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Matt Stump
The copyright debate between personal video recording companies and content providers broke out into the open last week at a Kagan Seminars Inc. conference, set against a backdrop that powerhouse Microsoft Corp. might enter the picture.
TiVo Inc. and Replay Networks Inc. allow consumers to record, pause, rewind and fast forward live TV programs through a computer hard drive imbedded in their systems. Although major media companies like Time Warner, NBC and Liberty Media have invested in both companies, many of those media groups are part of the Advanced Television Copyright Coalition, which wants a large say in how much latitude PVR companies give subscribers to manipulate content.
"We were a bit surprised by it (the coalition's tough stance)," said Morgan Guenther, VP, TiVo, saying that "we have an industry inclusive business model."
At the same time, the PVR technology does exist and will inevitably be exploited by consumers, Guenther said. Consumers love the product and "don't go back to their old ways of watching TV."
Media companies have to decide "do they want to be part of the future or the past?" Guenther said. "There are more constructive ways to pursue this."
But copyright holders are concerned that once a consumer stores content on a digital hard drive, that content can be manipulated, copied and modified without the copyright holder's permission.
"You've got an industry that is determined to protect and enhance its revenue stream," said Ed Bleier, president/domestic pay TV, cable and network features for Warner Brothers Inc.
"TiVo is a very serious issue," Bleier said. "The coalition isn't kidding." Bleier said the PVR companies are basing business plans on the Supreme Court Betamax case that allowed consumers to tape TV product for their private use. But consumers won the Betamax case by a slim 5-4 majority, with current Chief Justice William Rehnquist in the minority.
"PVR companies are sitting on top of other people's licenses and copyrights, and I'm petrified," Bleier said.
Jonathan Taplin, co-CEO of VOD provider Intertainer, said the business models for the PVR companies will change dramatically, giving the coalition members are also TiVo and Replay investors. "Wait until the content owners extract payment for TiVo," he said.
Peg Murphy, VP-new media, NBC, was more conciliatory on the contentious issues of copyright and advertising. (Another wild card in the debate is the consumer's ability to fast forward through commercials on both services, and to actually skip commercials using Replay Networks.)
"Programmers have to work with these companies," she said. "We don't want to settle in the courtroom."
"There is an opportunity to develop new types of advertising inventory," she said, like packaging a one-minute Veronica's Closet promotion with a Suddenly Susan episode, so if a subscriber tapes the former, they'll see a promo for a similar show (Veronica's Closet).
"We have to address the advertising topic together," she continued. "We can do more targeted advertising in better ways."
Murphy added that TiVo and Replay may not be the only players in this area. "We may see Microsoft making noise potentially in this area, but, besides that, it will be hard to get in."
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