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Dish Network Wins 'Hopper' Court Case

TMCnet Feature

July 24, 2013

Dish Network Wins 'Hopper' Court Case

By Gary Kim
Contributing Editor

In the entertainment business, you can count on leading stakeholders to try and prevent new media distribution systems from gaining ground. So is it lawful for a consumer to use software to skip commercials from content that the consumer is recording for private playback?

At issue is the legal notion of fair use, a fundamental part of copyright law.

The United States Court of Appeals for the Ninth Circuit now has ruled that modern digital video recorders with the ability to skip commercials automatically are permitted under copyright’s fair use doctrine.

The case involved Dish Network’s “Hopper” feature. Dish DVRs with “Hopper” enable consumers to skip over commercials automatically. And the “Prime Time Anytime” feature allows consumers to record prime-time shows automatically for later viewing.

The Ninth Circuit held that the Prime Time Anytime feature was legal under copyright’s fair use doctrine. And it held that commercial skipping didn’t even raise copyright issues, since the features didn’t involve making copies of Fox’s content.

If a new precedent is created and upheld over time, it is likely that the value of linear advertising on programming networks will drop, since the size of “audiences” likely will drop.

That probably should not be taken as a sign that advertising itself will disappear. Unless consumers suddenly develop a never before seen preference for paying full price for their TV content, advertising support still will be important.

Some might suggest the amount of ad skipping behavior will not be substantial. They probably are wrong. One study suggests 86 percent skip ads when viewing time-shifted content.

There are other content monetization models, to be sure. But content owners might not appreciate having to adopt them, as they might be described as “stacking dimes.”

In other words, lots of smaller revenue streams might be needed when “mass audiences” cannot be aggregated. A complicating factor is that content distribution is not only going to be affected by applying digital technology to playback, but also because distribution eventually will rely more heavily on online distribution, which implies Internet economics.

And there are few, if any, revenue models that have improved as distribution has moved from physical to Internet modes. That is why the latest decision is important in a larger sense.

If people really can skip over ads when viewing their content, content owners will have to create replacement monetization schemes. Most think that will have to rely a bit more on direct monetization, either from consumers or distributor partners. That means higher prices, either for subscription or pay per view consumption.

Oddly enough, Hopper and other innovations might lead to higher prices for video entertainment, not lower prices.

Edited by Rich Steeves

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