the DVRs are cost-prohibitive. ReplayTV 4000, for example, will be priced between $699 and $1,999.
"The ReplayTV 4000 is really a novelty item," says Sean Badding, vice president of the media research company The Carmel Group.
"But the importance is great because other companies can take technology like this and offer it at a cheaper price point. The networks are concerned about this becoming Napster-ized. The last thing that programmers want to see is the same type of infiltration from consumers to take away their content without paying for it."
The top DVR companies have already made a couple of moves that could propel growth.
TiVo, for example, signed a deal for a less expensive DVR to be marketed by AT&T Broadband to some of its 14 million customers. The system is expected to eventually find its way into an integrated set-top box.
TiVo also signed a deal to incorporate its technology into some of Sony’s electronic products and formed a licensing division to get even more of its DVRs to consumers.
November 15, 2001 © 2001 Media Life
-Kevin Downey is a staff writer for Media Life.
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