TV Networks Are Playing Ad Games With Digital Video Recorders

If you’ve ever taken a trip to the bathroom during a commercial break, watch out – the TV networks might sue you for breaking copyright law. Major entertainment and broadcast companies believe that skipping a commercial amounts to stealing their programs. To prevent this, they want to ban ReplayTV, a digital video recorder that lets viewers easily skip the commercials in recorded programs. But instead of limiting consumers’ freedom, companies should use this new technology to provide more value to customers.

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The networks worry that digital video technology will put them out of business. Commercials provide the funding for free television, and they’re a necessary source of revenue for basic cable shows as well. If nobody is watching the ads, companies will stop buying advertising time. And without the money that comes from advertising, broadcast television could not continue to exist.


But people have been ignoring commercials since television was invented. Viewers often leave the room or change the channel when a commercial break begins. The ReplayTV “Autoskip” feature is a lot like fast-forwarding through commercials on a videotape. You can also simulate ReplayTV’s commercial-free taping capacity by stopping and restarting a conventional VCR while recording. If ReplayTV users are stealing shows by skipping the ads, then all of us have been breaking copyright law for years.


In other media, your right to use copyrighted material as you see fit is unchallenged. Nobody argues that you violate an author’s copyright when you stop reading halfway through a book. Magazine publishers never sue people who tear ad pages out of their magazines. Closing a pop-up ad when viewing a web site is perfectly legal.


Internet businesses already understand that free content cannot be fully financed by online advertising. It is too easy for viewers to simply ignore the ads. Advertisers can track the impact of their online ads, and they cut back on their spending when the ads fail to bring in new customers. Since they can no longer rely on ads to support their businesses, Internet companies are now exploring other business models such as subscription fees and premium content.


As it becomes easier to ignore TV commercials, TV networks will encounter the same problems as Internet businesses. To solve these problems, the networks need to incorporate the new technology into their business models. This could provide even greater value and convenience to customers.


Well-made ads are as useful for consumers as they are for advertisers and entertainment providers. Ads tell consumers about new products they have not seen before. They also trigger competition, which lowers prices. Digital video recorders can make this process more efficient. Advertisers can use the technology to target viewers who are most interested in their products, instead of making guesses based on demographics. Extra information about the products could be included if the ad initially catches the viewers attention. Consumers would pay much more attention to these useful, targeted ads. And when advertisers are benefiting from this new technology, the networks on which they advertise will also benefit.


Some advertisers are already beginning to incorporate digital recording technology into their advertising models. TiVo, the maker of a recorder similar to ReplayTV, has contracted with advertisers such as Best Buy to provide expanded product information to viewers. In the future, they plan to offer sweepstakes and other enticements to encourage viewers to watch ads.

Entertainment companies have not yet tried to incorporate this new technology into their business models. Their lawsuit against ReplayTV would trap viewers into the current broadcast system. The courts should reject this attempt to suppress beneficial new technology. When innovations are banned, consumers are the ones who lose the most.