Audio Video News

Want to succeed in business? Two proven suggestions: don't alienate your customers, and use new technology to your advantage.

Hollywood executives seem to have forgotten these basic guidelines in their crusade to prevent ReplayTV users from skipping commercials or passing along interesting programming to others in the ReplayTV network. Last October, a coalition of film and television studios—including Viacom, Inc.; Walt Disney Co. (parent company of ABC Television); and General Electric Co., parent of NBC—sued personal video recorder maker SonicBlue for copyright infringement. The plaintiffs claimed that consumers' use of PVRs such as SonicBlue's recently introduced ReplayTV 4000 would encourage copyright violations. The suit was a sort of pre-emptive strike, as only about 5000 of the machines have been sold.

In particular, plaintiffs objected to the machines' ability to skip forward in 30-second increments, allowing viewers to see movies and television shows without having to watch commercials, and sought a broad injunction that would prevent the further use, support, or sale of the PVRs. The potential loss of a captive audience could have serious repercussions for broadcasters, who depend on revenue from television advertising.

Turner Broadcasting CEO Jamie Kellner went so far as to characterize the skipping of commercials as "stealing the programming." In an interview with Inside magazine, Kellner stated that consumers who watch "free" TV have a "contract to watch the spots . . . Any time you skip a commercial you're actually stealing the programming." Kellner stated that the principle applied to people who took too many snack breaks or made too many visits to the bathroom during commercials. When reminded that VCR users have been able to fast-forward commercials for decades, he said that this, too, was "theft." His remarks were reprinted with incisive analysis on the Website of the Yale Law School.

The plaintiffs won early support from US District Court magistrate Charles Eick, who on April 26 gave SonicBlue sixty days to develop software that would allow content providers to track the behavior of ReplayTV users. The order prompted howls of protest from civil liberties and consumers' rights groups, especially the Electronic Frontier Foundation (EFF), who claimed that tracking consumer behavior would amount to a new invasion of privacy.

Their fears were temporarily allayed in early June, when a Silicon Valley appeals judge overturned the order. "We have been, and continue to be, willing to work with the content providers to develop new revenue models," said SonicBlue CEO Ken Potashner. "If the networks and studios focused on the inevitable evolution of their business instead of attempts to stifle technology, we believe everyone involved would benefit—consumers most of all."

The setback for content providers hasn't mollified consumer groups, however. On Thursday, June 6, a group of ReplayTV 4000 users launched their own suit against the entertainment industry. Led by Ira Rothken, a San Rafael, CA attorney representing the EFF, the group filed a complaint in federal court in Los Angeles seeking to establish the legality of digital home recording.

The group hopes to get the court to rule that its members' activities are legal under current copyright law. "The studios are using their copyrights as an excuse to control what individuals do with their own property in the privacy of their own homes," said EFF intellectual property attorney Robin Gross.

"Rather than encourage innovation and provide customers with an experience worthy of attention, Hollywood intends to outlaw a new and promising technology," added EFF senior intellectual property attorney Fred von Lohmann. "It's just as alarming as the Betamax case of the 1980s when Hollywood tried to ban VCRs."

In that case, Walt Disney Co. sued Sony Corporation over the introduction of the videocassette recorder. While the case wound its way through the court system, VCRs exploded on the consumer electronics market, and were fully established by the time the Supreme Court ruled in their favor in 1984. The court found that the machines' recording capabilities were used by consumers primarily for "time-shifting" their viewing and were therefore well within the limits of fair-use law. Playback of pre-recorded material, their other major use, wasn't contested by the film industry. Those opposed to the VCR didn't anticipate the growth of the video rental market, which became a life-saving revenue stream.

Among those seeking validation for digital home recording is plaintiff Craig Newmark, founder of the San Francisco Bay Area community Website craigslist.com. "These Hollywood guys want to stop me from using my digital video recorder like I use my VCR, like for watching shows when I want or zipping through commercials," Newmark complained. Other plaintiffs are Keith Ogden, owner of a financial brokerage firm in San Francisco; Shawn Hughes, a Georgia electrical contractor; Seattle journalist Glenn Fleishman; and southern California video engineer Phil Wright.