CableVision DVR lawsuit = mistake

Im obviously a defender of copyrights. I m also a defender of fair use. I also think that there is a time to sue, a time to compete and a time to use some sense.

CableVision, a Long Island cable MSO created a very simple product. Its a virtual DVR. Rather than having a DVR with finite hard drive storage capacity in every home, they essentially moved the hard drive to a network location and let the storage occur there. The user had no idea where the shows they wanted recorded were stored. They were getting the DVR services they wanted, and the virtual DVR was a platform that made it easier to enhance and update services going forward. CableVision was able to save a ton of money on set top boxes.

A win for consumers. A win for CableVision. No problem, right ? Wrong.

Suing Youtube and pulling content from Youtube is a good idea because the content there is unemployed. Its not making any money for its creators, its only making money for Youtube. Content on the Cablevision DVR is employed. Its getting paid for. Cablevision may not have all the best content available (they havent figured out that they are losing subs not having HDNet, but thats another story), but what content they have, they pay for. So the media companies that sued Cablevision over their virtual DVR were getting paid for it.

But that alone is not what makes it stupid to sue to halt the DVRs. Critics of media vs youtube like to say that big media needs to find new ways to compete with internet video and combating youtube is not the way to do it. In reality, those critics have it backwards. Internet video is not ready for primetime and it will be years till it will, however, when the opportunity arises to create space for those who are paying for your content vs those who are stealing content, its a good idea to help out your paying customers.

Virtual DVRs from cable and satellite companies are a step in making television a better experience. Its a big step to creating an environment that can easily compete with internet video and far exceed the current and future capabilities of the net. After all, Cablevision et al can buy just as many hard drives and servers as Google or any internet provider to store and offer as much content as any internet site. Plus, they are already fully integrated into the home tv experience. Users dont have to buy Apple TV or whatever to make it all work.

So bottom line, those filing the lawsuit to halt the Cablevision DVR made a HUGE strategic mistake . They ought to go back to them and sign a quick deal allowing them and all video distributors to offer Virtual DVRs as part of what they pay for content.

Employed content is always a better business model than unemployed content

28 thoughts on “CableVision DVR lawsuit = mistake

  1. It\’s just like every big business company out their the world is moving towards hard drive media and they freak out because they can figure out a way to make money so they scream lawsuit instead of try to work with them. I think it\’s a great idea and soon you will be able to have all you music and movies at HI-REZ on something as small as an iPod. of course it will be a while but it will happen. they just have a system and it work and anything new throws a wrench it to their business they don\’t know what to do! what they should do is figure out a way to make it work where they can make a profit instead of just saaying lawsuit.

    Comment by james kingsted - domain inform -

  2. Good to see that you are backing Jim Dolan and crew about this business decision to try to cut out the middle ground of DVR units that are potentially faulty

    Comment by evden eve nakliyat -

  3. I was pleasantly surprised by your views on fair use. This is probably the major issue facing the entertainment industry in the very near future.

    Comment by Hospedagem -

  4. Hi Mark! Tell us what you think of this super story related to making money on media (ADVERTISING) over any medium (TV just being one of the many):

    Cable TV Group Withdraws from eBay Ad Initiative
    —April 6th 2007

    Online auction leader eBays effort to create an integrated cross-media advertising network has taken a major blow as the Cabletelevision Advertising Bureau (CAB) withdraws its support.

    There were high hopes for eBays Online Media Exchange, which would enable automated purchasing of print, broadcast and cable ads online. It currently has support from 10 major brands including Toyota and Home Depot, but without the participation of the CAB, which represents cable networks like Discovery and ESPN, the cable end of things may be permanently off the air…

    FULL STORY LINK:

    http://www.iht.com/articles/2007/04/06/business/ads.php
    OR
    http://news.google.com/news?hl=en&ned=us&q=ebay+cable&btnG=Search+News

    THANK YOU FOR COMMENTING ON HOW THIS MIGHT AFFECT THE MEDIA INDUSTRY AS WE KNOW IT, AND ABOUT HOW LONG WILL IT TAKE TO BECOME A REALITY.

    HOW LONG UNTIL BROADCAST TV NETWORKS CAN ONLY MAKE AS LITTLE MONEY AS A WEB SITE?

    Best regards always,
    Perry from
    Phoenix, AZ

    Comment by Media-Watcher979 -

  5. So would this be considered video 2.0 ?

    Comment by Name -

  6. I was pleasantly surprised by your views on fair use. This is probably the major issue facing the entertainment industry in the very near future.

    Comment by Carrousel Yacht -

  7. Gotta agree that stopping Virtual DVRs is a bad call.

    To me, it\’s this simple, take a diagram of the way a virtual DVR works and compare it to a diagram of the way a DVR sitting by the users TV works. The only thing that changes is where the DVR equipment sits. Sure, the virtual DVR will be hosted in a datacenter on different hardware but the consumer experience, including control, could be identical.

    In fact, one could reasonably expect the consumer experience to be better. I used to use a rotten DVR provided Dish Network and then a rotten DVR by Comcast. Each one of them cratered at least once in the time I had it, taking all our recorded shows with it. Moving the DVR in to the datacenter would let cable, and sattelite, providers take advantage of high-availability and redundancy features inherent in those environments.

