Steal This Show

R.A. Hettinga rah at
Sun Jan 30 05:15:58 PST 2005


The New York Times

January 30, 2005

Steal This Show

SAAC RICHARDS didn't think of himself as a rebel, or a shock to the
well-lubricated system of the television industry. He was merely unhappy
with the cable box provided by his local operator.

 Dismayed by the sluggish channel-changing capability and the sparsely
informative program guide, he decided to build a better cable box from
scratch. Today, nearly three years since Mr. Richards, a 26-year-old
computer software programmer in Willoughby, Ohio, embarked on his quest,
hundreds of thousands of do-it-yourself television viewers are using the
free software program he wrote, MythTV, to turn desktop personal computers
into customized cable boxes, complete with the ability to record shows,
surf the Web and strip out unwanted commercials.

 The members of the MythTV community, who now do not have to pay monthly
fees to rent set-top boxes or digital video recorders, have plenty of more
mischievous company in trying to outwit the television industry. Millions
of viewers are now watching illegal copies of television programs - even
full seasons copied from popular DVD's - that are flitting about the
Internet, thanks to other new programs that allow users to upload and
download the large files quickly. And entrepreneurial souls are busily
concocting even newer applications, including one that searches the
Internet for illegal copies of any television shows you may desire and
automatically downloads them to your computer.

 These high-tech tricks address desires that have become standard in an age
of instant media gratification: the desire to watch what you want, when and
how you want it. And they're turning television - traditionally beamed into
homes at the convenience of the broadcast and cable networks - into
something more flexible, highly portable and commercial free.

Not surprisingly, the repercussions - particularly the rapidly growing
number of shows available for the plucking online - terrify industry
executives, who remember only too well what Napster and other file-sharing
programs did to the music industry. They fret that if unchecked, rampant
trading of files will threaten the riches of the relatively new and
surprisingly lucrative television DVD business. It could endanger sales of
television shows to international markets and into syndication. And it
could further endanger what for the past 50 years has been television's
economic linchpin: the 30-second commercial.

 Hollywood has gotten a lot of headlines in recent months for fighting the
online traffic in feature films. But behind the scenes, the studios and
networks are just as focused on the proliferation of television shows being
downloaded. Even more quietly, the conglomerates that produce the vast
majority of television shows are scrambling to beat the downloaders by
offering viewers a slew of attractive new gewgaws, from video-on-demand
offerings that could let viewers order up an episode of "CSI" any time they
like to a device that allows viewers who tune into the middle of a live TV
broadcast to restart the program instantly.

"We have to try as an industry to get ahead of this and give the audience
an attractive model before the illegal file-sharer providers meet their
needs," said David F. Poltrack, CBS Television's executive vice president
for research and planning.

"The clock is ticking on this," he added.

It all started with the digital video recorder. First popularized by TiVo
and ReplayTV about five years ago, the DVR gave consumers a new degree of
control: instead of being at the mercy of the broadcast schedule or VCR's,
they could now be their own television programmers, scheduling shows at
their convenience, pausing live television and skipping easily past
commercials. Smith Barney estimates that though only a little more than 6
million Americans now use DVR's, by 2010 nearly half of American television
households, or 58 million homes, will have them.

 Meanwhile, the file-sharing networks that are the scourge of the music
industry began to have their way with television. Two factors slowed the
spread: television isn't as expensive as recorded music, and its digitized
files are significantly larger and harder to maneuver than their music
equivalents. But hacking the cable box or stealing pay-cable channels like
HBO is a longstanding tradition. "There is a sense of entitlement that once
it hits the airwaves it's free," said Brandon Burgess, NBC Universal's
executive vice president for digital media, international channels and
business development.

Until recently, it was hard for average viewers to act on that sense. But
these days all it takes is a broadband connection and a program like

 Created by Bram Cohen, a 29-year-old programmer in Bellevue, Wash.,
BitTorrent breaks files hundreds or thousands of times bigger than a song
file into small pieces to speed its path to the Internet and then to your
computer. On the kind of peer-to-peer site that gave the music industry
night sweats, an episode of "Desperate Housewives" that some fan copied and
posted on the Internet can take hours to download; on BitTorrent, it
arrives in minutes. BitTorrent may sound like some obscure techno-trickery,
but more than 20 million people have already downloaded the application.
Each week dozens of shows are shared by hundreds of thousands of people.
"The Simpsons," "Family Guy" and "Friends" top the most-popular list, but
even "SpongeBob SquarePants," "Trading Spaces" and "Extreme Makeover: Home
Edition" landed in the Top 20 for the week ending Jan. 16, according to Big
Champagne, which measures file-sharing activity.

 And the technology is getting easier to use by the day. Sajeeth Cherian, a
20-year-old communications engineering senior at Carleton University in
Ottawa, decided there must be a better way to find BitTorrent files on the
Web after listening to the constant gripes of his roommate about how much
time he was spending searching for Japanese anime. Videora was his
response. Plug in what shows you want to find, and it does all the work.
He's charging $22.95 for the software.

"I thought this was a big idea, a bigger idea than trying to shut my
roommate up," Mr. Cherian said.

 Although it can be used for piracy, Videora is legal, he said: "I've
considered this. I wouldn't want to get my pants sued off, and this has
many legitimate uses."

However, Videora's illegitimate uses threaten one of the most welcome
bonanzas for the television industry in recent years. Television DVD's, an
afterthought in the DVD market just three years ago, were an estimated $2.3
billion-dollar business last year, according to a recent Merrill Lynch
research report. They now represent nearly 15 percent of total DVD revenue,
with profit margins between 40 and 50 percent.

