Money and Content

With the launch of yet another iPad app by a video distributor (this time, Cablevision), several big media companies are now individually testing the outer boundaries of licensing deals that in most cases were forged before the iPad phenomenon began. The questions are many and really affect all cable, telco and satellite companies. What’s covered? What’s not? The legal rumblings have already begun, including some cease-and-desist letters and other machinations. Make no mistake: The TV Everywhere onslaught has entered a critical stage. And in many ways, this is the stage that we’ve all been waiting for: The Money Stage. For more than a year, distributors have been urgently working to get authentication beta tested, up and running, and marketed to the masses. But now comes the period that everyone was secretly dreading: How to split up the dollars.

 

At the end of the day, this is really all that matters. The business rules and economics will rule how TV Everywhere evolves—more specifically, whether the multiplatform world becomes a legitimate extension of traditional TV or simply devolves into a dark underground that undercuts rather than supplements existing revenue streams. At this point, a complete Wild West scenario seems unlikely. But unless content owners and distributors can figure out a fair way to compensate each other, whether its distributors paying license fees or content owners sharing ad revenue (or some combination of both), the entire ecosystem will suffer. The truth is that consumers don’t care about economics. They just want the content. And they’re in no mood to wait. Netflix, Hulu and others are striking deals left and right. And the cable industry must ensure that endless wrangling with content owners over digital dimes doesn’t end up costing digital dollars in lost opportunities.

 

What’s the answer? As usual, it’s pretty simple: Everyone needs to start talking without legal filters and holdups. Someone with a big title and paycheck should order coffee and pastries, find a comfy conference room (a nice view helps) and invite some folks over for a good, long talk. Yes, most of the distributors claim that iPad streaming is already covered in existing contracts. And content owners say it’s not. The truth lies somewhere in between, with degrees varying based on the contract in question and its specific language. As our CableFAX Daily columnist Steve Effros recently asked, do we really want to differentiate between IP-based and QAM-based video? And have we thought through all the implications yet? These are great questions, and the parties need to amend deals if necessary to create some immediate clarity. Consumers aren’t going to wait. They never do.