Network DVR: Copyright Catastrophe?

Will the Supreme Court put the kibosh on Cablevision’s RS-DVR?

A group of media companies that includes Turner, ABC, CBS, NBC, Disney and 20th Century Fox – which sued Cablevision over the proposed network DVR — is claiming an appeals court ruling upholding the legality the MSO’s service "fundamentally destabilizes copyright law," and they’ve asked the Supreme Court to review the lower court’s decision. The court is expected to decide by mid-January whether to take the case. 

Turner, et al. have plenty of friends in their fight against the RS-DVR.

More than a dozen parties filed amicus briefs this week with the Supreme Court, including MGM, Major League Baseball, the NFL, the NCAA, Sony BMG Music Entertainment and the Copyright Alliance — a coalition of more than 40 companies and institutions, including Viacom, CBS, NBC Universal, Microsoft, the Motion Picture Association of America, NASCAR and Time Warner (see RS-DVR Fight Builds At Supreme Court).

There’s been no consensus on whether the RS-DVR is allowable under copyright laws. Jurists with years of experience examining copyright disputes have reached two different conclusions. The U.S. District Court in Manhattan said Cablevision’s network DVR was illegal, while the 2nd U.S. Circuit Court of Appeals said it did not directly infringe the content owners’ copyrights.

Cablevision’s position — which the 2nd Circuit agreed with — is that the RS-DVR is exactly like a regular set-top DVR, just that it happens to be located in the cable headend. To paraphrase this line of argument: It doesn’t matter if a copy shop’s photocopier is in front of the counter or in the back room, because the customer still controls what stuff gets copied.

No way, say the media companies, which contend the RS-DVR is actually akin to a VOD service and the rights to transmit content in this fashion need to be covered under a separately negotiated license.

I’m no lawyer. But as a consumer, I look at the network DVR as an acceptable fair use of cable TV programming. I’ve already paid to receive these hundreds of channels, right? The content guys aren’t challenging the fundamental premise of the DVR, so it seems like they’re trying to nip the RS-DVR in the bud on technicalities.

Yes, this is about cable networks, broadcasters, movie studios, sports leagues and others wanting to protect their leverage in licensing discussions. But from an industry perspective, it seems to me that in this legal spat the media companies and their distribution partners are missing a bigger business opportunity.

That is: make everything on-demand. Figure out the deals to do this. That can potentially result in new ad inventory — e.g., interactive overlays, animated banners, etc. – around that on-demand content.

The time-shifting genie is already out of the bottle. Programmers are monetizing TV content on the Internet, and that’s driving some people to cancel their pay-TV service (small today but possibly a harbinger of things to come). A network DVR service, with a virtually unlimited video store of searchable HD content at a cable customer’s fingertips, would be a compelling offer indeed — and perhaps a vital difference, as Internet on-demand video choices continue to proliferate and increase in quality.