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The hole in the copy-proof fence

The Optus TV Now decision

The value of live sports sponsorships isn’t going to collapse overnight, regardless of the dire predictions made in the wake of last week’s decision in the Optus TV Now case.

The judgment, that TV Now is legal, has been greeted with the usual response from the plaintiffs (the Australian Rugby League and the Australian Football League), that they will take the case off to the High Court.

The theme of the remaining commentary is that the decision will destroy the value of TV sports sponsorships. It’s no surprise, given the reach of television executives into Canberra, that communications minister Senator Stephen Conroy should go public saying that the law may need review.

All of which is a little overblown, in my opinion.

Whose PVR?

First, let’s explore the idea that content could somehow be ring-fenced from services like TV Now.

The judge decided that since a user gave the “record” instruction, and since the recording is made for private use (as is spelled out in the terms and conditions), there was no difference between customers using their own recorder and personally controlling infrastructure owned by Optus.

If an infringement exists, it’s the user that infringes, not Optus; but the Copyright Act specifically exempts personal recordings made for the purpose of time-shifting, so long as the user does not then communicate that recording “to the public”.

The shift from recording on your own device to one owned by Optus has, the TV networks argue, opened up a dangerous loophole in the Copyright Act which, if allowed to stand, would destroy the business model of sports broadcasting (at least on free-to-air channels).

Consider this, however: there are hundreds of thousands of Australians who already record TV programs on devices they don’t own. Anybody with a Foxtel IQ box (for non-Australians – a Foxtel-supplied device that includes PVR) is recording shows on a device they don’t own, but do control. As Foxtel’s FAQ puts it: “FOXTEL iQ remains the property of FOXTEL, which allows us to offer it at a low price. This also means that we will continuously update the software for the period of your FOXTEL subscription.”

So how do you prevent someone using a hard disk owned by Optus as your recording device, while permitting them to use a hard disk owned by Foxtel?

Old-world thinking

What about the supposed wholesale destruction of the value of broadcast rights?

The aggrieved parties in the case were the two football codes and – as the offstage motivator – Telstra, which forked out $AU153 million for exclusive rights to broadcast games to mobiles.

Broadcasters have their business model worked out: they pay the sports codes for broadcast rights (more than a billion dollars in last year’s AFL deal, for example), which they recoup from advertisers.

If viewer eyeballs matter to advertisers, the direct impact on broadcasters isn’t catastrophic. The advertisers (and broadcasters) get eyeballs otherwise lost: Optus subscribers who aren’t in front of their TV sets (for a rebroadcast running two minutes behind the “live” broadcast, ad-skipping isn’t the viewer’s main concern).

I note with interest that while broadcasters are making all the right noises in public, none of them felt it worth their while joining their names to the AFL/ARL lawsuit.

Right now, it’s all about Telstra and that pesky $AU153 million that it wanted to recoup from its customers.

The mistake the football codes made was to try and apply an old broadcast-exclusivity business model to the online world. A feed available for a fee to all mobile carriers (and maybe to other players like FetchTV) would, in retrospect, be less immediately lucrative, but more strategic. Instead of antagonising someone with the resources to launch a service and then defend it, the codes could have aligned the carriers’ interests with their own.

It would have also bought the football codes a bit of breathing space, to try and work out what the next business model will be. Hiring lawyers to put their fingers in the leaking dam wall won’t work. ®

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