Broadcasters win one, for now

Of all the disruptions facing traditional forms of media today, none is greater than that which is threatening the value-through-scarcity of the broadcasting/cable arrangement. The broadcasters won one in court this week, when a U.S. District Court in New York issued a preliminary injunction against ivi, Inc. The injunction stops the company from streaming copyright-protected broadcast programming online, creating an online form of cable at much lower rates than cable itself ($4.99/mo).

According to the Associated Press, the court rejected ivi’s reasoning that it is “entitled to the same rights to distribute broadcast programming that federal copyright law automatically grants cable TV operators.” The court found that ivi does not qualify as a cable system.

ivi website

The company is being sued by a host of entities, including local broadcasters in Seattle and New York. ivi said it will shut down its broadcast offerings while it appeals. In a press release following the decision, ivi CEO Todd Weaver sounded a lot like protestors in the Middle East.

“This fight is for the people and their right to choice and control over their own entertainment — and it will continue. The oppressive big media networks must open their doors to innovators or they will inevitably fall. People want responsible choice, not the one-size-fits-all television offerings imposed by powerful media interests.”

ivi argues that this is an issue for the FCC and not the courts under copyright, an argument they have little chance of winning. The content within the signals that ivi retransmits belongs to its creators, not the public. I do think, however, that ivi is right in stating that sooner or later, program creators are going to have to realize that the old model of forced scarcity — and for which they can charge an arm and a leg — can’t last forever. Personal broadcasting — including content marketing by the people formerly known as the advertisers — is on the rise, and if Hollywood (and the National Association of Broadcasters) isn’t careful, it’ll find itself on the wrong end of the public’s attention curve.

Consider that the rapid growth of what Borrell Associates calls “non-ad spending” among advertisers includes their own programming, and that these people would be very happy with any distribution model. They are, after all, the folks with the money that support all this programming in the first place. Here’s what Gordon Borrell told me on the subject:

The onset of digital media has accelerated the trend whereby businesses are spending more on non-traditional forms of advertising. Traditional advertising as we know it has gone flat, while “non-advertising” forms of marketing have increased — like spending money on their own websites, paying for product placement in programs, giving away products and services for free via the Groupon program, paying to have their websites optimized for search engines, etc. The table below shows that businesses spend twice as much on “non-advertising” marketing than they do on traditional advertising. To look at it a different way, you might say that advertisers, like consumers, now have control of the media.

non ad spending 2011, courtesy Borrell Associates

Consider also that all of the forecast models for the future show a dramatic increase in online video usage. Search and unbundled distribution options will rule the roost, not some programmer’s view of what to watch when and where. Google TV and everything like it will have their day. The broadcasting industry must be on the forefront of this and not be fighting every attempt to develop the marketplace. As we learned with music, the people will have their way. Does the NAB have the courage and smarts to lead the way, or will we simply try to stop it in the name of short term results?

ivi’s approach on all this has been bold and in-your-face and, as such, could be seen as almost laughably naive. “They’ll never get away with it,” is a logical response. The noise they make along the way, however, will resonate with everyday people, and that’s a problem no matter what the courts decide.

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