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‘How It Works,’ Meet ‘You’re Not Allowed’

2/21/2011 12:01 AM Eastern

how technology works, there come
times when the “how” of it gets
blunted by the cavalcade of reasons
why it can’t be done, whatever “it” is.

Rules, in other words. In prior chapters,
this surfaced as retransmission
consent; must-carry; syndicated exclusivity.
We’re at one of those times
again. Weird stuff is happening.

A cable operator arranges to distribute TiVo
boxes to its customers. Hooray! Consumers love
TiVo boxes. On the TiVo box is a Netflix button.
Click on the Netflix app, find a title of interest,
stream it. Ordinarily, this column would delve into
how that works — where the stream is sourced,
how it moves, how it’s protected, what happens to
it along the way. Except, let’s say the operator isn’t
allowed to include the Netflix button, because one
of the content sources for Netflix also sells monthly
subscriptions to premium content on cable. What’s
a better deal for the program network — to get
paid a tiny sum per stream, from Netflix, or to get a
monthly subscription fee from the cable subscriber?

Yet if Consumer Jane trotted out to a retail
store, bought a TiVo box, and hooked it up to her
cable subscription, then she can have the Netflix
app? That’s OK? (Huh?)

Contrast this to last week’s app-within-an-app
riddle, which started to play out from the Apple
camp. It goes like this: Consumer Jane can now
buy subscriptions to stuff from Apple’s App Store.
That is so great for Jane! Or is it?

Developers think otherwise. Here’s why: Under
App Store rules, Apple takes 30% of any revenue,
subscriptions included. Sure, developers can sell
their subscription-based apps elsewhere — but
not if that means giving consumers a better deal
than they can get in Apple’s store and not if it
means giving buyers an option to purchase goods
outside of the Apple environment.

Google came out the next day with its “One
Pass” plan — a 10% cut of revenues, and developers
can sell their apps elsewhere without issue.

Maybe these examples are unrelated. But anytime
the word “subscription” is involved, it seems
wise for cable people to pay attention.

Cable is aggregated television content, available
by subscription. The marketplace to deconstruct
“television” into video components, as
apps, is just beginning. At this point, it’s the rules
of rights that seem to be the sticking point, more
so than the technology that will make it possible.

So here we are again, at the intersection between
technology and the rules about video-distribution
rights. Rules slow things down. Slowdowns
afford time, whether we want it or not, to wait and
watch. While waiting, it matters to choose any next
moves wisely. Forewarned is forearmed.

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