 Recent hit shows like "The Simpsons" can make a profit of $15 million - a
season. And those are exactly the shows traded most online, according to
Big Champagne. Although older shows are not quite as lucrative, the better
ones can still bring in $1 million in profit for each season, the Merrill
Lynch report found. So it's no surprise that the studios and networks are
emptying their vaults; "The Bob Newhart Show," "Dynasty," "The A-Team,"
"Moonlighting" and "Remington Steele" are just a few of the DVD's planned
for release this spring.

 Executives at the entertainment conglomerates and the Motion Picture
Association of America argue that the industry and the government have to
move - fast - to establish rules by which copyrighted television
programming "cannot be moved around willy-nilly," as Rick Cotton, executive
vice president and general counsel of NBC Universal, puts it.

 Otherwise, television executives say, the very creation of television
programming is placed in jeopardy. "It's very expensive to produce and
market, and people will be very reluctant to provide that content if it
can't be adequately secured," said John Malcolm, the senior vice president
and director of worldwide antipiracy operations for the M.P.A.A.

One way to protect such content, according to the industry, is through the
introduction of something called the broadcast flag. The Federal
Communications Commission announced in the fall of 2003 that any digitally
broadcast show must include an invisible antipiracy device.

 This has not gone over well with viewers. Last October, nine nonprofit
groups petitioned the United States Court of Appeals for the District of
Columbia Circuit, arguing that the action oversteps the F.C.C.'s authority,
making life more complicated for law-abiding home viewers while being
"entirely ineffective at stopping any pirate."

 At the grass roots, the response has been more direct: a rush to buy and
even build television sets and DVD recorders that sidestep the ruling. Home
consumer devices, from digital televisions to DVD recorders, sold before
July 1 do not have to recognize the broadcast flag. So the Electronic
Frontier Foundation, a digital civil liberties organization (and one of the
nine petitioners), has decided to set up what it is calling the Television
Digital Liberation Front. Starting last July 29, it began holding the first
of a planned series of nationwide "buildathons" to help novices build
home-brew digital televisions and DVR's based on systems like the perfectly
legal MythTV software.

Those systems are still pretty clunky to assemble, requiring technical
skills beyond the grasp of most couch potatoes, not to mention bulky,
fan-noise-spewing P.C.'s. But television tinkerers are trying to smooth
these experiences - for profit or not.

 Cecil Watson, a 32-year-old software expert in Fontana, Calif., created
KnoppMyth to make the installation of MythTV as simple as possible. The
MythTV movement is "picking up steam," Mr. Watson said, because it
satisfies the way he wants to watch television today - and he doesn't have
to pay rental fees for a cable box or a DVR if he chooses not to. "It
records the shows I want to watch and I now have the choice to spend the
time the way I want," he said.

 The build-your-own-TV advocates say they're not looking to steal content;
they're just looking for a reasonable amount of flexibility to watch the
same recorded program in different rooms, or on the train to work; to lend
friends a TV recording the way they used to lend videotapes; to bring the
same set of recordings from their city home to their vacation house.

 Playing the same show on different screens around the house seems
reasonable, said Mr. Cotton of NBC Universal. But he added that expanding
the circle much beyond that, the way future versions of the recently
released TiVoToGo offering might allow one to send recorded programs over
the Internet to nine other devices, including P.C.'s and laptops, was
dangerously excessive. "Once you allow that much, is the technology really
secure?" Mr. Cotton asked.

 A spokeswoman for TiVo said that the current analog version does not allow
transferring files outside a home network, but that the F.C.C. has
nonetheless approved the company's security measures if it rolls out a
robust digital version.

Ultimately, whether the television industry can avoid the disruptive fury
that sideswiped the music industry - and even find lucrative ways to
benefit from a digital, broadband, interconnected and portable
entertainment world - will depend on how fast and flexible the
conglomerates are in meeting viewers' changing desires.

 It will also depend on understanding the motivation behind this flurry of
new activity. It's not just the thrill of the illicit, like lighting up
behind a Kroger's in high school. That is "woefully inadequate to describe
why millions of people steal," said Mr. Garland of Big Champagne, the
online media measurement company. "People aren't essentially lawless. It
takes far more motivation than that."

The industry has begun experimenting, rethinking the rules by which
television is disseminated. Some of the proposals, which center on video on
demand, are fairly radical, going beyond the movies, news programs and
N.F.L. highlights that make up today's most ambitious offerings.

 Mr. Poltrack of CBS said that according to his network's research, a large
number of viewers would welcome the chance to pay $1 to watch each
television show, if they could do it on their own schedule and with the
ability to skip commercials. With commercials, they'd be willing to pay 50
cents. And because the average viewer sees only half of a show's episodes,
he said, this on-demand viewing won't hurt the regular showing.

 A further CBS study gave viewers the chance to build their own night of
television, where they could choose among a select group of pay-per-view
shows in addition to the regular schedule of free programming that night.
More than half of the 211 respondents chose to pay extra for at least one
show. "This is the way people want television delivered," Mr. Poltrack said.

Before this video-on-demand vision materializes, a bewildering thicket of
contract and revenue-sharing issues among the producers, programmers and
distributors of television must be overcome.

Nonetheless, executives understand that they have little alternative but to
push ahead. Chasing after the people trafficking in television programming
can do only so much good.

"You'll make more money and suffer far less from the black market if you
simply create the opportunity to access content freely," said Mr. Garland
of Big Champagne.

R. A. Hettinga <mailto: rah at>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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