Friday, February 18, 2005

Broadcast Flag Appeals Case Set to Begin Next Week

You can read the brief announcement on Radio World Online.

Folks, this is an important case. Many, including myself, believe the FCC exceeded it's authority with the Broadcast Flag mandate, set to go into effect later this year. I've included a couple of links for additional reading, at the end of this piece.

What is the Broadcast Flag and what does it do?

The FCC mandates that all consumer equipment, that can handle television broadcasts, be built to honor the evil "broadcast flag". This capability allows the broadcaster to control what you can and cannot do with digital television content you recieve on your own equipment.

Watching American Idol and want to skip through the commercials? If the broadcast flag is set, you might just have to watch your timeshifted copy from start to finish assuming they even let you record one. That's right, record. Another feature of this little flag is the ability to deny recording rights on a program by program basis.

The advent of the DVR has eliminated the concept of "Prime Time" for a rapidly growing percentage of the TV watching population. Of course the networks hate this because they lose potential AD dollars on popular programs. On the other hand, most people love this because it puts TV on their time, not network time.

Being a father of 4, I can say my DVR lets me actually watch TV again, so it's not all bad. I timeshift into the late evening and watch when things have settled down. The ability to fast forward lets me enjoy the average 1 hour program in about 40 minutes.

The question at hand is the ability for broadcasters to do this. Should we allow our own devices to be controlled by the broadcasters or should our existing ability to record and watch later, as we do with VCR's today? The digital transition is enabling the media companies to revisit these questions again, with the answers having significant implications for us going forward.

If you have gotten this far, the rest of this essay attempts to communicate the implications this case will have on consumer technology and how that could affect you in the near future.

Many of their arguments will be framed around the issue of piracy, that is unauthorized copying of broadcast content. The simple truth is that people have been copying things ever since we have been able to copy. Despite this, media companies continue to see high profits and growth, making the piracy issue a red-herring. So, what drives this movement forward besides simple greed?

Control Implications: (WHY YOU CARE)

If consumer gear must adhere to a mandated set of artifically restricted capabilities, the media companies then get to dictate what we do, when we do and how we do it. However this is not the whole story. The media companies know they can generate plenty of live content that will attract people at regular times. It's harder to do with PVR enabled viewers, but not impossible.

The real reason behind this broadcast flag control is to limit competetors. Before I detail why I believe this to be so, let me first explain briefly the difference between open technology and closed technology.

Most common consumer technology is currently open technology. A VCR, for example, can record video. The recording, stored on videotape, can be played back on most any VCR. This allows everyone to produce content.

By contrast, digital technologies are increasingly closed. The information format and behaviour is determined by the software code that handles the information. Without getting too technical right now, lets just say not everyone will be able to produce and distribute digital content in the near future. It's possible today, but that ability is being attacked in our courts and legislature right before our eyes.

To sum up:

Open Technology:

Anyone can produce / distributre content. With this comes the ability to copy things; thus, the potential for Copyright Infringement exists. Good for us, not as good for the media giants.

Closed Technology

Only authorized content creation and distribution is allowed. Ordinary people are not part of this group. The potential for Copyright Infringement is sharply reduced. Bad for us, very, very good for the media giants.

Another interesting side effect of closed technology, not mentioned at all in the press, is the shrply reduced competition. If only authorized content is allowed, the existing media giants will be able to keep new content and means of distribution from sprouting up. They get to say who can compete and on what terms.

This is bad for us in that it creates an artifical scarcity of both new content and distribution which, in turn, keeps prices artifically high.

That's why this case is important. It will set the stage for our future technology direction. Will it be open or closed?

One more example:

Lets take a brief look at recorded music. Until recent court actions and market pressure forced price reductions, the average music CD was as expensive or sometimes more expensive than a full-length movie on DVD. Buying the soundtrack could be more expensive than the movie itself! Clearly the music companies want to keep their product valued as high as possible, but should they use our laws to do that, or should they be working hard to improve their value proposition?

In a free market, these questions are answered through competition and demand. We are seeing lower music prices because the movie companies put price pressure on the music companies. Cheap DVD media means cheaper music media, that's just the way it is.

However, traditional music distribution also is under pressure from Internet music distribution methods and Peer to Peer music swapping and sharing on the Internet.

The music companies are being pressured in a third way as well, in that the cost of recording music itself has dropped dramatically as well. It's possible today to produce quality music with only a modest investment in technology. The Internet allows for easy distribution to potential listeners as well. This new distribution channel has the major labels shaking in their boots because they profit from their current lock on distribution.

If artists can sell directly to the people wanting to listen, what do we need the major labels for?

Now you know why the media industry is working so hard to close our technology. To them, it's a matter of their very existance. The open nature of most personal computers, for example, makes their task very difficult. Nobody wants to buy limited machines when unlimted ones cost the same. How to solve the problem?

Get their existance mandated into law. That's what this broadcast flag represents.

If the broadcast industry can get their interests mandated, then so can the rest of the media industry.

I'm opposed to this because it limits our creative ability, while at the same time forcing us all to depend on outdated business models we will likely not need in the near future. Each wave of innovation has had to fall to the one following. Why should multi-media content be any different?

Imagine laws like this during the early industrial age. Would be still be using horses and wagons because they were threatened by cars? That's crazy isn't it?

The advent of the Internet has started another change in how we produce, consume and distribute information. Shouldn't we let it develop rather than kill it because some existing businesses find it cheaper to buy laws than compete for our dollars as they should?

I think so. If you agree, now would be a great time to contact your elected officials to remind them of this issue. The media companies are well represented and have deep pockets. If we ignore this issue, it will be decided for us and we won't like the decision. Do something --anything besides just nothing. Send a friend a link to this blog entry, mention it in conversation sometime, call your legislator, write a letter.




Anonymous Anonymous said...

In an ironic twist, this is not unlike when the musicians' union had regulations to discourage radio stations from playing phonograph records on the air (I think that this was up until the 1940s). There was a thread in the Portland Radio message board about this. I see that in a way as the musicians' union trying to fight a new idea/business model to protect the jobs of musicians. Today (as you point out) the record/media companies are fighting to preserve business paradigms in which they are accustomed to operating.

When you mentioned DVR, I thought "but what about VCRs--people have been time-shifting shows with those for over 20 years." Well, a similar scenario played out back in the early 1980s. I remember reading (circa 1983) that Disney and others were suing to have a tax imposed on VCRs and blank videotapes alleging that recording TV shows off the air was a form of copyright infringement. At the time, I thought this was pretty stupid, as I thought that Disney and other media companies should love VCRs because they would encourage people to watch more TV.

March 11, 2005 6:28 PM  
Blogger Doug Dingus said...

So true. I had thoughts along similar lines during the VCR times. Great minds think alike 'eh?

Anyway, they did get that tax and people ended up making copies and the VCR did more to boost the overall movie studio revenues than anything they had ever tried.

It's going to work the same way again, once we get the lawyers off our backs.

That's why I think it's more about control than infringement. It's growing increasingly obvious that people want to sample and share content they enjoy with others and that these activities stimulate more overall content consumption than would otherwise occur.

The giants, in almost any industry you can name right now, are busy legislating their profits at our expense. I'm not sure what triggered this exactly, but it's a growing problem that gets almost *no* real discussion.

March 11, 2005 10:36 PM  

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