My Two Cents.

I have discovered a new law of physics: The more I understand a subject, the simpler I can explain it to readers. Call it "Dom's principle"! Really though, this time it wasn't easy. The subject was simple enough -- develop a new model to finance TV programs since the old models are fast becoming obsolete by the prowess of the Internet. The problem started while writing on this subject for the Italian financial daily II Sole 24 Ore. I was confronted not only with deciphering incomprehensible jargon (a technological requirement it seems), but also with the need for reviewing set precedents (legal implications) and the subject's evolution (historical base). All of these topics had to be dissected, digested and then regurgitated in a palatable way to fit this page. Not an easy task, at least for me.

I discovered that the creation of new financial models for TV program production is nothing new. Indeed, this marks the sixth time the industry has been forced to invent a new model.

Originally, at least in the U.S., network TV programs were produced by the advertiser. After that, CBS' Bill Paley devised a way to produce the programs and sell only the airtime to the advertisers. Later on, the networks were prevented from producing its TV shows and thus were required to buy broadcast rights from producers. With the advent of syndication, advertisers reverted to financing programs. Recently, the networks angled back into production, closing the "analogical" cycle.

With the advent of digital television (where programs are labeled "content" and transmission has morphed into "transport") copyrights have lost their meaning and as a result, the industry has, once again, gone back to the drawing board to re-invent yet another financial model.

A few years ago, John Perry Barlow, president of the Electronic Frontier Foundation, wrote in Wired magazine that since the Internet has rendered copyright protection impossible, it is advisable to go back to the patronage system -- the financial model that flourished in Italy during the Renaissance. In that period, royalty commissioned and paid for intellectual properties for their subjects and the masses to appreciate.

Under the Renaissance model, the artworks remained stationary and the public went to see them. Television changed all that: the public does not move, the intellectual properties seek the audiences out. At that point, the production industry devised several ways to finance these properties. Then the advent of the video cassette recorder freed the public from the imposition of having to view the programs only when transmitted. Once again, the production industry had to devise a way to benefit from this added user's convenience.

Now we find ourselves at another crossroad. Technology is being leveraged to cause all the modern production financial models to become relics of the past. However, by going back to the Renaissance's financial model, the past is providing a solution.

I have another solution. First, the backdrop: As we know, the Internet and a personal video recorder (of the TiVo or Replay variety) will allow any transmitted program (via broadcast, cable TV, satellite, etc.) to be recorded as a "file" and released worldwide while maintaining the "fair use" status defined by the U.S. Supreme Court in Universal Studios vs. Betamax (1984). This principle was revalidated last June by the California courts in the case Recording Industry of America vs. Diamond Multimedia Diamond manufactures the Rio playback for the MP-3 compressed music files downloaded from the Internet.

From Canada, the precedent set by iCraveTV.com (the company that grabs TV signals over the air and retransmits them via the Internet) doesn't bode well for either the broadcasters or the producers. In addition, as pointed out by Yuichi Akatsu of Japan's NHK, broadcasters have been unable to protect their "neighboring rights" (those associated with the stations' own activities) for some time now. Lastly, there is DVD content, considered the best way to put movies on the Net. The fact that the files are so large (3-4 gigabytes) is only a temporary setback.

It is therefore evident that content will be like a distribution form of its own, independent from the control of the copyright holder. In practical terms, this means that producers will not be able to raise production money by exploiting the various windows (ancillary and international markets) offered by analog media. My solution: parallel to its first transmission, the program's copyright holder would distribute the same content via the Internet in order to exploit that medium, rather than be penalized by it. Consequently, license rights will have two simultaneous fee tiers: 1) domestic (via traditional transmission) and 2) international (via the Internet) as a parallel window.