Property rights and revenue models II

The federal court has ruled against Optus in its bid to record sporting events on behalf of subscribers.

The Federal Court has overturned a decision that allowed Optus to broadcast near-live vision of NRL and AFL matches through its mobile platform.

In a landmark decision earlier this year, Optus was found to have not breached copyright by allowing customers to watch sporting matches shown on free-to-air TV on a short delay through its mobile TV Now service.

But in Sydney today, three judges of the Federal Court allowed an appeal by Telstra and the sporting codes.

Optus is deciding whether to appeal to the High Court – I hope they do (and win).

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37 Responses to Property rights and revenue models II

  1. m0nty

    Word among IP lawyers apparently is that Optus probably will win in the HC, Sinclair.

  2. Sinclair Davidson

    I hope so. IP isn’t supposed to protect business models, but promote innovation.

  3. Token

    If that is the case, M0nty, do you konw what will be the hit for Telstra in terms of revenue? I’m sure it will chop into the AFL’s revenue in coming years.

  4. Fleeced

    Yes, hope they appeal, and hope they win.

  5. amcoz

    Sinc; what’s ‘innovative’ about flogging other people’s property for your own benefit?

  6. Fleeced

    Sinc; what’s ‘innovative’ about flogging other people’s property for your own benefit?

    They weren’t flogging anything. People are allowed to record shows for personal use on a PVR. They are allowed to lease a PVR to do so (eg, through electronic sales and rentals – or for that matter, Foxtel – where you don’t actually own the box). Having a PVR effectively remote hosted on another server is perfectly reasonable – and yes, a very innovative solution.

    These shows are free-to-air. You are allowed to record them. If I understand the Optus solution correctly, you are effectively leasing a virtual PVR.

    If this is deemed illegal, then a lot of cloud hosting services are probably illegal as well.

  7. amcoz

    So, Fleeced, you’ll fleece my property for a profit as you give to someone else who is able to watch it for free, regardless of what cloud you’re floating on?

  8. ar

    The Optus customers apparently pay more to watch matches than people taking the service through Telstra. Optus users pay data rates while Telstra customers are unmetered. This is just a way Optus is using to prevent churn by trying to eliminate product differentiation.

  9. Fleeced

    So, Fleeced, you’ll fleece my property for a profit as you give to someone else who is able to watch it for free, regardless of what cloud you’re floating on?

    No, you couldn’t. As I understand it, Optus isn’t just recording once, and then sharing it witrh everybody – they are effectively selling individual personalised PVRs

    The product (ie, FTA TV) is already free – customers are already allowed to record them on their PVR. Optus is selling a virtualised PVR. What property do you imagine has been stolen?

  10. amcoz

    The product I send FTA is only free in the signal to the receiver for their personal usebut Sum Won decided to copy it and give to others without my permission, particularly as I’ve contracted that right to U No Hoo.

  11. Fleeced

    The product I send FTA is only free in the signal to the receiver for their personal use..

    Which is exactly what is happening here – the customer is leasing a virtualised PVR, for their viewing only.

  12. m0nty

    If that is the case, M0nty, do you konw what will be the hit for Telstra in terms of revenue? I’m sure it will chop into the AFL’s revenue in coming years.

    That is a contract matter between Telstra and the AFL which is dependent on the negotiating skills and power relationships of the respective parties, and the effect might not be as big as you think because there are other reasons that Telstra pays the AFL a lot of money. Telstra has been warehousing the AFL IP for more than a decade: overpaying the clubs, underinvesting in the product and generally treating it as a cost centre to be minimised. Telstra’s strategy has mainly been to block anyone else from having it. The Optus decision would change that, of course.

    Then again, the reason they treat the AFL IP as valuable is that they think it drives mobile phone take-up of the various Telstra networks… but that’s not a problem for them at the moment as they are smashing the competition in the marketplace regardless, due to superior network quality and investment. So they may not feel pressure to drop the AFL contract.

  13. Sleetmute

    I also hope they appeal and win. I don’t see the difference between what Optus is offering and the remote (IQ) recording (of FTA TV channels) I can request on the Foxtel website.

  14. Sinclair Davidson

    Sleetmute – I saw an ad the other day for a phone app/function/thing that allows you to record on Fox. Is that the what you’re talking about? I can’t see the difference either.

  15. Exactly, sleet… I think many people imagine Optus making a copy and sharing it around, whereas it’s effectively an individual virtual PVR for each customer.

    The trend is moving towards virtualisation anyway – why have a big box plugged into your TV?

  16. m0nty

    I also hope they appeal and win. I don’t see the difference between what Optus is offering and the remote (IQ) recording (of FTA TV channels) I can request on the Foxtel website.

    As far as I know, IQ doesn’t get streamed to your phone. Also, Foxtel (through Fox Sports) has the rights and Optus doesn’t.

  17. sdfc

    Property rights are everything except when it comes to the AFL it seems.

  18. .

    Humbly I ask…

    Surely the advertisers like it? All that will happen is that the auction price for the rights will be lower for free to air television? Given the advertising is worth more, wouldn’t the AFL just rewrite the contract based on ad revenue during AFL games? It is hard to say the FTA stations would actually lose out to Optus…I mean, I’d rather watch Carlton thrash Essendon on a lounge, not on a train…

    (I have no prior empirical or anecdotal knowledge about this).

  19. As far as I know, IQ doesn’t get streamed to your phone.

    No, it gets “streamed” to your TV by a direct cable. Would it matter if it were streamed from a remote PVR instead? If so, how? And if not, why is streaming to a phone any different.

    Also, Foxtel (through Fox Sports) has the rights and Optus doesn’t.

