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Big fight over small screens

November 29, 2005

WHEN IT COMES TO the entertainment industry, it seems that no revolutionary deed goes unpunished.

Two Hollywood studios sued Sony when it brought out the first affordable home-video recorder in 1976, even though the VCR eventually created a huge new business for the studios. The music industry won a crippling injunction against the original Napster's groundbreaking file-sharing service, which introduced free (and illegal) downloading to the masses. TV companies helped drive Sonicblue out of business after its Replay unit, one of the first manufacturers of digital video recorders, let customers send TV shows to one another through the Internet.

Replay's cohort on the cutting edge of television recording, TiVo, has drawn periodic threats from the TV industry for helping viewers to -- gasp -- fast-forward through commercials they'd rather not watch. The major networks sheathed their sabers earlier this month, holding a news conference to announce that digital video recorders weren't such a bad thing after all. People with TiVos or the generic equivalent actually watch more TV and see plenty of commercials in the process.

But then TiVo pushed the envelope, and the industry's sabers are rattling again. The company announced software that lets subscribers automatically copy recorded shows onto two popular pocket-sized video players, Apple's new video iPod or Sony's PlayStation Portable. Never mind that TiVo plans to deter piracy by inserting watermarks into the copies. To some industry executives, the move threatens to undermine the fledgling market for TV shows distributed on demand. By making it easy for subscribers to put shows on their iPods or PSPs for free, TiVo has made it harder for the networks to collect a fee.

It's not clear how a court would rule if the TV industry sued TiVo over the new feature. The actual threat to the networks is minimal, given that well under 1% of U.S. viewers have the right combination of TiVo service and a portable device. Beyond that, TiVo's move could boost interest in watching TV on portable devices, creating more opportunities to sell programs and advertising.

Instead of girding for a legal fight, the networks would be better off working with TiVo on the company's latest feature, which lets TiVo subscribers tell advertisers which commercials they might actually want to see. What a concept -- pitching pickup trucks to people who are thinking about buying one.

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