    Finally, the irony of all of this is that it would be harder for individual users to violate copyright using a Network DVR. With a network DVR you would have to buy additional hardware and do a lot more work to make shareable copies of your recorded content. Most casual consumers wouldn\’t do it. DVR/DVD Recorder comibnations are all over the place now and a lot of people are moving to \”Media Centers\” based on purpose built PCs. So, all that stifling Network DVRs does is push more people toward devices they can use to easily create illegal copies. If they were smart, content creators would be falling all over themselves to embrace Network DVRs.

    Comment by Jay -

  8. The real problem lies in the market power of the programmers. Going back, the cable operator was king.they controlled the last mile. At that time, if the cable operator couldnt work out a beneficial carriage deal with the programmer, then they were dropped. Its not like the customers had any other way to get the other 15 channels.

    Today the tables have turned. DBS, IPTV and the Internet have opened up competition into the home. Now that the programmers have various last mile solutions, they have all the market power they need. For example: when Sinclair and Mediacom couldnt work out a retransmission consent deal, Sinclair worked with the DBS providers to go after the Mediacom subscribers.

    I agree with you that the programmers should work with the cable operators to provide a more efficient time shifting experience for subscribers. The end user will not know the difference between nDVR and DVR.only the cable operator in cap-x. I think that the content owners are just upset over DVR in general and the potential loss of a major revenue stream (commercials). We all know that the programmers would fight DVR capabilities as well if it was not for the precedent of the Betamax case.

    Comment by andy davis -

  9. And while it wends through the legal system, a lot of money will be made

    Comment by Museum Stuff -

  10. Mark,

    I completely agree with you. Not only should content providers sign a deal allowing them to have a virtual DVR, they should try to sign a carriage deal with Cablevision to use that technology to regain the ad revenue they are losing from time shifting.

    Ryan,

    A virtual DVR is different than VOD in the sense that the user is defining what is available on demand versus Cablevision going out and offering every show possible for VOD. It\’s a really smart idea as it allows for Cablevision to know what type of programs its users want to time shift without making an investment in that specific program until it\’s requested. I have never used the service, but they would be smart to allow anyone to access a program that was recorded by another user as they are already using the server space.

    Comment by Tyler -

  11. Mark,
    Good to see that you are backing Jim Dolan and crew about this business decision to try to cut out the middle ground of DVR units that are potentially faulty. With that said, can you teach Mr. Jim Dolan how to run a Basketball Franchise as the Knicks are in a sorry state of affairs these days!

    Comment by Aaron Kardon -

  12. Isn\’t this exactly the same issue that got MP3.com in trouble when they would stream songs you already owned, but they digitized the songs on their end instead of making you upload everything? The company is technically making a copy of material for an \”unauthorized use,\” with the shorthand for authorized being user-directed and, as another commenter pointed out, geographically close to the user as well. Which isn\’t to say it\’s not a mistake, but it\’s entirely consistent and with precedent.

    I think Rick Boucher is back on the case in Congress with regard to trying to fix copyright laws, but I\’m not totally sure of that.

    Comment by notabbott -

  13. The Judge fills a lot of pages with technologicalunderstanding conveyed to him by the parties, and their experts. But, in the end, he doesn\’t appear to \’get it\’ and how a RS-DVR is a user-driven system with user-selected options. He fails to convince that it\’s distinguishable from the long permissible, Betamax time-shifting.

    Comment by Thomason -

  14. I do not belive Cablevision pays for all of the content you are referring to. Unlike most cable networks, the most popular channels (CBS, NBC, ABC, FOX) get no \”per sub\” fees from cable MSOs. So Cablevision would be making money off of content they are not paying for…if they want those rights -start paying the networks for content and negotiate-in those rights as well.

    Comment by Wayne -

  15. I agree with mark; As long as the content is not – Cross accessible. Also though – The owners paid for DVR to only have so much storage; now the cable company is offering unlimited storage….

    – The amount of product stored can be debated.

    Comment by Pallet Rack -

  16. There are many issues to consider with Network DVRs … not the least of which is the boundary of \”Sony\”. Anyway, I do agree that the lawsuit was a bad idea but was the result of bad moves by both sides.

    My suggestion would have been that Cablevision reached out to the rights holders and explain the value that was being deployed … namely, a virtual DVR that behaves by the business rules of the rights holders (no or restricted ad skippinng for instance). One might argue that this is anti-consumer but the the flip side of this coin is that they have more reliable/scaleable storage … and possibly high production value content to watch in the future.

    There needs to be something for all sides … rights holders, MSOs and Consumers typically find it hard to get past ME.

    $0.02.
    -p

    Comment by Peter -

  17. I just switched away from Cablevision. FIOS is a much better service all around. Now I get HDNET and HDNET movies so I can watch Little 5. I think we will see a massive shift to FIOS as it become available to more people. Cablevison treated people poorly and never gave consumers a great service. It was good, but good is the enemy of great. Great is what FIOS is not to mention that its less expensive, more channels (especially HD), and verizon has great customer service. This time next year Eric Gordon will be dominating for the Hoosiers. As long as i see that I dont care what service is providing the feed. Content will always be king for any media outlet.

