Beware the AFL copyright spin

Business Spectator

It's hard to imagine how either government legislation or footballers' bullying is going to stop services like Optus' TV Now, the one that has got the AFL and NRL so excited.

Outraged spin from the football codes has suggested Optus is engaged in piracy and that the Federal Court judgement in Optus' favour is some kind of wild travesty.

An appeal has been lodged and the federal government has meekly fallen into line – the Minister for Sport, Mark Arbib, has even suggested that kiddies will be the losers: “In the end, if this court case stands, then the revenues (of Australia's biggest football codes) will take a big hit... when it plays itself out, the big losers will be those kids on the sporting playing fields.”

That's all rubbish. They need to have a cool drink and accept that free-to-air TV and internet streaming are effectively the same thing, since they are both unencrypted.

Copyright owners will not be able to get money for the same product on each platform because technology is making them converge. In fact, all free-to-air TV will probably end up being streamed on the NBN instead of using spectrum-hungry terrestrial broadcasting, which is needed for streaming video to mobile phones and tablets.

Optus' TV Now is merely a cloud-based personal video recorder (PVR), and there's no way it can, or should, be stopped either by a court ruling or legislation. Eventually the cloud will be used for all storage, and physical hard drives will be obsolete.

There are dozens of legitimate services just like TV Now in the United States and Europe and while there seems at first glance to be a thin line between this and cyberlockers like Megaupload that are definitely used for copyright piracy, there's actually a big difference.

With TV Now or services like it, you can record free-to-air TV in the cloud for personal use, instead of using hard drive storage attached to the television. You can only record channels to which you have access (according to where you live) and you can only play what you have recorded yourself.

Although the virtual DVRs, as they are called, in the US and Europe usually make only one recording of each program no matter how many people “record” it, Optus' TV Now application makes a new recording in the cloud every time someone records it. If a thousand people record “Days of Our Lives”, then there are 1000 recordings of it sittings on servers somewhere. You get 45 minutes storage for free and pay $9.95 for more than that.

The most recorded program on Optus so far is Big Bang Theory; number two is Home and Away; number three is The Simpsons.

The reason the AFL and NRL are appealing and lobbying for legislation is that you can also record sporting events played on free-to-air TV, and like all PVR recordings you can start watching the program soon after you start recording it. It's not live streaming – you're playing a personal recording – but it can be close enough to live that you wouldn't bother with streaming.

It doesn't hurt free-to-air broadcast rights for sport – since you're actually recording the full free-to-air program, with ads – and it doesn't harm pay TV rights because it's encrypted and you can't record it on a PVR, only on a dedicated box like the iQ.

But the ability to watch the recordings near-live definitely damages internet TV rights, for which the AFL got $153 million last year from Telstra as part of its $1.25 billion broadcast rights agreement. The Telstra deal also included running all of the AFL's websites, including the 16 clubs, and the amount paid specifically for live streaming of one game per week was not revealed, but it was only part of the $153 million.

In the context of the whole broadcast rights deal it's a tiny amount of money, but presumably the AFL has been licking its lips about getting more and more cash from Telstra and other telcos in the decades ahead by selling the same games for live IP streaming as it's also selling for free-to-air broadcast.

But will the federal government really pass legislation banning the use of cloud-based storage for recording free-to-air TV? How could it ensure that the legislation didn't prevent other uses of cloud storage? How could it justify drawing such a distinction between a physical PVR under a TV set and a virtual cloud-based PVR if they behave in exactly the same way?

The football codes need to calm down and think clearly about this issue, instead of just reacting with a charge and shirtfront. The use of cloud-based PVRs should increase the value of free-to-air broadcast rights over pay TV rights, since it's only unencrypted free-to-air programs that can be viewed on mobile devices using that technology.

Yes, it means live internet streaming rights are not going to be worth much, if anything, but that's no big deal.

It just means sporting codes won't be able to sell the same games three times, for free-to-air, pay TV and internet streaming; the first and third of those are really the same thing. They just need to accept that and move on.