Screw You, Pay Twice: Content Industry To Consumer

By Richard Menta 4/29/06

I couldn't help but ruminate on the recent Ars Technica article that is predicting Hollywood will soon sue Sling Media, makers of the Slingbox, out of existence. It seems great ideas and products are always generating suits from the media conglomerates. Companies who claim their rights are being trampled, but in reality just want to knock out the innovators so they can move in and take over the innovation - and charge more to do it.

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Slingbox, for those who do not know, came up with a product that "place shifts" our TV shows. Time shifting is the ability to record our favorite shows on lodge night so we can watch it at a later time. It is a concept the Supreme Court endorsed as fair use back in the 1980's. Place shifting allows the user to watch the Met game live from his hotel in Nebraska, where it is otherwise unavailable. The user simply taps into his home TV setup - the one he or she is shelling out egregious cable fees for - and the video is sent over the Internet to wherever they are staying.

The only cost is for the Sling device itself, about $200. There are no monthly or recurring charges. Have a network capable PDA? Sling Media announced their SlingPlayer Mobile Thursday, a $30 software package that allows you to control your set remotely from devices that run Windows Mobile Pocket PC 5.0 and soon Windows Mobile Smartphone. Again, there are no recurring charges. And from a consumer's perspective why should there be as you are already paying through the nose for this content? The issue here is that for large corporations a flat fee is not enough to justify their entry. Recurring fees, on the other hand, can prove quite lucrative.

Paying for Middlemen

Recently, I attended a session at Bell Labs in NJ where they too are working on place shifting via IPTV. The difference is that Bell Labs is not building a device per se, but a service. Their customers are not consumers who purchase a device and walk away, but the cable and phone companies who plan to charge you a monthly fee for the right to tap into that home connection. I tested the service and the quality was pretty good.

Ars Technica expects a suit because big media sees potential in this place shifting game, but a company like Slingbox is in the way. It doesn't matter that Slingbox brought place shifting to the market, if the market can be taken from Sling it will be.

But it is not just the cable and phone companies who want this action. The companies who produce the programs we watch also want a cut of the action. They want consumers to pay an extra use fee for the privilege of place shifting and they demand a percentage of that take. This includes not only HBO and Disney, but major league sports.

As an MBA I fully understand the corporate strategy of creating new revenue streams. It is how they sustain growth and it's simply good business. The trouble in the copyright world is that they want to erode the fair use rights of the consumer to do it. They are not even nice about it. As they indignantly call every new innovation in content delivery theft, what they are really saying to the consumer is "Screw You, Pay Twice".

There certainly is money to be made in multiple payments for the same content. But is there value? Most of the time the answer is no. Of course, value is a subjective matter between each individual consumer; some have no issue with multiple payments. I do. Multiple payments for extending how I use a product does not satisfy my sense of value.

Sling Media's products do satisfy my sense of value. They delivered reasonably priced products that do not require additional payment. I find SlingPlayer Mobile particularly compelling as it opens up live television viewing to the mass transit commuter with a video-capable mobile phone. The mobile phone market is a key market targeted by the folks at Bell Labs.

But Verizon wants big bucks for the right to watch TV on your cell and the TV networks want Verizon to pay them big bucks to allow it. It becomes apparent what these monthly fees are really for and that is to pay to support the entry of two large middlemen. This is important, because as Sling Media has already proved, middlemen are not necessary.

The media companies say they are necessary, necessary because you need their permission. The fault in their argument is that fair use already gave you that permission.

This is why the media companies turn to the courts to restrict fair use. That is why they will claim that products like Sling Media's violate their copyrights. That is why they will pay their lobbyists to push Congress to pass laws that will criminalize such products. If these products are not illegal now, they will make them illegal.

"Screw you, pay twice" has become the mantra of the record companies and the movie companies and the TV companies and major league sports. What I say to them is if you want to continue solid growth as industries; you must first show a little respect to us customers. We are not as stupid as you are treating us.

Other MP3 stories:
Fans Who Share Music Aren't Thieves
Apple Turns to Samsung for iPod Brain


The Creative Zen Vision M is available on Amazon


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