Cablevision and the Supreme Court
In January, I wrote about Cablevision and the Infinite TiVo, a plan by a cable operator to shift recording of TV shows from users’ boxes to a central server:
Cablevision wants to offer DVR as a service instead of a device. Rather than recording 30 Rock on the box attached to your TV, the show will be recorded at Cablevision’s headquarters. Then, when you want to watch it, Cablevision will send the show to your television. If it works right, it should feel just like a normal DVR. Only without the cost of the DVR.
I thought it sounded great if you were a consumer, or Cablevision. And pretty damn bad if you were a copyright holder, or someone who produced content. Like, say, a screenwriter.
Cablevision’s RS-DVR is back-door video-on-demand. They’re trying to offer the networks’ output to their customers on their own terms, without paying any additional fees.
The U.S. Supreme Court disagrees. Sort of.
Today, it refused to hear an appeal on the Cablevision case, allowing the Second Circuit Court’s decision to stand. Cablevision can begin introducing its service.
In a brief to the Supreme Court, the U.S. Solicitor General’s office had already urged the Court to skip this case, rather than risk bad precedents:
Network-based technologies for copying and replaying television programming raise potentially significant questions, but this case does not provide a suitable occasion for this Court to address them.
The parties’ stipulations, moreover, have removed two critical issues — contributory infringement and fair use — from this case. That artificial truncation of the possible grounds for decision would make this case an unsuitable vehicle for clarifying the proper application of copyright principles to technologies like the one at issue here.
If Cablevision’s service really is exactly analogous to a conventional DVR — a giant farm with one hard drive per customer, recording shows only a time-forward basis (no reaching back to record last week’s 30 Rock) — then it’s pretty easy to use the metaphor of a very long hard drive cable. A different case, or a more ambitious service, would offer a better venue for figuring out what role a middleman can play in offering content to consumers.
I don’t think consumers really want a virtual DVR. They want content. They want to watch whichever TV show they want, whenever they want it. And they should be able to.
As I said in my first article:
The studios should then negotiate with Cablevision and all the other cable and satellite providers to roll out a system that calls this service what it really is: video-on-demand. A consumer should be able to watch (or record in their home) an episode when it’s first broadcast, or get it through VOD for a fee. That fee should be low, cheap enough to make it an appealing alternative to piracy.
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July 2nd, 2009 at 1:04 pm
Merde. They’re coming tomorrow to finally hook up my cable and internet. Does Vios have the same problem?
July 2nd, 2009 at 2:28 pm
Cablevision, Comcast, and Time Warner are all just scared to death of becoming dumb-pipes. You summed it all up in saying, “That fee should be low, cheap enough to make it an appealing alternative to piracy.”
The problem is that cable providers are fully aware how useless they are as television providers. That eventually, an internet device could emerge that would completely negate their existence. Instead of combating it with a superior service (or embracing their “dumb pipes”), they are just setting up restrictions around the content they control (which is, like, all of it). They’ve settled around not having to take risks.
Hey, Cable Guys, it’s time to sack up.
July 2nd, 2009 at 6:06 pm
I’m not exactly sure how Netflix pays the companies when someone watches a movie on demand through their service, but as a user it works like a charm and it’s clearly the future of television.
I recently bought a Roku which attaches to my TV and then also pipes into my internet and lets me play all the “Watch it now” movies on Netflix. I’m only paying $14.95 / month and I seem to be able to watch an unlimited number of films. They don’t have most new films available but the thing works like a charm and the quality is good. Sometimes my wireless isn’t fast enough and I have to attach an actual cable. But I have an HDMI cable into the TV and the quality always looks great.
I actually just watched The Nines through Netflix on demand so maybe you can actually explain a little bit about how the money flows down to the filmmakers. I suspect at this stage consumers are getting a great deal more than their paying for as Netflix tries to get people to adapt the technology.
July 2nd, 2009 at 10:13 pm
VOD is VOD no matter how you slice it, and the copyright holder should get their cut, not just the exhibitor. This holds not only for big studios, but Indies as well. At the Produced-By Conference there was a lot of talk about VOD being the future profit center for independent filmmaking because the communications carriers have a billing structure and a proven track record of making money, unlike Internet sites like Hulu. If Cablevision (and Netflix, etc.) undermine this hope by finding backdoor (or overt, for that matter) ways to profit off VOD without paying a fair share to the content creators, then the future isn’ so bring after all, not only for Independent filmmaking but for Big Studios as well.
With DVD sales falling precipitously, and theaters filling up with only a few big budget blockbusters, the field of filmmaking will narrow quite substantially if VOD (whether it’s sold to you by a cable, telephone, or Internet company) doesn’t actually pay content creators for their work. Everyone I know in the industry eats food and lives in a house just like everyone else, so this continuing devaluation of what we do will simply drive talent out of the industry and reduce both the quantity and quality of American Cinema overall. As not only a member of the industry, but a Cinema lover as well, I’d find that quite unfortunate.
July 3rd, 2009 at 6:31 am
Hey, John. I know you said that you didn’t exactly know how The Nines’ residuals worked on Netflix’s Instant Watch. Did you ever figure that out? Like Ashley, above, I would be interested to know if you think that’s a good offer for both consumers and copyright holders.
July 3rd, 2009 at 10:02 am
This is just a second to Ashley and Jesse’s comments about the role of Netflix Instant viewing and residuals. Was this part of the issues being addressed by the strike last year?
