Digital Rights place broadcasters at crossroads

The crystal clear signal of HDTV would be a pirate's dream.

The development of digital tech nologies such as personal video recorders, video-on-demand and HDTV is forcing the creation of new content and advertising rights contracts.

Honey Berman, vice president of programming and licensing for SeaChange International, says broadcasters face the most complicated rights issue of the digital era.

Broadcasters, unlike movie companies or many cable networks, do not own most of the content that they produce, nor do they have direct control of many of the ads they run. On top of it all, cable operators now manage the broadcasting technology a majority of consumers use to watch local broadcasts.

“Broadcasters are caught in the middle,” Berman says. “For the most part they're just re-broadcasting signals, and they have a lot of people they depend on for their businesses.”

Local broadcasters have to work out new deals with content providers to account for the new digital technologies. Ironically, broadcasters have been mostly content to let cable operators and movie studios hash out the first deals.

Such a passive approach could prove dangerous. Digital manipulation of content will only become more prevalent as computing power and software sophistication increase. Broadcasters need to actively find the best ways to take advantage of this technology. If they don't, cable operators and satellite TV vendors certainly will.

Dan Sheeran, a senior vice president of worldwide sales and marketing at nCube Corp., Foster City, CA, says companies such as his can now deploy personal video recorder (PVR) capabilities into cable head-ends. In this way, broadcasters can gain at least some control over how consumers manipulate programming and possibly earn some revenue for providing the service to consumers.

This would require broadcasters to provide cable operators the rights to record and store their programming. Sheeran notes that broadcasters are afraid of such arrangements because PVRs make it easier for viewers to skip over ads. But he notes that if broadcasters do not opt for such a service consumers will simply use a TIVO or other similar device, which would take the process completely out of broadcasters' control.

Sheeran says that server-based PVR systems could let broadcasters encrypt digital signals as well as inserting code to prevent viewers from erasing ads.

To make use of such technology, broadcasters have to work out rights issues with cable operators and other content providers.

Even if broadcasters do not act to control PVR use, they will need to face the digital music sooner or later. Michael Ledwich, director of special development at Encoda Systems Inc., Denver, CO, notes that content providers are leery of HDTV. The crystal clear digital signal would be a pirate's dream. Without sophisticated signal encryption technology and far-sighted rights negotiations, HDTV could languish without content.

Movie studios simply do not want their content broadcast over such technology without stringent pirating protection. Though HDTV is still years away from widespread use, such copyright protection issues need clarification now so the technology can be free to develop. Equipment with full encryption capabilities needs to be made as soon as possible, including the TV sets, Ledwich says.

Broadcasters face the huge task of reworking almost every aspect of their businesses to accommodate new digital technology. The sooner they get started, the better.

Charles Waltner is a freelance journalist headquartered in Seattle.