TiVo Sells Out


June 1, 2002


BROOKE GLADSTONE: We're back with On the Media. I'm Brooke Gladstone.

BOB GARFIELD: And I'm Bob Garfield. When TiVo's and replay TV hit the market some people were saying you know these machines could change TV as we know it, because if you use these two devices, you never have to watch a commercial. While it's true that remote controls led to channel-surfing, and taping a program on a VCR lets you fast-forward past ads, studies show that TiVo and replay TV lead to commercial-zapping the likes of which the ad industry had never seen. But we haven't exactly seen runaway sales for TiVo and replay TV, so it was all a tempest in a TiVo, right? Well, wrong. The ad industry is quaking in its Gucci loafers because it collectively worries that in a couple of years all TVs will be sold with TiVo technology, and then -- look out! Or more precisely, tune out those ads. Michael Fremer is senior contributing writer to Stereophile magazine and an expert in all things digital. Michael, welcome back to the show.

MICHAEL FREMER: Oh, it's great to be back.

BOB GARFIELD: So first of all replay and TiVo -- explain for us what they are, what they do.

MICHAEL FREMER: Well they're basically a digital video recorder essentially, and because it's a hard drive-based product, it's kind of like your computer - you can get random access to anything on the disk. You can record and watch at the same time. And you can push Pause and go get something to eat, come back, and push Play while the show is being recorded, and you can watch in real time. You know what I'm saying? In other words you don't have to wait till the show's finished and then rewind it and watch it. TiVo has certain other aspects of it like it's got a searchable data base where you can say I want any show with Jim Nabors on in the next month I want you to find and record for me -- and it will do that. It's a search engine kind of based thing.

BOB GARFIELD:And by their nature, both of these devices enable viewers, if they wish to, to delay seeing advertising, to avoid seeing advertising all together.

MICHAEL FREMER: It's able to skip the commercials, and this is creating a big problem for, for the advertisers and for the networks, because they feel that if, if everybody gets one of these and they watch everything pre-recorded or with commercials skipping, then they will lose advertising revenue. I think they're a little bit hysterical at this point in time.

BOB GARFIELD:It's reasonable though for the broadcast media to be a little bit hysterical about this development because what pays for the programming is the advertisers and their commercials, so if people stop watching commercials, maybe the advertisers will lose faith in the commercial broadcast model and go other places to try to figure out how to persuade consumers.

MICHAEL FREMER: I don't think that's really going to happen, and I know that they feel threatened that their model is threatened, but apparently some network executive said that people who skip the commercials are stealing the television shows. This is so ludicrous.

BOB GARFIELD: Yeah, no that was Jamie Kelner [sp?]; he is the big boss at Turner Broadcasting.

MICHAEL FREMER: He - that's hysterical.

BOB GARFIELD: Is it hysterical? Why is he wrong?

MICHAEL FREMER:Well calling the people who might want to skip commercials thieves doesn't help the situation, because it's just - it's an incendiary-- statement. But people have been recording shows, you know, since the VCR came out, which don't forget the film industry wanted to stop because they were afraid that their movies would be stolen and they'd lose a lot of money. What ended up, what ended up happening was they made more money on, on the pre-recorded VCRs and DVDs than they ever dreamed they could make on what was in the movie theater! Now they -- see the problem is they couldn't imagine -- because the lawyers were driving this - they couldn't imagine how they might change their business model to make more money. So they fought it. And luckily for them, they lost! Why are they screaming and yelling hysterically about it now? For one very simple reason: it's now digital, and there --what has happened is the industry is of a mind -- and this goes to the Fritz Hollings' [sp?] bill that they're trying to pass -- that because it is now digital, it's something that changes the whole working model of the thing so, so when you skip over the commercial, it's more onerous. And I don't see why there is a distinction. Basically they're using digital as a red herring to try to gain control of what they're trying to let us watch and listen to.

BOB GARFIELD: Walt Disney Company which owns ABC--

MICHAEL FREMER: Which tr-- was the prime mover in trying to stop VCR, don't forget--

BOB GARFIELD:-- they want to go to the manufacturers of the replay device and go into consumer data and find out who among the customers have been avoiding commercials and then charge a fee for the lost opportunity to Disney of those eyeballs that their advertising clients have paid for.

MICHAEL FREMER: The outrageousness of that on its face should be quite obvious. It's none of their business what I'm looking at and what I'm watching.

BOB GARFIELD:Last week there was a controversy Britain because the BBC has cunningly figured out a way to find the other edge of the double-edged sword that is these TiVo devices. What they did was send programming that the individual TiVo owners hadn't pre-selected, and it sat there for one week -- people couldn't erase it. Has that happened in the United States as far as you know?

MICHAEL FREMER: I don't know. I, I haven't heard about it, but I would say if they want to do something like that, and they said to you, you know, cause TiVo is - you, you pay a fee per month -- if they would say we'll cut your fee in half or we'll cut your fee by 2 dollars if you're willing to have us dump s-- a couple of shows on your, on your hard drive - you know, an hour's worth a week or 2 hours' worth a week -I think people might say, okay, fine. You know. What do you want to send me? I - and there's all kinds of changes that could be made. That's the whole brilliance of, of what's happening with, with digitization is that everything changes! You can't stop the change; you can simply adjust to it.

BOB GARFIELD: Well Michael, thank you very much.

MICHAEL FREMER: My pleasure.

BOB GARFIELD: Michael Fremer is a senior contributing writer for Stereophile magazine.