    1. The Foxtel app thimgammy also allows you to record FTA in this manner – not just their own channels (which Foxtel does actually rebroadcast, unlike Optus).

    2. Optus isn’t broadcasting, so broadcast rights are irrelevant. Individuals are merely using a remote PVR.

    But, IANAL… I can say the way I think the law *should* work, but I can’t say whether or not the judges were wrong in this case (but if they’re right, then the law is wrong)

    Foxtel should be leading the way with this sort of innovation – iQ boxes are expensive for them to install/fix – they’d be better off using a cloud-based solution where bandwidth permits it, and in years to come, I’m certain they will… unless it’s still illegal.

  20. I’d rather watch Carlton thrash Essendon on a lounge, not on a train

    Surely you’d rather watch them do it on a footy field?

  21. sdfc

    Dot

    The AFL and NRL are selling a product. Any dilution of the rights must impact their revenue stream.

    Whether there would be increased advertising revenue and whether it would make up for the lost revenue I don’t know. But surely it is the AFL’s right to sell their product to who they want without any freeloaders coming on board.

  22. But surely it is the AFL’s right to sell their product to who they want without any freeloaders coming on board.

    They did sell them though sdfc, to the FTA networks that broadcast them. People can watch these broadcasts for free, and are allowed to record them to PVR for personal use. Optus simply facilitated this process.

  23. sdfc

    Telstra also paid for the rights to broadcast AFL. The free riding Optus didn’t as far as I know.

  24. But Optus isn’t broadcasting anything, so what’s the problem?

  25. sdfc

    Optus is broadcasting the AFL’s product to its subscribers with a 90 second delay. It has not paid for the rights.

    The AFL has sold those rights to Telstra as it has a right to. Optus is free riding.

  26. Sinclair Davidson

    sdfc – IP doesn’t exist to protect revenue. A change in technology means that the AFL rights aren’t as valuable as before. Those same rights didn’t even exist (about) 10 years ago.

  27. sdfc

    The product is owned by the AFL. It is being pilfered by Optus, reducing the value of the AFL’s property.

  28. Optus is broadcasting the AFL’s product to its subscribers with a 90 second delay. It has not paid for the rights.

    But they’re not broadcasting – that’s the point. Each user’s stream is separate.

    AFL own the product. They’ve sold screening rights to the networks. FTA network screens it, and end-user records it – as is their right.

    Do you consider it theft for the end user to record on their PVR? How is this different?

  29. sdfc

    I have to be an Optus subscriber to get the coverage via that method. They are in effect broadcasting to their subscribers.

    How is it different? Optus is profiting from it at the expense of the owner of the product.

  30. Fleeced

    They are not broadcasting. Each stream is separate and individual – hence, not broadcasting. The owner of the property in question has already sold it – to the networks. Users are free to record – either on their own devices, or ones they lease from others – provided it is for their personal use.

    Now, it seems to be this latter point where the fed court has disagreed, and declared these recordings to be made by Optus not the individual. I believe this is wrong, but if upheld may simply require a technical workaround on Optus’ part… Otherwise, their may be many other cloud services, both upcoming and already existing, that will be stifled.

    Honestly, as bandwidth increases, most tv you watch will be delivered this way – but you want it outlawed?

  31. sdfc

    I don’t want anything outlawed. What I want is irrelevant.

    Optus is piggybacking on AFL property, profiting from it, and in the process devaluing the AFL’s product.

    Regardless of the tchnology it is no different to me printing up text books, written by someone like Sinclair, and selling them.

  32. amcoz

    sdfc, you’ve nailed it, concisely.

    Sum Won owns the ‘virtual pvr’ to which the free signal is received, and then they are aiding the copying of it and charging a fee for that copy without seeking the free-signal owner’s permission.

  33. .

    So you think this is passing off, sdfc?

  34. Pedro

    Hoping Optus will win is just bone-headed. It’s plain common sense that professional sporting events will not be produced in the same quantity or quality if the copyright in the broadcasts is not protected.

  35. .

    I thought that they will be “protected” by largely shifting what is left to subscription broadcasting, the only problem being that there isn’t much competition here for an “auction”.

  36. “I don’t want anything outlawed”

    But you accept a viewer can record themselves, yes? What does it matter whether they use their own physical PVR or a remote server app?

    Or is it just sporting events that trump rights of people to record FTA stuff for personal viewing? This is essentially the service that Optus was offering[1] (frankly, I don’t care about AFL – I don’t see why sport needs special protection).

    The only reason it’s an issue for sporting events in the first place is because government insists they be shown over FTA…

    [1] The judges disagree with my interpretation:

    “The subscriber, by selecting the program to be copied and by confirming that it is to be copied, can properly be said to be the person who instigates the copying. Yet it is Optus which effects it,” judges Arthur Emmett, Annabelle Bennett and Paul Finn said in their judgment.

    Looking at above statement, I think the judges are luddites. They concede that it’s personal use, but discount it on fact that “Optus effects it”. How do they think PVRs work? (In fairness, I don’t know how they came to that conclusion… it may be that Optus simply needs to tweak things to get around it, by making leasing of server app to individual more explicit).

  37. Rebel with cause

    Unless I am missing something here, the question isn’t whether Optus own the rights to the AFL, but whether it is legal for them to record live FTA television broadcasts on behalf of their customers and then later deliver that recording to the customer.

    Just because sports is involved, people are getting all worked up on the matter. The court should have no regard for what the content being delivered is. The question is quite simple:

    If I am legally allowed to make a recording of a FTA transmission for later personal viewing, am I entitled to request someone else to make that recording on my behalf, and then deliver that content to me for my personal viewing?

    If the answer to this question is yes, then the only objection to the Optus situation can be that this isn’t what Optus is in fact doing.

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