Oct. 20, 2014 SIGN IN | REGISTER

Shapiro: Consumers Win When Innovators Are Able to Innovate

In the classic 1942 film “Casablanca,” police Capt. Louis Renault says he is “shocked to find that gambling is going on” at Rick’s Café Américain — as he quietly accepts a pile of money from one of the gaming table dealers. TV networks are reacting in much the same way this month, expressing shock that any of their viewers would ever skip commercials, even while they expect other payment for their content.

In early May, DISH Network introduced a new digital video recorder feature that allows a subscriber using its new Hopper DVR to choose whether to watch TV commercials during playback of prime-time shows on the day after they are recorded. The commercial skipping feature is called “AutoHop” and must be activated by the viewer for each program.

Reaction from the TV networks was swift and overblown, predicting that this consumer-friendly innovation would “destroy the advertising-supported ecosystem, labeling it “tampering ” and somehow “unlawful.”

The battle recently moved to the courts with a flurry of lawsuits.

In reality, the Hopper upgrades the long-standing — and entirely legal — DVR technology that allows users to fast-forward commercials. Yet the networks argue the Hopper undermines their advertising model, thus threatening their existence. Readers of a certain age will feel like they’re experiencing triple déjà vu because they’ve heard this melodramatic lament twice before: first in the 1970s when VCRs revolutionized the industry and again in the 2000s when DVRs first appeared.

In reality, TV networks can no more force you to watch TV commercials than a newspaper can force you to examine every ad on your way to the sports page. And anyone suggesting that drivers should be forced to read every billboard would be scoffed at as a lunatic.

Yet the TV networks are making these same ridiculous claims in their lawsuits against DISH, which is only trying to give subscribers what they want — the freedom to watch TV as they wish.

For the uninitiated, a history lesson: In 1976, Hollywood studios sued Sony over the Betamax video cassette recorder, claiming that allowing consumers to record over-the-air broadcast television for free violated their copyright and made Sony a “contributory infringer” through its innovation. The case relied on advertisers’ testimony that they would be less likely to buy TV ad time. The Supreme Court sided with innovation in its 1984 Sony Corp. of America v. Universal Studios Inc. decision. The Supreme Court Betamax decision has governed controversies over copyright infringement and fair use ever since. It’s the Magna Carta for the innovation industry.

Today’s backlash against the newest DVR technology is nothing more than a rehashing of the Betamax case. The case set the specific and clear precedent that consumers have the right to “time shift” — record programming to watch it later — and businesses have the right to provide time-shifting devices. In fact, NBC owner Comcast provides customers with DVRs that enable them to skip a 30-second ad with one click.

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