July 5th, 2009 at 1:00 am
The paradigm of broadcast t.v. is changing very, very rapidly, and to be honest, I don’t know how t.v. is going to make, or spend the same amount of money as it has in the past. People are getting used to not having ads (via torrents/one stop download sites), or simply having minimal ads (like on HULU).
The internet is a blessing and a curse.
HULU has show that people will put up with a minimal amount of focused ads to watch content on demand. As a bonus, the ad rates are more for HULU ads than broadcast.
http://gizmodo.com/5302448/advertising-during-the-simpsons-more-expensive-on-hulu-than-tv
If I were an advertiser selling a new/unique product (like a new video game) I would most certainly use HULU over broadcast.
Cable TV is deathly afraid of becoming irrelevant, which technically they already are. Even though I have two T.V.s in my house, I hardly ever watch “T.V.” on them, I watch mainly movies on them, and I watch “T.V.” on my computer via HULU and other internet services.
I support the shows I like by purchasing the dvd/blu-ray sets, since unless my views are on HULU, I doubt that they get counted, and even then who knows how that factors anymore.
Personally, I don’t really understand how Neilsen can accurately gauge the true metrics of television viewership anymore. The viewing world is fragmented, and will only continue to get more fragmented. Broadcast t.v., although not dead, will certainly be on it’s last leg by 2020.
Furthermore, there is the mobile platform that I’m certain terrifies the old guard of broadcasters. There are currently 30 million+ iPhone/Iphone touch devices in the world. I’m using the iPhone platform as just ONE example of a very popular device that can download and play t.v. and movies (both legally and illegally). The Sony PSP is used primarily as PMP first, and as a game platform second.
There is an app called ORB for the iPhone that lets me stream my entire digital collection from my home computer to my iPhone, giving me unlimited storage. Pretty much that is the future. My best friend’s brand new t.v. has an iPhone/iPod dock for pete’s sake!
In the (very near future) all content will HAVE to be hosted on a server and streamed to multiple devices, with the MOBILE platform taking PRIORITY over all other forms of delivery.
The handwriting is on the wall.
The iPhone has practically CRUSHED AT&T’s 3G network, and that’s with Flash disabled and limited downloads. When the iPhone can operate on a 4G or WiMAX network it will finally be the paradigm shift for the broadcast industry.
I’m just curious as to how much longer physical media will remain relevant? Some new t.v.s now have an SD CARD reader and limited codec playback of divx files. Sony just dropped the UMD player on it’s PSP, and how much longer will the public buy dvds, when their portable devices can hold 35 “dvd quality” movies, and storage will only get cheaper and bigger?
July 6th, 2009 at 2:33 pm
I agree, John. A “virtual DVR” makes little sense. DVRs with physical hard drives are reliable and relatively cheap, and consumers are very satisfied with them. There’s clearly more to Cablevision’s plan.
But I have a feeling that the content providers will beat them to the punch. Within a couple years I wouldn’t be surprised if we have a fee-based Hulu (that’s faster and higher-quality) that you can watch from the couch.
July 19th, 2009 at 11:52 am
John, you’re still way off the mark. There won’t be another case with substantially different facts, because if you substantially change the facts along the lines you have suggested, you end up with something that all observers agree runs afoul of current copyright law.
What the Solicitor General was suggesting was that this was an unsuitable case to resolve the issues not because of the facts of the case, but because of the stipulations of the parties limiting the legal theories to be considered. The appellants had previously stipulated that they would allege direct infringement only, not contributory infringement. In turn, the appellees had stipulated that they would not assert a fair use defense.
Interestingly, if you read the SG’s brief carefully, you’ll find that it appears the SG believes that the most important aspect of this was the exclusion of fair use from consideration. The SG brief explicitly suggested that there might exist a fair use defense even for direct infringement. Together with the SG’s expressed comfort with allowing the lower court decision to stand, the brief would seem to clearly suggest that the SG felt the system did not, in fact, infringe copyright.
If you want to talk about slippery slopes, then the slippery slopes to discuss involve things like what happens as storage becomes cheaper and cheaper, so that mass archival by individuals becomes commonly feasible. And what happens as technology advances so that more and more programs can be recorded simultaneously?
These are legitimate questions to raise — and in fact, they are extensions of the slippery slope issues that arise from the original Betamax case. i.e., time-shifting with VCRs started out as something fairly laborious to achieve, and with sharp limitations on how many programs could effectively be recorded and how long they could be saved, in terms of mass consumer behavior. The later advent of the DVR changed that mix considerably, so that significant time-shifting became a mass behavior, impacting content providers very differently.
So there are certainly slippery slope issues worth considering — caused by the natural advancement of technology. And for the record, those slippery slope issues apply equally well to in-home devices as they do to network implementations.
On the other hand, the suggestion that there’s a legal slippery slope, whereby there could be changes to the key facts on which the decision in this case were based, and yet this decision would still apply as a precedent, is simply fallacy.
August 16th, 2009 at 8:43 pm
Since people were inquiring about how Netflix pays for Instant Watching, I can illuminate that a little bit, as I’m involved in the distribution side of the industry ’round these parts.
Netflix doesn’t pay per use, what it does is pay a flat fee for a certain period of time, which varies depending on the film. Big studio films that have been released relatively recently obviously attract more money than an indie documentary, for instance.
I’ve heard different figures quoted. A more notable film would probably get between $10k – $20k for a 6-month window (which is the average licensing time), though I haven’t heard amounts for big budget ones that were recently in theaters (Wall-E comes to mind).