What do a possibly illegal Web startup and one of the country’s biggest cable companies have in common? More than you might think.
Redlasso is a company that until recently, operated an Internet based bank of servers that recorded content off of broadcast and cable television, and made it available to bloggers in the form of clips.
The broadcast networks didn’t like this at all. Several networks, after sending ineffective cease and desist orders, filed suit against Redlasso in July for copyright infringement. A few days later, Redlasso caved, and stopped offering the clip service to bloggers.
Separately, Cablevision has been locked in a battle with broadcast networks over a service they created for allowing users to record TV shows, “Tivo-style”, without having a physical DVR in the home. The idea is that Cablevision (CVC) records the TV shows you want to watch on their servers. This has great cost benefits for Cablevision, since it allows them to offer DVR service to customers with older cable boxes. The DVR capable boxes cost several hundred dollars.
As with Redlasso, the broadcast networks don’t like the on-demand DVR concept, and sued Cablevision. The networks won the first round at trial court, but several days ago they lost the second round on appeal.
And this is where the situation gets interesting. The Cablevision case is almost certainly going to be bouncing around the courts for a while. But if Cablevision eventually wins, it may very well open the flood gates to innovation and handed Redlasso a business model.
While Redlasso can almost certainly not operate the type of clipping service they were operating, this may be an opening to a much bigger opportunity. That’s becase Redlasso is itself a virtual DVR, just like what Cablevision is offering. Technically, the only difference is that the content is delivered over the Internet. But these days, there is precious little difference between what the cable wire delivers to your TV set and what it delivers to your PC. They are all just digital signals coming from the cloud. It seems to me the courts would have a hard time saying that Redlasso could not compete in this market. That argument would likely raise anti-trust concerns.
Of course the one issue which would have to be worked out is whether the consumer has the *right* to view and therefore record a channel. The cable company has this billing information and Redlasso doesn’t. I think that Redlasso could actually force the local cable companies to provide them with what “rights” a given user has. That would mean that if you were a Cablevision customer, you could tell Cablevision to tell Redlasso that you have rights to certain channels like HBO, TBS, etc.
If Redlasso knew what rights viewers have, they could limit viewers to the recording of shows they do have rights to, but on their PCs instead of just through their cable boxes. If Redlasso opened up their APIs, this would then allow a new platform for innovation around the TV content.
Another service that Redlasso could offer is directly to smaller cable companies that don’t want to set up their own infrastructure. By innovating with their software, Redlasso could carve out a niche as an on-demand DVR service provider to the cable industry. In this scenario, Redlasso wouldn’t have to force the cable companies to do anything, and it would be more like a partnering opportunity where the cable networks get a better PC + TV offering for their on-demand DVR customers.
Interestingly, beyond just being a virtual DVR, Redlasso might ultimately be able to operate as a kind of national cable system, cutting deals directly with cable networks, particularly new ones that have a harder time getting distribution. This of course would be dicey when trying to play nice with the cable companies, but it is an interesting alternate strategy if being nice doesn’t work out so well.
The courts may be providing Redlasso a fascinating opening, and it will be interesting to see what they do with it.
SAI Contributor Hank Williams is a New York-based entrepreneur. He writes Why Does Everything Suck? Exploring the tech marketplace from 10,000 feet.
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