U.S. Supreme Court Helps Future of Ad Skipping

Posted by: David Kiley on June 30, 2009

The U.S. Supreme Court on Monday unintentionally struck a victory for consumers who don’t want their time wasted with bad or irrelevant ads. The high court declined to hear a case about digital video recorder technology, thus making it easier for cable systems to offer services that would bring ad skipping systems to more TV watchers.

The case began in 2006 when Cablevision Systems, the New York-area cable operator, made plans to offer a DVR system in which a customer could digitally record a program, say a football game or American Idol, on a server provided by the cable company rather than on the hard drive of an at-home DVR box.

The technology allows an operator like Cablevision to convert existing set-top boxes into ones with DVR capabilities without installing new equipment in millions of homes. It is, most agree, a much more efficient solution to proliferating more DVR boxes.

But programmers like Turner Broadcasting System’s Cartoon Network and CNN had sued Cablevision, charging the system violated copyright law. In March 2007, a lower court agreed, ruling in the opinion that Cablevision “would be engaging in unauthorized reproductions and transmissions of plaintiffs’ copyrighted programs.” Not so fast, ruled the The United States Court of Appeals for the Second Circuit in New York, which reversed that decision. The Appellate Court’s ruling is the one that stands now.

Plaintiffs argue that cable systems, by storing the programs remotely, could redistribute them in ways that potentially rob those holding copyrights from their fair share of revenue. That argument didn’t hold much water. Arguing what a party “might do” seldom does. Their real cause, of course, was trying to slow down the penetration of DVRs and DVR-like capability, which consumers use to record programs and skip ads.

Networks and cable operators have yet to crack the code of aiming ads at people that aren’t irrelevant. In other words, they still can’t figure out a way to aim dog food commercials at just people with dogs, and spare the dog-less from 30 seconds of wasted time. I would suggest that is a problem for the networks and cable operators to work out technologically rather than holding poor defenseless dog-less people hostage to watching Alpo ads.

Cablevision said the decision of the court not to hear the case would help make DVRs more accessible, and that programmers and advertisers could, for example, sign agreements allowing Cablevision to insert new ads into recorded content.

Oh Joy. But can I suggest to Cablevision that if that is their plan…might you ask customers to fill out a survey to find out if they own a dog before inserting dog food ads into someone’s recording of The Wizard of Oz. And if customers are going to give you that kind of information, make it worth their while by giving them the service for free, while those who want the service ad-less have to pay for it.

Reader Comments

1YL - UO

July 7, 2009 11:59 AM

While this seems like a positive ruling in terms of consumer choice and the capacity for content distributors to provide higher margin services, I'm a bit concerned by the acknowledgment of 'ad skipping fears' noted in the article. It seems to me that they are open to the idea of preventing ad skipping or otherwise limiting end-user control rights to the recorded programming.

My understanding of the Betamax doctrine is that its based on consumers' private property rights to copy and watch programming for their own personal use. An essential part of any property right is control over the article. For hosted DVR services, if the provider interferes with consumers' ability to record, play, or skip ads in any significant way, I think its essentially interfering with that private property control right. Unless the hosted DVR service explicitly notes that the service may be abridged/interfered with in some way, I think many consumers will cry foul and somebody will make an argument that its the equivalent service provider interference that violates the private property control right and network neutrality presumptions.

I also wonder how the specifics fit the legal definitions of private copying - will the hosting service have a discrete file of the recorded show on a server space for each user, or will it just be a data pointer that allows the user to access the show file on a shared server. If its the latter, all the user has is a hash/meta file, not the actual copy. This too opens the door to a legal argument that a hash/meta-pointer file is somehow synonymous with the actual content file - this is another issue that is still being hotly contested in file sharing litigation, and also refers to another aspect of the Betamax doctrine.

Although the technology exists to provide these very lucrative and valuable personal recording services, I think the SCC's refusal to actually hear and reason out the case leaves the door wide open to further litigation on the matter from slightly different angles. This might serve as a deterrent to investing heavily in the technology/business model, since the underlying notion of what the legal definition of private copying in the digital server/cloud services era is far from clear. Ultimately, I worry that it will simply perpetuate rather than clear up the creator vs. user tension that is the source of ongoing controversy and litigation in the content provider, distributor and consumer access industry, as well as our broader media and knowledge culture.

I don't think this is the last of it and I will be interested in how it plays out - both in the USA and Canada and beyond.

AV-Tech turned 1YL (Canada)

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News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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