    Comment by Joshua Rieders -

  18. Actually, a verdict against Cablevision came down this week.

    http://www.newsday.com/business/ny-bzcabl245143006mar24,0,5683061.story?coll=ny-business-print

    The judge likened the service to video-on-demand, which requires a license. If it sets any precedent, it\’s \”proximity of the bits\”. If they\’re recorded inside you home for home usage, then the service is legit. What Cablevision wanted to do was build a shared DVR that was located at their facilities. Each shared DVR would serve 96 homes, and presumably be cheaper than deploying and servicing 96 individual DVRs. Customers would have to record a show to keep on DVR, DVR would have limited storage. It was really just an issue of placement, not service.

    This is a tough call… On one hand, we seem to be evolving toward a \”proximity of the bits\” test, which would favor just about any service that can be deployed in the home. So, for example, if you could throw 300 digital tuners and 300 terabytes of storage into a box, you could effectively have a year of VOD right next to your TV. On the other hand, every service with an outside the home component is subject to a lawsuit, barring complete sign-off by every media company. iTunes Store, requiring positive participation, may be the sustainable model. Also, the local cable companies will be more about delivering bandwidth and services than content, with national providers promoting more uniform content offerings across a variety of delivery services (phone, cable, power lines, anything Internet). Mark seems to be betting on local cable franchises and satellite, so I can see where he\’s coming from. And it\’s a reasonable bet for the next half decade because HD requires lots of bandwidth, time shifting of HD is still a premium service, and HDNet is tied to HD. The brand would suffer from downscaling content for YouTube for example (well, that\’s my guess anyway). But other media companies are betting on disintermediation (or reintermediation) via the Internet.

    Comment by Brad Hutchings -

  19. Those suing Cablevision DVR are in over their heads. They are making a mistake that may cost them a large amount of money.

    Comment by Shane -

  20. It depends on whose perspective you look at this from. If it is from a ad free paid subscription network then you are not loosing anything, from a broadcast ad supported network then there are less potential eyeballs watching your content. That means less money per commercial. When you look at it from a ad supported networks perspective with Cablevision, that is 3 million people that could skip the commercials, wouldn\’t you want to delay that? We have had a DVR for 3 years and unless the commercial is visually interesting never watch them, we record every thing to view later.

    Comment by Gadge -

  21. That is so stupid. The people paying for that service were basically renting the dvr server space and recorded shows for themself, how can this really be different than renting the actual box? This is only happening because someone is sue-happy and wants some undeserved money.

    Comment by sewing machines -

  22. You are spot-on about the suits over virtual DVRs. Suing over that is clearly analagous to the Buggy Whip lobby suing the car manufacturers for making cars.

    The suits over content… We\’ll have to see how it plays out. The answers to your subpoenas will be interesting, if you ever get anything. Also the GooTube suit will be interesting, especially if there was an effort to compensate the big record labels while keeping the money away from the artists.

    But without actual collusion, it could just be the evolution of digital property.

    It\’s fun watching!

    Comment by Scott Yates -

  23. I am confused, as I am not close to this story. How is this different than the \”On-Demand\” services. Anyone got a good link on this story?

    Comment by Ryan -

  24. I cross-posted on this topic. I wanted to hear your thoughts on this subject:
    \”At some point people will realize they don\’t need to collect copies of their favorite media, but rather access them whenever they want via a streaming service. This is already happening with music thanks to Pandora and last.fm. That\’s going to be a seismic shift in the media landscape, I\’d be interested to see what someone as thoughtful as Mark Cuban thinks about that.\”

    Comment by Bret Terrill -

  25. I believe that Cablevision is absolutely right stating that their lawsuit is actually without merit. I can\’t begin to fathom as to why they would even waste their time to file lawsuits on that basis.

    Too many lawsuits issued for copyright protection, it wastes the legal systems time. It should stop now.

    Comment by FSBO -

  26. I must disagree with you on this one.

    I\’m not sure on all the details of Cablevision\’s offer to consumers, however, by violating the content provider\’s copyright, Cablevision was making more money. Think about that for a second. That is the same exact reason that rebroadcasting is banned. If Cablevision is making money from this setup, the broadcaster is entitled to a share. It need not be a huge share, but the copyright holder should not be expected to relinquish its rights to share in the profits from an alternate mode of distribution.

    Comment by William Finkel -

  27. I\’ve always wondered why Cable companies couldn\’t do such a thing. Now I realize, it\’s because content owners really have no clue. Perhaps they are suing in order to force a negotiation. I think it would be interesting to know if there is any lag time to receiving your DVR\’d programming.

    Comment by Joah -

  28. I know this is a little off topic, but I found it very interesting. You can earn 2% Cashback on any HDTV or LCD TV by Amazon.com. If you are going to buy there anyways, it is definitely worth it go and get 2% Cashback on your purchase.
    http://www.hdtv.about-it.org

    Comment by Matt -

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