THE NEXT BETAMAX CASE – part 2 The full court press to legally challenge the way consumers use new technology and watch and listen to video and audio is finally under way. Last week I outlined the case that has just been filed by the content owners (the networks, the studios, etc.,) against Cablevision after learning that the company was planning to offer "remote storage" or "network" DVR service. The problem, the content owners say, is that if the hard drive storing the television program is not in the same box as the electronics, on the top of the consumer’s television set, like a TiVo, then the "service" being offered is akin to Video On Demand, and Cablevision has to get a separate contract to offer all that VOD service for each and every cable and broadcast station. The response: what Cablevision is planning to offer is simply a good deal for consumers so that they don’t have to buy an extra piece of equipment. The "networked" part of the DVR is simply the storage, and Cablevision is providing consumers a capability and control that is identical to what they get when they buy or lease a DVR or VCR. Well, another suit has also been filed, this one against XM satellite radio. In this case XM is offering a piece of equipment that allows its customers to record the programming they get from the subscription service. There is no argument that XM has secured agreements to transmit the copyrighted programming. The argument is over the fact that the equipment they are now offering gives consumers the power to record, store, and re-order (into a playlist) the music they get from XM. The copyright owners say that is not "transmitting" the programming, it is a "downloading" service, and that, they say, XM does not have rights to provide. Do you see the trend here? In both cases the customer has already paid for a subscription service that, in turn, has paid the copyright holder for the right to deliver the program to the customer. In both cases the customer is using new technology to listen or view the program paid for at his or her convenience. In both cases the copyright holders see an opportunity, because of this same new technology, to either charge multiple times for the same program viewed or listened to on different devices (like an iPod), or get additional money from the service provider because that service provider has aided the consumer in doing what the consumer has every right to do. Note that under an act of Congress adopted several years ago, content owners already get a 2% royalty on the equipment price for new digital audio recording capability. So these suits can only be viewed in one of two lights; either they are designed to challenge the "fair use" rights of the consumer in an effort to limit consumers to given "uses" of the product in specific forms, or they are designed to create leverage in negotiations aimed at getting additional revenue from distributors. In either case, it’s something to watch closely. These are mirror-image cases. One tries to restrict the distributor from also offering consumers a more convenient way to store legally received data, the other tries to redefine "transmission" rights to characterize "downloading" by the consumer a different, licensable "service". In both cases, ironically, if content owners supported these services they might gain more secure distribution of their products with less risk of theft, something they say they really need!

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