Let’s clear one thing up right off the bat. Consumers are not entitled to high-quality TV programming. It’s a business. If that business doesn’t make sense, the shows won’t be produced.
I know that seems obvious, but as with so many arguments made by technology companies seeking to hijack the distribution of works for themselves, this latest one seems to proceed from a typical assumption that the “content” will just be there no matter what. As I said in an earlier post on this same subject, if the producers and distributors are correct in their criticisms, the FCC set-top box proposal could provide consumers with new methods of acquiring a lot less content over time.
In a nutshell, the TV programming we enjoy is made available because the producers (copyright owners) enter into licensing agreements with distributors, referred to as Multichannel Video Programming Distribution (MVPDs). Generically we tend to call MVPDs “cable providers,” but MVPDs include satellite and various other ways to receive television programming that has been licensed from the copyright owners. These licenses sit on top of a network of other licenses between the producers and their suppliers, advertisers, etc. For instance, the actors on a show not only receive fees for their performances but also have residuals and health & pension plans paid through SAG from those licensing fees that are paid by the MVPDs.
Not to say it’s complex, but Register of Copyrights Maria Pallante, in her 17-page August 3rd letter to the FCC, referred to “a constellation of arrangements between MVPDs and program producers.” Pallante further states …
“… the copyrighted works that make up an MVPD’s multichannel video programming are produced and made available to the public only as a result of complex, private negotiations between content owners and MVPDs, and on the understanding that the MVPDs will make works available to the public in accordance with the terms of the resulting licenses. Typically, a violation of the license terms will constitute either copyright infringement or breach of contract.”
What the FCC says it wants to do is to unchain consumers from the dreaded box — that thing we rent from the cable companies to unscramble the channels, and which symbolizes whatever frustrations we might feel with the service, the pricing, or the lack of competition in the pay TV market. I feel these frustrations myself, so on the surface, Chairman Wheeler’s proposal to give me options to watch TV more flexibly—through tablets, smart TVs, and other products sounds appealing. But there’s a bug.
The proposal would mandate that the MVPDs make their programming and data available to third-party manufacturers of devices (surprise, Google is one of these), who would not pay license fees but would be free to distribute, brand, and monetize with advertising as they see fit. The producers and the MVPDs have argued that this circumvents the aforementioned network of complex and costly licensing; and some producing interests have also raised the concern that because these third-parties operate on web platforms, a more seamless integration between legal and illegal viewing may exacerbate the adverse effects of piracy on the market.
The Electronic Frontier Foundation asserts that none of the criticisms of the FCC proposal made by producers and MVPDs implicate copyright law at all. Mitch Stoltz of the EFF this week argued that the proposal is exclusively about allowing new technology products to come to market and to provide consumers with new choices. Interestingly, despite his insistence that the proposal has nothing to do with copyright, Stoltz—and Cory Doctorow in a companion EFF post—refers to one of the most important copyright cases to support this position.
Sony v Universal (aka the Betamax case) is the reason consumers may use recording devices for “time-shifting” TV programs for their personal use; and these proponents of the FCC proposal appear to be arguing that Sony provides the only precedent needed to reject any further consideration of copyright in this matter. Stoltz writes …
“Copyright gives rightsholders power to control copying, but not technology design. In fact, that sort of control is the antithesis of copyright’s purpose. Over thirty years ago, in Sony v. Universal, the Supreme Court refused to allow movie studios to “extend [their] monopoly” into “control over an article of commerce”—the videocassette recorder—“that is not the subject of copyright protection.” Today, you can search all 280 pages of the Copyright Act, and you won’t find anything that says a copyright holder has the power to control search functionality, or channel placement, or to decide who can build a DVR or video app.”
But here’s what Register Pallante says about Sony in her letter to the FCC:
“Sony itself focused on the distribution of an article of commerce where the seller had no ongoing relationship with the purchaser after the sale, and no connection to the content being exploited. Nor did the Court address fair use where the device distributor was itself engaged in copying activities, as opposed to private home users. Both of these factors could conceivably be present with respect to devices and services under the Proposed Rule. Nor have courts gone so far as to obligate rights holders to provide content in a manner that would facilitate time-shifting or other non-infringing uses.”
So, maybe the FCC proposal has a little to do with copyright. And that word obligate is an important one, referring back to my opening note that there is no right to TV programming. Its production has to make sense as a business, and that only works because of copyright.
A rights holder of any work has the discretion to make decisions about the manner in which that work is distributed. This is in fact fundamental to copyright’s purpose. If you write an autobiographical novel about a serious subject, for instance, not even your publisher may blithely repackage it with a steamy romance cover (unless you sign those rights away) because they think it will sell better. But that’s basically what the third-party manufacturers want to do. They want the federal government to compel MVPDs to deliver programming and data to them, for which they will not pay a license fee but will be allowed to distribute, package, and advertise against the works in any way they see fit.
The implications of that business model go well beyond the scope of mere gadget-making, clearly falling into the purview of copyright law. Kevin Madigan on Mister Copyright summarizes the distinction between the device and the model thus:
“The difference with the current navigation device manufacturers is that they will receive copyrighted TV programs to which they’ll have unbridled liberty to repackage and control before sending them to the in-home navigation device. The third-party device manufacturers will not only be able to tamper with the channel placement designed to protect viewer experience and brand value, they will also be able to insert their own advertising into the delivery of the content, reducing pay-tv ad revenue and the value of the license agreements that copyright owners negotiate with pay-TV providers.”
That’s not what VCR’s (and now DVRs) do, and I’d be surprised if any court had much patience for a party relying heavily on Sony to support the FCC proposals. Additionally, as reported, the EFF recently took the bold step of suing the federal government on the grounds that Section 1201 of the DMCA is unconstitutional. Perhaps their assertion that the FCC proposal has “nothing to do with copyright” presumes that they have already won this argument because Register Pallante recognizes a “tension” between the FCC proposal and the 1201 anti-circumvention measures in the DMCA ….
“The Proposed Rule would inhibit the ability of MVPDs and content programmers to develop, improve, and customize technological solutions to protect their content in the digital marketplace. It would do so in part by requiring MVPDs to give third-party actors access to copyrighted video content and associated data according to one or more security standards prescribed by an outside organization rather than through their preferred (and potentially more secure) protocols negotiated between copyright owners and the MVPDs. In addition, the Proposed Rule suggests that the FCC might allow third parties to self-certify their compliance with whatever security standards are adopted. The Proposed Rule would thus undermine content creators’ ability to choose how best to protect their content in the marketplace, as Congress intended in enacting DMCA.”
Between Stoltz’s latest editorial and the recent suit over 1201, it seems the EFF is increasingly uninterested in working with copyright law and is focused on efforts either to abolish it or simply pretend it doesn’t exist. This post is not meant to suggest that I can endorse every business practice of every MVPD, but the EFF’s assertion that these parties are “cloaking” anti-competitive practices in false claims about copyright is misleading. Moreover, it should be abundantly clear by now that if the name Google is on the list of providers seeking a new regime from a federal agency, then customer choice and free-market competition are likely not at the forefront of that effort.
© 2016, David Newhoff. All rights reserved.