Sunday, February 05, 2006

Important parallels (or Survivor-off-demand)

The season premiere of Survivor: Panama began in the US on Friday. It will be shown here but as usual it is unclear when. And, as usual, it will be with enough lag that those of us using the Internet will have to keep off to avoid knowing who won.

CBS -- the US owner and broadcaster of Survivor -- are offering two non-free to air TV means of watching Survivor. First, it is available at Google's new video store. Second, it is available from CBS's own web-site as an 'on demand' option (viewable for 24 hours after downloading). Each will cost US$1.99. And each can be played on any Window's based PC. Moreover, they were available only a few hours after broadcast (in time for an evening showing here) and ad-free.

But, just as in Apple's iTunes Music Store, both sites restrict purchases to the US only. Actually, for Google the check is an IP address and so you must actually be in the US. For CBS, a US credit card address appears sufficient.

The question is why? And the answer is easy -- because presumably CBS has done deals with local broadcasters that give them exclusivity (for some period of time) or at least until they are broadcast locally. Although there are indications the restrictions may be indefinite. (For example, old episodes of Star Trek available on Google are restricted to the US; long after broadcast and DVD availability everywhere).

But that is only half the answer. From an economics perspective, a channel of distribution should only be shut down by a producer if it is inefficient. Downloads are not inefficient and offer improvements in quality to some. So we have to ask ourselves: would the amount of revenue (in advertising) that a local broadcaster (such as Channel 9) loses from downloads available elsewhere exceed those that CBS could gain from making those downloads widely available? With regard to local affiliates in the US, CBS has decided that the answer is no. Why would the answer be different for Australia?

Moreover, it is unclear to me (although, I am not a lawyer) why such a restriction does not violate our parallel importing laws. After all, no local broadcaster could prevent DVDs of Survivor from being brought to and sold in Australia by an importer but what about downloads that compete with local broadcasts? There appears to be an import(ant) parallel here (pun intended!).


Kim said...

Short answer to the legal question is that Australia has not, at this stage, loosened the restrictions on parallel importation of films: you can import non-infringing books, sound recordings (CDs), computer programs, 'electronic literary or music items' (ebooks and emusic), but nothing else. Film copyright is infringed by importing the film (this would include television programs, too).

Slightly more involved answer is that even if we were, say, talking about sound recordings, the law allows 'import' of non-infringing copies: and they are thinking physical copies here. Although you could make an argument, I don't think that the law would be interpreted to allow unrestricted downloads.

Legal policy answer is that at the time the parallel import issue was debated, the download market wasn't really there so they didn't think about this scenario.

Of course, the stance looks even siller once you take into account that in the absence of legal downloads of these TV shows, people are just getting them off the P2P networks.

My bet would be the networks would make two arguments:
- the desire to keep the 'windows' model for exploitation - maximising fees in each stream (from broadcasters, and then downloads). The market for downloads probably isn't clear enough to them to outweigh the more immediate fear of losses from the broadcasters;
- licensing complications. One reason iTunes takes a while to get to each country is the need to deal with all the copyright licensing owing to different owners etc in different countries, as well as payments to performers from use in different markets. LOTS of transaction costs. Bet they argue the same thing applies here (though I also bet it's a less legitimate argument here).

Anonymous said...

I don't think the restriction is australia specific. it is probably just a US-only block.

I would also hazard a guess that the block is temporary. If the experiement is successful, and CBS gets all their assets on google/iTunes it might open the flood gates and cut out the local stations completly.

But until it is a prooven winner, why risk alienating your channels?