Fight for Your Rights

Networks wrestle with TV technology deal by deal

As networks and producers face new ways of transmitting television, nothing is more important than the rights to their content, controlling who uses their video and how they use it. But as technology advances, programmers fighting for their rights are picking their battles carefully.

Given the hype over the show South Park’s battle with Scientology, it’s no surprise that pirates rushed copies of the new season’s first episode to the Internet within hours after it aired on MTVN’s Comedy Central.

But the network doesn’t always police such theft, letting episodes and clips go live even on Web sites that would be easy to control. For example, South Park episodes went live on the suddenly popular, where users can freely upload—and download—all sorts of video.

MTVN executives have a tougher stance toward another use of their copyrights, Cablevision Systems’ new twist on digital video recorder (DVR) service. Rather than recording MTV’s Laguna Beach in the hard drive of a set-top box, Cablevision said it wants subscribers to store that video in its central headend. Cablevision believes the new service qualifies as “fair use” of networks’ programming; MTVN is expecting to ask Cablevision to pay.

MTVN officials wouldn’t comment, but the programmer is far from alone in its apparent conflict over video rights. Broadcast and cable networks have embraced new technology. CBS airs entire series on the Web. NBC sells episodes through DirecTV’s on-demand service.

But consumers have become increasingly facile at adapting to new technologies that allow them to watch television content in a variety of ways. And network executives are often confused about which new twist represents opportunity and which might be a dire threat.

Disruptive Times

“These are highly disruptive times,” says the top digital media executive for one cable network group. “There is no straight line. No one—if they’re being honest with you—will tell you anything different.”

Figuring out whether some new video outbreak is a threat or an opportunity is not easy. Is that new Web video mash-up site simple piracy, or is it invaluable promotion? Will offering episodes of My Name Is Earl on-demand solidify its current audience or simply cut into the hundreds of millions of dollars of potential syndication and DVD sales?

The major factor influencing copyright owners is speed of new products and services coming to market. “The time from seeing these things get announced, [then] launch and really rocket, is remarkably short,” says Rick Cotton, executive VP and general counsel for NBC Universal, which is on a crusade against the piracy that is affecting NBC U’s theatrical movie business.

Viral Signs

Last summer, portable video was an afterthought. Today, the video iPod is one of the hottest products in the industry, transforming how television shows are sold. Six months ago, YouTube was obscure even in techie circles. Yet one user propelled the video-sharing site to popularity by uploading a single bootlegged Saturday Night Live clip that took off as a viral video.

NBC’s reaction was to crack down on YouTube. The company tried to sate surfers’ appetites by putting the goofy SNL shorts up for sale on itunes. That may have brought in some cash, but what was the promotion opportunity NBC lost?

NBC’s reaction is no surprise to Blake Krikorian, CEO of Sling Media. Krikorian helped develop the Slingbox. In a play on a VCR or TiVo’s “time shifting” of video, the Slingbox allows an owner to “place-shift” local TV. Slingbox redirects a home’s cable or DBS feed over the Internet, making it available for viewing on a PC while at the office, traveling, etc. That means a New Yorker visiting Los Angeles can still watch the news on WCBS, then change channels to see Yankees baseball games on New York’s regional Yes Network.

Some network or studio threatens to sue him “every week” Krikorian says. “When a new technology hits—especially when it’s empowering the consumer—content owners’ knee-jerk reaction is that it must be something terrible for the industry.”

So far, Krikorian has avoided any lawsuits, partly by emphasizing how security prevents more than one person from watching a Slingbox at any one time.

Perhaps the networks would be better off asking not how a new service can hurt them but instead how they can make money off it.

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