Licensing Content for the Internet

With IPTV music licensing conditions still undecided, we asked a cable industry content entrepreneur and pioneer how the last round of agreements were negotiated, and learned that the future may be nothing like the past.

by Alex Goldman ISP-Planet Managing Editor [November 4, 2005]

At ISPCON, we asked cable industry content entrepreneur and pioneer Nyhl Henson how the licensing deals of the cable industry had worked. He explained to us that throughout history, they never have.

Few people know that Hollywood is located where it is because the industry was fleeing Thomas Edison's copyright on movie making technology (as documented in the, naturally, free book, Free Content, by Lawrence Lessig).

Few people know that songwriters once argued that they should control all technology that reproduces sound, fearful of the effect of player piano technology on the sale of sheet music.

When the cable companies were built, they initially rebroadcast the networks' content, and were accused of piracy. Eventually, a copyright tribunal established a system whereby the cable operators paid a percentage of their income to a copyright tribunal, which in turn paid the copyright owners.

Broadcasters were also allowed to file with the FCC to require cable companies to black out certain valuable broadcasts. At the time, Nyhl Henson was working for a cable company in Columbus Ohio. The local broadcast station WBNS, filed regularly and promptly to prevent the cable company from using a popular TV show, Mary Hartman, Mary Hartman. Henson says the cable company replaced it with the Pittsburgh Pirates, who were a good team, well over .500 in 1976 (92-70), 1977 (96-66), and 1978 (88-73).

Nevertheless, the cable companies realized they needed content, and the company Henson was working for ran a program called Pop Clips for its Nickelodeon channel that eventually became MTV.

Henson says that at the time, MTV did not have the rights to much of the music. The same was true of Country Music Television. "I'd have the ASCAP people in my office regularly and they'd say they wanted to talk about licensing, and I would keep explaining that you had to build the business first before you'd know what you could pay."

Power to the people
But the future of music and content is a world in which the agenda is set by the viewer. When content is pulled, not pushed, the distributor provides access but the viewer makes the program decisions.

So while Henson is betting on IPTV distribution with IVI Communications, in which he is a major shareholder, he is also on the board of MICI, a company whose mission is to own content. He says Food, Christian Music, and Graceful Aging could be channels in addition to educational and instructional material.

Henson just might enter the next video content revolution with a stake on both sides of the fence, able to influence the rules as both a content distributor and a content owner.

But he's acutely aware of the fact that the broadcast networks were doomed to lose the cable wars because their institutional DNA prevented them from doing something new. "The broadcasters thought like broadcasters and therefore failed," he says.

So he's looking at things the internet is doing that the cable companies cannot do. At the time of the interview, we point him to the tame but brilliant user-driven content ranking engine that is BroadbandReport's Digital Imaging Forum. Reading the latest issue of Wired Magazine, we're now ready to recommend a website just purchased by Rupert Murdoch, MySpace.com, as described in the article The Hit Factory.

The challenge for those who won the content wars of the past will be letting go, and actually talking to consumers. The Wired article says that of MySpace.com's 30 million user pages, about 400,000 are rock bands. The article focuses on the band Hawthorne Heights, a band that "achieved its popularity without any real radio or TV airplay, a feat unheard of a few years ago."

Instead, the band found 20,000 friends on MySpace. "The bandmates were lavishing attention on them. On tour, each musician would spend four to five hours online every day, answering e-mails and adding new friends. (MySpace users must approve each person who requests to be added as a friend.) The fans loved it. 'They can't believe they're actually getting a response. You've got a fan for life.'"

The reality, the article says, is that young people are learning about new music in a new way. "The new reality is that their audience isn't listening to radio or vegging out in front of MTV. The audience is online."

Those cable industry executives who are willing to learn will follow that audience and find themselves online, too.

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