Implications of Supreme Court Decision Not to Block Remote Storage DVR

The Supreme Court decision today chose not to review a Court of Appeals ruling that rejected claims by film studios and television studios stating that the network DVR approach would infringe copyrights. While recording programs ("time shifting") using a personal DVR is legal, the studios argued that a network DVR, one that was not in the home but operated remotely by the cable operator in a data center, was creating a temporary copy and was thus illegal. The court's decision not to review the case, affirms that the lower court ruling stands - use of remote DVRs are legal as well. The result of this decision has very interesting implications.

To be clear here's how it works:
A Digital Video Recorder (DVR) such as a TiVo is connected to your TV and has been deemed legal. In the past, the courts have ruled that time shifting content is legal, and not infringing on copyrights. Cablevision essentially built a remote DVR. Rather than sitting next to your TV, it resided in Cablevision's datacenter (or in "the cloud" as some will think of this). Aside from that, it did exactly the same thing. It was functionally identical: Users would be able to save shows, fast forward and rewind. Essentially the studios were insisting that by moving where the box lived, it somehow made it illegal. The Court of Appeals disagreed.

My thoughts on this decision and the implications:

• I believe the Court of Appeals got it right. Functionally there is no difference and thus no copyright violation. If it is performed locally or remotely and the capability is the same, the location of the storage or the location of the function is irrelevant. They are both time shifting content.
• From the cable operator's perspective, a network DVR will likely be much more efficient to operate and run. What they need is scalable and reliable infrastructure that allows users to perform individual time shifting on their stored programs. This is akin to an emerging "cloud service" infrastructure -- a lot of disk storage, and other software and hardware to manage each users storage of shows, and how to play it out efficiently. It is similar in some regards to existing on-demand services already offered by them, albeit with a much larger library of content, and users essentially determining the equivalent of an on demand playlists. Depending on how it's implemented it could be very efficient because they may not need one copy of the stored show (a file) per customer. Instead there can be one instance of the show and they can provide access to it governed by permissions, regardless of number of households/customers. So it is potentially very scalable, with a minimum of storage requirements, and could be easily tracked.
• It's potentially greener too -- they don't have to necessarily produce millions of DVR boxes that will later be discarded.
  
• It will broaden use of DVRs. This is a great thing for consumers -- people get to watch what they want, when they want it. Tivo has proved this. I would expect that this is also a good thing for both the cable operators and the studios/networks: People actually watch more TV -- just at thier own time. Now they have to figure out how to adapt to this behavioral change -- not fight it.
• It still has technical limitations: 1. A set top box is still required. Until technologies like Tru2way are implemented which provide streamlined interactive TV capabilities (e.g. the ability to use a remote control that comes with the TV to control non TV programming functions like a remote DVR) and the TVs incorporate them, a set top box of some kind will be required to process the forward, rewind, pause etc. signals. So why not get the DVR in the same box? This will hinder some adoption. 2. Performance. Because the signal to pause or rewind has to travel back up to the cable provider, and this could take a couple of seconds, the response time will not be as fast as if the DVR were sitting next to your TV. For some consumers, this will be a problem and another reason not to us a network DVR. 3. Reliability. If the service goes down... you can't watch your shows. With DVR boxes, it's all local, though in some cases the cable signal may still be required to watch the content. If it's unreliable... people will want the box rather than the service.
  
• It could lower DVR service pricing. With this remote DVR infrastructure approach, I would expect DVR service to potentially be less expensive to consumers on a monthly basis. Over time, I would expect it to eventually become part of the basic service as a common feature. One difference is that you can purchase a DVR and pay a one time fee over the lifetime of the box. You won't be able to do that with the service. Over time the service will likely cost consumers more, but it has the ability to continue to grow in capability (e.g., more storage for the same cost) -- which the DVR box could not.
  
• Or it could add additional DVR service tiers. Then again, they could price different tiers based on the amount of storage. This is an interesting possibility for a couple of reasons. First, it allows the operators to derive additional revenue for storing content. DVR boxes were always limited by storage, so you generally couldn't keep shows for very long -- or you had to make decisions about what to keep and what to discard. But you couldn't easily keep too many things forever. Now, however the operators could charge for different storage levels, allowing consumers to hold more of their favorite shows for longer periods. At any point does this become a "long term video rental"?
  
