The Beauty of Not Asking Permission

Last year, when Viacom visited YouTube andspotted shows from MTV, Comedy Central and other content producers it owns, it decided to act quickly — and the only quick reaction a company of Viacom’s size is capable of in that sort of situation is to sue.

Only after many months did other giant TV networks put the finishing touches onHulu, a site that does basically the same thing that YouTube had been doing — showing proprietary content for free on demand. The only major difference from the user perspective is that Hulu wedges in short, relatively unobtrusive ads that you can’t skip over.

Content owners know that they’re going to have to change in order to survive in the face of digitization and widespread broadband access. They’re just having a hard time figuring out exactly which way to go, and when you’re steering a ship as big as CBS, for instance, you’d better be sure of yourself before plotting a new course. U-turns are expensive.

Meanwhile, upstarts often come up with compelling ideas on media delivery. Yet they risk being clobbered by lawsuits from the content owners and their various industry groups should they so much as dip a toe into the cloudy waters of copyright infringement.

That Rascally Tivo

TiVo is one company that’s amazed me with its ability to get away with taking the control of distribution out of the hands of content owners without being squashed under a mountain of litigation.

First, of course, there’s the ability to skip over commercials. In the eyes of Turner Broadcasting’s former CEO Jamie Kellner, even leaving the room while a commercial plays is tantamount to stealing. Yet TiVo lives on.

It goes beyond the ability to work around the networks’ primary source of income, though. TiVo also seems immune to producers’ demands to control what devices their shows play on. TiVo has long offered a system called “TiVo2Go.” While Apple and NBCfought it out over how much to charge iTunes users to download shows, TiVo users could port content from NBC (or any other TV channel, for that matter) to their iPods without giving the producer a cent.

Workarounds like this are fairly easy to find, but they’re usually offered by under-the-radar sects of code crackers, not publicly traded companies. How did TiVo not get stomped out of existence on day one?

“Fortunately, we have a situation in which copyrights are not absolute rights,” said Matt Zinn, VP and general counsel for TiVo, at a panel discussion conducted at the Tech Policy Summit last week. “Content owners have jumped up and down from time to time about things we’ve come up with.”

The company often avoids lawsuits, he added, because losing a case wouldn’t be a simple matter of a swing and a miss. Losing could backfire. The court might set a legal precedent the plaintiffs would find unfavorable, so they’d rather not take the gamble.

You Could’ve Asked First

TiVo took a gamble when it put itself out there a decade ago. It didn’t ask content producers’ permission, and it was confident enough in its own legality that it didn’t think it would have to beg forgiveness either.

Why didn’t TiVo take a safer path? wondered UCLA Law School Professor Doug Lichtman, host of the Tech Summit session. He outlined an alternate approach that TiVo could have taken: Sit down with all the major networks and lay it out for them. Tell them: I’m talking to your competitors about the same things I’m talking to you about right now. One of you is going to partner with me, maybe two. But we will have a major partner in this digital video recorder device, and we will go forward with it. It’s going to be the future of TV, and early partners will have the advantage. Are you in?

“We’d never make it out of that network’s office,” Zinn replied.

Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation, backed up Zinn on this point. Pitching TiVo to a content producer would mean asking it to weigh a completely untested idea against a business model (just broadcast the shows and sell the ads, none of this time-shifting nonsense) that had years of proven return on investment to back it up.

The status quo usually prevails when a new idea comes from inside the established giants; only outsiders have the ability to shake things up. Dinosaurs only change, von Lohmann said, when it’s a matter of survival.

“If it weren’t for file-sharing, there would be no iTunes today,” he said.

I’m trying to imagine how record labels would have responded to an iTunes proposal if Napster had never been born.

We have a safe and sound business of selling customers $15 CDs that they must buy even if all they want from that disc is a single song. The rest of the CD can be garbage; they still have to buy the whole thing. Now you want us to let you sell our music one song at time for a buck, and you’ll give us a fraction of the profits we make on CDs? And you want all those songs playable only on a device you manufacture? Thanks, but we’ll pass.

ISP and P2P

The idea of incumbents at first assailing and then embracing disrupters was underscored when Comcast announced it wasready to make nice with a technology that’s become peer-to-peer (P2P) file-sharers’ protocol of choice: BitTorrent. ISPs have long had a rocky relationship with P2P. Internally, it takes up a lot of bandwidth; externally, it opens ISPs up to accusations from groups like the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA), which contend that allowing P2P traffic is basically condoning piracy.

Months ago, in fact, The Associated Press caught Comcast throttling back on BitTorrent traffic. Now, the ISP says it will work with BitTorrent, Inc., the company that develops the protocol.

Earlier last month, another ISP, Verizon,announced breakthroughs in increasing network traffic speed using peer-to-peer technology.

Making Sausage

Even though the RIAA may seem more desperate with every round of litigation it fires off to song-swappers, that conflict and energy indicate the music industry as a whole is ready for a giant step forward. TV producers have vowed not to let the same thing happen to them, so they’re trying to be a little more proactive — but it’s still a move based on the same threat of file-sharing.

As format proprietors see their supposedly airtight digital rights management schemesget cracked time and time again, perhaps they’ll come to the conclusion that it’s just not worth it. ISPs’ embrace of peer-to-peer technology may not give you the legal right to download movies for free, but it may mean faster access to legit content.

The more unpleasant evolution is to watch, the better the results. Just try not to get sued yourself.

Click here to e-mail Paul Hartsock.

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