August 5th, 2008

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In a stunning but welcomed reversal, a New York appeals court has overturned a Judge's ruling outlawing remote video recording and playback. It's a huge victory for consumers because they'll get a cheaper DVR type of service, but it also sets a sturdy legal precedence which MP3tunes' can use to battle for the legality of our online music storage service which has strong similarities to the service judged legal.

Here's the background. Cablevision wanted to offer a DVR (digital video recorder) service where customers could record videos for later playback - a service pioneered by Tivo and ReplayTV. Rather than make every customer buy and install an expensive box like other cable companies do, they decided to install a giant storage unit at their central office and let all their customers control it using a slightly upgraded remote control. They could instruct the remote server to record and playback shows just as if the device was their own Tivo. This would make it economical for their customers and quick to deploy since all that was needed is a new remote control. Upon hearing of this new technology media companies Fox, Universal, Paramount, Disney and others piled on in a lawsuit to halt its roll-out claiming it would be massive copyright infringement.

Cablevision is not the first to offer a net based DVR. That credit goes to David Simon who 8 years ago launched RecordTV. As with Cablevision media companies attacked his new service with a lawsuit and him personally (just as they have with me in the MP3tunes case). The lawsuit took it's toll on Mr. Simon who said he was just "a guy with a mortgage, a wife, and two girls". With no funding to fight the suits he was overpowered financially and forced to settle by agreeing to shut off the service. The assets were later sold to a company who operates a successful service in Singapore.

The trial judge sided with the media companies finding Cablevision's planned RS-DVR (remote server) system to be illegal. He ruled the servers in the technical process of preparing to make a recording were making unauthorized copies. He ruled resulting copies were infringements because Cablevision was making the copies not the user and that when the users played back their recordings that it was an illegal public performance - in spite of the fact that the person who made the recording was the only one eligible to play back the video. Cablevision took their resounding defeat to the appellate court asking them to re-assess the situation.

A three Judge panel reviewed the facts and 16 months later issued a 44 page ruling declaring Cablevision's system legal. It ruled that 'buffer copies' did not make for an infringement thwarting the media companies technically nuanced argument. It concluded that the user's were making the actual copies not Cablevision (in spite of it being on Cablevision's machinery). Finally, they found that since the video was only viewable by the initial recorder it was not public.

Undoubtedly the press will paint this as a victory for Cablevision's RS-DVR system which it is, but it's much more. It's another defeat for the media companies failed 25 year strategy to sue nearly every new technology which kicked off with the VCR and also includes the MP3 player. (Most people have forgotten the record labels ganged up and tried to get MP3 players outlawed. Thankfully they resoundingly lost.) Rather than work constructively to make new technology beneficial for them they try to halt its advancement with an army of attorneys. (They could have negotiated with Cablevision to make ads unskippable for example or even negotiated a small reasonable fee, but that opportunity is now likely lost.) More importantly it indicates the courts have not forgotten the consumer. Implicitly acknowledged is that consumers have the right to record, store and playback content - and it's OK for companies to help them in the process.

The ruling set a definitive legal precedence for other responsibly run media storage and delivery services like MP3tunes. Just as with Cablevision's cloud video service, media companies are suing my cloud music service making similar claims of copyright infringements and unauthorized public performances. Unlike Cablevision we are not doing any of the recording instead users are uploading their own music which we then play back only to them (no sharing, no anonymous access). It is a personal service with strict security measures in place since day one. This ruling won't necessarily help Youtube and other one-to-many type of hosting services, but those true personal storage services should benefit mightily by the reasoned arguments rendered in the Cablevision case.

Our case, EMI v MP3tunes, is currently in the same district court (albiet before a different judge) as the Cablevision case which is why I'm hopeful the court there will find our service legal. The parallels to Cablevision are striking with the primary difference being they're video and we're music. Both are services storing your personal content and playing it back for you. Music in the cloud is definitely coming and this legal precedence is paving the way. Don't be surprised when in the near future your ISP (cable co or DSL) offers a RS-DVR and music storage option as part of your monthly plan. You can get a glimpse of that future by signing up for your free cloud music service here.

-- MR