• It could open a new distribution channel and revenue stream for the studios. There is an opening here for the studios to potentially make money with long term content/program leases -- akin to video rentals. Consider the fact that the recording is done by the operator as a service for the customer. However, the biggest difference is that operator can now determine, monitor and record who is recording what. Given that, they insert themselves into the recording process, they now can exert control over what programming can be copied for free and what must be paid for... they could potentially become the new digital video distribution arm of the studios! Perhaps certain content, like on-demand movies, is only released through the cable operators as paid-for content. Perhaps if a customer wishes to store the program for a specific minimum period of time it requires a "digital video rental" fee. There are some really interesting possibilities here that could make the relationship between the studios and cable operators mutually beneficial. Playing this out a bit, the cable providers become another distribution channel, just like videos and iTunes are. Certain content is released on a schedule -- e.g. feature films go to video, DVD and to pay-per-view cable at a particular time. With DVR capabilities, Pay-Per-View potentially evolves into long term video rentals or sales, where the cable providers become the new "digital Blockbuster" -- enabling paid video recording of certain content for placement into a customer's online digital library.
• Cable based "iTunes"? I think a longer term the more interesting question is would this recorded content ultimately merge into our home entertainment library as just another piece of content? iTunes has defined one user interface for all kinds of content. Could the cable operators do this too? Some of them (like DirecTV) offer music channels. So a digital library via our cable company is not out of the question. Beyond that, would it then be allowed to be transferred to our iPhone or iTouch? Would it become accessible to our iTunes library and become accessible on other devices? I think this is a possible longer term opportunity...
  

On ad revenues:

• DVRs, regardless of form, were diminishing ad revenues because of the ability to skip. So the network DVR is really just an evolution of this and is going to erode it faster.
• I don't believe consumers will put up with the ability not to skip ads, if this functionality were to be removed (or enforced) by the cable operators.
  
• The Studios should seek how to leverage the proliferation of DVR use envisioned by this ruling, not fight against it. The Studios need to adapt to this not fight it. They've shown they can do it with music. Now figure out how to do it with TV content. This is boring to watch over and over again with each change in media. It happened with VCRs -- and look where a huge amount of studio revenues now come from!!! So I'm absolutely confident they can do it with "time shifted, file based programming". Network DVRs provide "on demand user selected programming". It could be easily tracked who is watching what, if the operators were willing to provide this data back to the studios. It also wouldn't be hard to add ad insertion capabilities as part of the DVR playback infrastructure -- so then targeted ads could be inserted by the cable operator based on fine demographic information -- and even if they were skipped they would still be seen and would be more relevant than other ads.
  
• "Skipped" ads still play -- just faster. When Tivo first came out there was the ability to skip ads built into the box. The studios pressured Tivo and Tivo caved on it, updating the boxes and removing the capability, only allowing fast forwarding. So now, ads can't be completely skipped, only sped through. That being the case, perhaps someone could figure a way to get their message across when played as a skipped ad -- it's really just faster frames per second. So it's a compressed timeframe and message. How about a 2 second spot ad? Gosh, now they really could do subliminal advertising!

On Competition:

• What happens to Tivo? Over time a majority of people will opt out of purchasing a DVR box. Some people will continue to buy them for any number of reasons (e.g. more privacy, more control, because they like technology and wiring things together). I think the question for Tivo going forward is how much of their intellectual property (IP) in the form of patents and possibly software (e.g. user interface/interaction) can they license to the operators? But that is a different business model than licensing or selling boxes to consumers.
  
• Other operators: With this decision, other cable operators will no doubt go down the same path as Cablevision offering their own remote DVR service -- perhaps competing on price, and possibly competing on features. This would be good, as we'd start to see competition emerge on capabilities and possibly on user interface. DVRs should be easy to use (as they seem to be thus far for the basic play/pause/replay capabilities) but can still use some improvements in content organization, access and replay -- I find the linear search of may cable DVR box to be a really limited organization and search mechanism -- especially as the disk drive sizes, and thus number of programs I can store, increase.

Overall, this decision will open up a whole new set of consumer oriented digital services that will be enabled through the cable operators, and embraced by consumers. And I believe that the studios can and will adapt, and just as with the VCR, will find this to be a great boon to their top and bottom lines.

Additional articles
Business Week
Los Angeles Times
Wall Street Journal Online
Barrons Tech Trader Daily
Paradigm Shifts: Remote Storage DVR


Additional commentary on Tivo and others:
http://blogs.barrons.com/techtraderdaily/2009/06/29/cablevision-network-dvr-gives-edge-over-satellite-rivals/
http://blogs.barrons.com/techtraderdaily/2009/06/29/tivo-shrs-slide-on-high-court-ruling-on-network-dvrs/

Digital Asset Management Market Update - Impressions from Henry Stewart DAM NY

My impressions of the DAM market after attending the Henry Stewart Digital Asset Management (DAM) New York, June 1-2, 2009.

