William Carleton, Counselor @ Law

Three Dish Arguments for Why Skipping TV Ads is Okay

A satellite TV provider, Dish Networks, is in a dispute with legacy TV networks over whether Dish is doing something wrong when it sets up Dish subscribers with equipment and software that permits the subscribers to watch time-shifted TV shows free of commercials.

This article on CNN quotes someone at the FOX network as saying that Dish's service "will ultimately destroy the advertising-supported ecosystem." That sounds like a ringing endorsement of Dish to me.

In a race to the courthouse, Dish sued the legacy TV networks first, and I understand the latter may have since filed suits or claims of their own.

Here are three interesting arguments from the very readable, non-legalistic complaint filed by Dish in federal court in New York:

1. "DISH is required to pay the Major Television Networks hundreds of millions of dollars per year in retransmission fees, collected from its subscriber base, for the right to re-broadcast those signals — even though the Major Television Networks provide their content at no charge to television viewers with an over-the-air antenna." I like this point. It sets up the argument that the legacy TV networks have already monetized the time-shifted content that is re-transmitted by Dish, through the fees Dish has collected from its subscribers and then passed on to the TV networks. The ads, of course, were the "tax" consumers had to pay in order to watch the original broadcasts for "free."
2. "The commercials are not erased or deleted. They remain on the recording and can be readily viewed at each customer's individual option. The DISH Auto Hop feature does not alter or modify the broadcast signal." These points seem to be preparing for copyright and degradation arguments that the legacy TV networks will make. If subscribers can replay the original broadcast in all of its commercial glory, it's harder to argue that Dish has substituted its judgment for that of the content copyright owners.
3. "A 30-second skip feature is already standard on many DVR remote controls. . . . The remote controls that come with DVRs supplied by Comcast, an NBC affiliate, can be programmed to include this 30-second skip feature." This is a great argument. There's potential for blowback, here, though; Dish seems keen on also asserting that its service is new and cutting edge, which may help the legacy TV networks argue that something more than industry-standard DVR time-shifting is happening here.

Photo: the Library of Virginia / Flickr.

Crowded crowdfunding industry

Paul Spinrad doesn't post that often to his "Change Crowdfunding Law" blog.

But everytime he does, it feels like you've happened on a clearing in the woods, and you're surprised to be reminded there's a forest for the trees.

Paul's post yesterday quickly diagnosis a problem presented by the overabundance of would be spokes-organizations for the nascent crowdfunding industry. Everyone in this a merging industry should heed what Paul is saying: let's not compete just yet, not before we cooperate to get the industry launched.

That's just one issue the post checks in on. It caught me up on a number of fronts and is rife with links for follow ups.

Photo: Steve Chilton / Flickr.

Twitter Information Sharing and Disclosure

Twitter has recently revised its terms of service and privacy policy again.

I haven't had the time to prepare thorough redlines to surface all of the changes, but I did make a quick peek comparison of a section of Twitter's privacy policy, titled, "Information Sharing and Disclosure." Here's that comparison, 17 May 2012 laid over 23 June 2011:

Twitter's growing up. I like how they are ditching some of the earlier, gratuitous euphemisms (a/k/a, the earnest bullshit) that marks a young company speaking to its self-perception rather than describing reality. The example of that evolution at work here is in how "certain trusted parties" is struck in favor of the matter-of-fact "service providers." It adds credibility.

Not only do changes like that add credibility; they foreground all the more effectively the more surprising changes that mark affirmative decisions to stand by users against the Man. To whit:

"[N]othing in this Privacy Policy is intended to limit any legal defenses or objections that you may have to a third party’s, including a government’s, request to disclose your information."

That sentence is new, it's substantive, it's not expressed in a self-aggrandizing way, and it's meaningful. Twitter is talking after walking, too; I imagine this particular change expresses a policy the company worked out in the course of opposing the New York judge in the recent standing case that Ziff and I blogged about.

Is this (the U.S.) a great country or what? In Europe or elsewhere, I can't help but imagine, a regulator would be involved, and companies wouldn't naturally assume they had the right to change the rules.

More on Facebook monetization

Glenn Kelman has a nice post on the corporate Redfin blog this week.

He's talking about Facebook monetization, and makes a very strong case that the arithmetic for Facebook's public market valuation can't be supported by display advertising. (It's apparent that Glenn thinks carefully about size of markets, rates comparables; part of his job, no doubt.)

Two things I especially like about his post.

One, he talks about how developers value the platform in a different way than do financial types. Because of Facebook, he says, Redfin can know a lot more about a user when she logs in to Redfin than it would otherwise. (He's not talking about me, though. I opted out of being a Facebook user, and I wish that information about identity could be leveraged so ubiquitously from an open system.)

Two, I like how Glenn assumes Facebook might monetize by charging users for services. (Though he thinks they have been smart, so far, to have "focused on growing the cow, not getting more milk."

As for advertising, if that does remain a part of Facebook's monetization strategy, longer-term, I hope the company finds a way to respect, rather than exploit, users' earnest engagement. Particularly if Facebook is going to embed advertising in user newsfeeds, it should share the ad revenue with the participating users.

Photo: "SR 520 Toll Booth - 1979," Washington State Department of Transportation / Flickr.

Asymmetric information dissemination

Just heard a report on the radio, about the allegations that revised Facebook revenue projections were selectively circulating as its IPO was being promoted, priced and sold.

It makes me think again of the information clamp-down provision in the crowdfunding section of the JOBS Act, which states that:

"an issuer who offers or sells securities shall . . . not advertise the terms of the offering, except for notices which direct investors to the funding portal or broker . . ."

Contrast this with a different provision in the original McHenry crowdfunding bill:

"an issuer who offers or sells securities without an intermediary shall comply with the requirements of this subsection if the issuer . . . makes available on the issuer's website a method of communication that permits the issuer and investors to communicate with one another . . ."

The McHenry bill did not pass both houses of Congress of course.

Though Rep. McHenry is justly famous for having sponsored the popular crowdfunding exemption that passed the House, though he led the parade of legislators in the Rose Garden at the signing of the JOBS Act, his bill was completely gutted and replaced by the downright cynical Merkley/Brown bill. (McHenry's contribution to the JOBS Act, as it turned out, was a floor amendment that added the federal broker-dealer safe harbor for angel platforms and incubators, facilitating, ironically, crowdfunding for accredited investors.)

And it's too bad the McHenry bill didn't make it into the final JOBS Act.

One thing a crowdfunding exemption might have done, might yet do if the legislation is revised down the road: come up with a new kind of way for information to circulate among investors. The issuer is always going to have to be scrupulous, of course, for any offering to be fair. But I wonder if the paradigm of tightly controlled, top down, centralized disclosure isn't subject to even more potential abuse, than a system privileging transparency.

Imagine that, at the same time it was allegedly sharing the information with its underwriters (perhaps in good faith!), Facebook had simultaneously posted its revised projections on Facebook.