[opendtv] Re: Compensation for content
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 6 Jul 2014 08:02:11 -0400
On Jul 3, 2014, at 9:11 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
wrote:
>
> Craig Birkmaier wrote:
>
>> My problem is at a fundamental level. IMHO, when a program is broadcast,
>> the content owner is being compensated for that performance. I do not
>> believe that ANY technology used to get THAT performance to a viewer
>> should require an additional payment to the copyright owner. The
>> technology is helping the broadcaster increase the audience for that
>> performance, which in turn may result in increase compensation based
>> what the broadcaster charges for the ads in that program.
>
> I believe this argument changes when the content becomes walled in, and is
> used to help attract more subscribers to a lucrative walled garden.
>
> An analogy might be hotel room rates. You can argue all you want that a
> Holiday Inn room in Kalamazoo should cost the same as a similar Holiday Inn
> room in Manhattan. But it won't. The prevalent costs in the neighborhood
> matter too.
>
> It seems logical to me that once walled up in an MVPD, the TV networks'
> content should command at the VERY LEAST as much compensation as ad-supported
> cable-only channels. So I'm not so opposed to retransmission consent.
The basis of your argument is that the FOTA content carried by MVPDs is
attracting more subscribers to the service. This argument has some fundamental
problems.
MVPD systems all offer a "lifeline tier" that includes all local broadcast
channels and a few other programs at a significantly lower price than "the
bundle." Kagan estimates that only 8-10% of MVPD subscribers are limited to
this tier. Thus more than 90% of subscribers are paying significantly more for
"the bundle," which does not include FOTA stations, but does include many
off-air reruns.
Much of the most valuable content offered by broadcasters is now available on a
delayed VOD basis via the Internet - e.g. Hulu and network portals.
And then there is the "minor" issue that the most valuable network content
commands SIGNIFICANTLY MORE compensation than ad supported cable networks.
Broadcasters rely upon the MVPDs to reach more than 80% of their viewers, and
the rates they charge are at an all time high in terms of cost per thousand
viewers. Cable networks are not able to command comparable ad rates.
And then there is the reality that this valuable content only makes a portion
of its revenue from the network broadcasts when it is "fresh." This content is
then licensed into syndication, run on affiliated cable networks, and licensed
to VOD services.
Retransmission consent dollars are on top of all of this, and are a significant
factor in the latest round of price increases for MVPD service.
As broadcasters primary service is to reach viewers via the public spectrum,
you might ask why they are not concerned about making reception as easy as
possible. Instead they are focused on the 80+% of the audience that pays
retrans fees
> But here's what I really want to know. If Aereo service were unicast
> absolutely free, available only for the cost of the broadband pipe, and were
> kept within the ISPs of the local TV market area only, would the broadcasters
> still object? My bet is, they would. But it would not be in good taste to
> explain that opposition, I don't think.
Great question with an obvious answer.
They would object because this would be another way to cut the cord, which
would in turn reduce their retrans revenue.
As the broadcasters obviously prefer that people not use antennas, let's end
the false pretenses. Cut the cord to the transmitters - they will make more
money thanks to the lower power bill and increased retrans revenues...
Just to be fair, the FCC could give local broadcasters a protection period on
MVPD systems - say ten years before the network could become just another cable
network without distributing through affiliates.
Regards
Craig
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