The DAM market appears to be alive, with vendors continuing to innovate and grow. Over the past couple of years, more vendors have added on-demand / hosted / SaaS DAM offerings -- either their own or via acquisition (e.g., Open Text's purchase of eMotion) and added support for the XMP metadata specification (not quite yet a "standard") and most recently new user interfaces. Every conference has a theme and this time it appeared to be "User Interface/Experience" as many of the vendors (MediaBeacon, North Plains, Autonomy/Virage - MediaBin, and Open Text/Artesia) were showing off their new user interfaces.

MediaBeacon demonstrated their new R3volution 3.0 Widget Platform and R3Search, Organic Enterprise Search. MediaBeacon was the most innovative going with Google Web Toolkit (GWT) as a "standard" for their Widget Platform, which allows users to easily include any other GWT widget into the UI. This allows users to include all the GWT and Google social networking widgets (chat, IM, etc.), for easily constructing powerful user defined or company defined portals which neatly integrate DAM. They also added faceted search based on SOLR an open source extension of the Apache Lucene search engine. Users see groupings of tags for the images in front of them and then filter further by drag and drop of filters into the query palette. Users can easily filter assets by these drag and drop tags, without typing. MediaBeacon also added drag and drop of assets onto metadata "stamps" -- a grouping of metadata that can be reused and attached to assets -- or users can drag and drop stamps onto individual or groups of selected assets to apply predefined metadata to the assets. I've always felt that DAMs exposed metadata too much -- users should work with metadata without knowing that they're working with it. The trick is to incorporate it into the UI in clever ways. I like MediaBeacon's approach a lot because it hides the metadata manipulation behind simple drag and drop user interactions, and makes the user experience much more a visual user experience.

Note: this kind of drag and drop metadata application was first available in a limited form in Adobe's Photoshop Album software -- a standalone, personal desktop image management program. You could have an image represent a tag and then drag and drop that image onto other pictures to apply the tags (metadata). It made grouping pictures of friends, family, events, locations, etc. very easy to do and you didn't even think that you were adding metadata. That was the key. More of the DAM products need to do this -- make the application and manipulation of metadata a background operation, hidden under well designed user experiences.

MediaBin, now called Autonomy Virage MediaBin, (which is a mouthful, and frankly a real branding challenge -- more comments on this below) was demonstrating the new MediaBin Version 7 -- an integration of the Autonomy IDOL conceptual search technologies and Virage search and video technologies with the MediaBin DAM all expressed through a new UI. The combination provides a very rich search environment, probably one of the richest of the DAM products. It includes (not an exhaustive list):

• Full text search
• Faceted search
• Speech to text for video (from Virage) with search of the text and return of keyframe accurate references back into the video
• Speech highlighting as it is spoken (from Virage)
• Easy filtering of assets based on metadata
• and drag and drop application of metadata (similar to MediaBeacon)

The UI also displays a tag cloud for common metadata. The search capabilities are deeply integrated into the UI and user experience. Gone are the multiple windows that plagued previous MediaBin user interfaces. MediaBin also (finally) adds dynamic collections (that refresh each time a user accesses them providing users with the most up to date set of assets that match the criteria defining the dynamic collection), a capability that most DAMs have had for a while.

This was the first major release of MediaBin since the acquisition of Interwoven by Autonomy. It's clear that Autonomy is attempting to maintain all the brands somehow for a period of time. While understandable, it's incredibly confusing. Leading with Autonomy and trying to keep the Interwoven, Virage and MediaBin brands is certainly desirable for a time, but it's not clear where the MediaBin product lives, nor is it possible to easily find information about it. At the time of this writing, the Autonomy, Interwoven, Virage, and MediaBin web sites are not in sync. Trying to find information on the latest MediaBin DAM release can only be found at http://www.autonomy.com/VMB7 a link that was buried in the MediaBin 7 press release. Clicking on all the others, including the "Digital Asset Management" link on the Autonomy home page, take you to the outdated Interwoven/MediaBin information rather than the Virage MediaBin 7 page listed above. Incredibly confusing.... and something that needs to be addressed soon!

North Plains was showing their recently released publishing platform for trade book publishers and their video manager. They had demonstrated TeleScope Publishing Platform (TPP) at both the London and NY book fairs where they published a book in 48 hours to multiple electronic formats, as well as a bound and delivered, print-on-demand, 6x9 edition. Not that anyone would actually publish a book that fast but what it proved is that it's possible for book publishers to significantly reduce the publishing time for multi-channel book publishing. It provides end-to-end capabilities including a lightweight commerce portal and marketing program tracking tool. TPP is an application that actually doesn't require the Telescope DAM. It is a real differentiator for the company -- it's a clearly defined application that has real business value to a very well defined audience. HarperCollins was the first to sign on. And it's rumored that there are a couple others in the pipeline. I suspect the publishing industry is watching how HarperCollins fares and will take notice of this offering.

I had a chance to take in some of the conference as well. While I'm sure that there were many interesting DAM user presentations, the two that caught my attention were Boeing's 787 Dreamliner eGallery and Showtime.

Boeing's presentation was titled "Changing the Rules of the Game: How Boeing is Leveraging DAM to Connect Customers with Suppliers Across the 787-Supply Chain via the Dreamliner eGallery". A clear descriptive title to be sure. However, Boeing's Dreamliner is a fascinating project in and of itself where the brand marketing is entirely about ecofriendly. It is a thorough application of the idea, but the Dreamliner program goes far beyond than that. It fundamentally changes how Boeing builds planes, interacts with their suppliers, and serves its customers -- allowing custom building of a plane, with interchangable parts (what a novel idea!), from different suppliers -- and providing a showroom (both physical and the virtual eGallery version) where buyers can examine and select all the components of the plane that they want. No more traveling from one seat supplier to another a thousand miles away, trying to remember how comfortable your bottom felt. You can do it all in one place. And similarly customers can preview and select all the components online via the eGallery. It's a purpose-built DAM application that stays within the Dreamliner ecofriendly brand: By allowing customers to view and select components (seats, coffee makers, TVs, etc.) via a web browser, it saves tons of paper (from not printing all the suppliers product literature), travel $ (including fuel) and makes selection a much more convenient and easy process. By requiring suppliers to provide images and metadata for their products for the both the egallery and physical showroom, Boeing becomes more like a typical retailer -- requiring its suppliers to provide the goods that it can put on its shelves and the pictures and descriptions it can put into its circulars. A fine use of a DAM. The Dreamliner program is also more economical for plane financiers who don't tie up as much money when airlines wish to shed or resell planes: Did you know that it currently takes a month to convert the engines from those your airline uses to the ones mine uses? Now it can be done in a day allowing them to offer better financing terms. Boeing has clearly thought through the whole set of stakeholders and is providing, in my opinion, a very compelling brand and offering. Very cool stuff!

Showtime demonstrated how they have become much more agile in responding to the advertising and marketing needs of their programs. Paul Nicholson, VP Print and Broadcast Production at Showtime Networks has done a masterful job of using a DAM and XMP metadata to automate and integrate a multiple systems into a cohesive enterprise-class system for managing and facilitating the produciton process for all of their print and on-line marketing materials. Using MediaBeacon and its deep support of XMP they've been able to increase the volume of material they develop and deliver (e.g., posters, bus covers, on-line ads, etc.) and have significantly reduced the amount of time it takes to produce each piece. It's a very impressive system for it's integration with existing systems, broad adoption throughout the creative services group, the flexibility, visibility (into the state/progress of things) and cost reduction it provides. I'd seen it presented before but it doesn't get old -- it still impresses me. It shows how DAM can provide real value to an organization.

One emerging area for DAM appears to be Open Source. On the one hand, this seems to be a natural occurance as there are open source versions of many other content technologies (e.g. web content management systems, search engines, content mangement systems, etc.) However, I've long thought that a good open source DAM would be far too specialized and couldn't be done well enough as an successful open source project. There's a lot of coordination required between the various components and functions of a DAM that I believe would make it difficult to do anything more than something with rudimentary or basic DAM capabilities through open source approaches. I still hold to that position. I was surprised to see Openedit exhibiting at the conference -- it was the first conference that I'd been to where an open source DAM vendor exhibited. Like with many open source projects, the revenue model is based on services. This may fit well for DAM as many implementations require customization. But Openedit's capabilities struck me as fairly basic. Thus anyone who would use it for a project of any significance would appear to require a lot of services, it could therefore easily turn out to be a better proposition to go with a non-open source vendor, not only for the comparable cost, but for the broader capabilities as well. This will be an interesting area of DAM to watch going forward.

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