Arbitron Loses Nielsen Patent Challenge, Ruling Raises Questions About Partnership
A European judge Wednesday ruled in favor of Nielsen in a patent challenge brought by Arbitron, which claimed that Nielsen's A/P metering system--the core technology behind Nielsen's new system for measuring digital television--violated preexisting patents owned by Arbitron and possibly others.
It was unclear at presstime what the legal merits of the ruling are, who else might have been involved in the challenge, or even what specific patent Arbitron claims Nielsen compromised--but the fact that there are any legal disputes over metering technology between the two companies speaks volumes about the nature of their relationship as they consider not one, but two major joint ventures involving a new metering technology: Arbitron's portable people meter.
Nielsen spokesman Jack Loftus confirmed that a judge for The European Patent Trade Organization in Munich Wednesday ruled in favor of Nielsen. He said it was unclear whether the claim was related to Arbitron's PPM system, but he said it challenged the technology behind the A/P meter.
A/P, which stands for active/passive metering, utilizes a combination of active and passive audio and video codes, which Nielsen claims make it a foolproof system for measuring digital TV signals. Nielsen began rolling the system out earlier this year as a means of measuring digital television, including digital video recorders, and video-on-demand. To date, Nielsen has installed the new meters in 1,750 households, and in ten days it will begin reporting ratings for DVR households via the new system.
Arbitron spokesman Thomas Mocarsky said he was unaware of the patent challenge and could "neither confirm nor deny" the ruling.
It's also unclear why the patent challenge was made in Europe, and not in the United States, where Nielsen first began deploying the technology--but it would seem the ruling frees Nielsen to either launch the new system, or license its technology in Europe, where Arbitron has moved aggressively to establish its PPM technology as that continent's audience metering standard. Nielsen has a major joint venture with WPP Group's AGB Research unit in Europe.
But the real story may be what all the legal tussling says about the nature of the relationship between Arbitron and Nielsen as they move forward on the joint field test for one major research initiative--parent VNU's and Arbitron's Project Apollo system--and as Nielsen nears a decision about forming a joint TV/radio ratings service with Arbitron, both of which feature Arbitron's PPM technology at its core.
Rivalries between Nielsen and Arbitron are not new. Until the 1980s, Arbitron competed with Nielsen in local TV ratings measurement, but ultimately pulled out of that business to concentrate exclusively on radio. During the late 1980s, both Arbitron and Nielsen's parent company at the time, fielded major single-source measurement initiatives that would have competed with each other--but both failed. More recently, Arbitron and Nielsen both competed on the development of outdoor audience measurement systems featuring GPS technology. Arbitron has since abandoned that business, but Nielsen recently announced the launch of a new outdoor ratings service.
While Arbitron and VNU have been working closely on jointly selling Project Apollo to marketers and media outlets, Arbitron and Nielsen have emitted a number of conflicting signals over the development of a PPM ratings joint venture. Nielsen recently announced a push to complete its due diligence on a PPM ratings system, and said it would make a decision in the first quarter of 2006.
Meanwhile, Arbitron is facing new potential competition for its so-called "Radio First" PPM rollout strategy--a plan to introduce PPM as the radio industry's ratings currency, should Nielsen opt out of a joint venture.
On Thursday, radio giant Clear Channel Communications announced that seven finalists have been invited to pitch a new, "state-of-the-art" radio ratings system, including: Arbitron, Integrated Media Management, MediaAudit/Ipsos, Mediamark Research Inc., Paladin Adsolutions, RadioStat and Simmons Market Research Bureau. The seven finalists were drawn from a list of 34 companies that responded to a request for proposal issued by Clear Channel in June.
Clear Channel also announced an "evaluation team" comprised of major advertisers, agencies, and fellow broadcasters, including executives from Mediaedge:cia, Initiative Media, MediaCom, MPG and Ford Motor Co.
"Each of the final proposals selected share common characteristics," stated Jess Hanson, senior vice president of research for Clear Channel Radio, citing their ability to measure "real life" radio listening not capable with Arbitron's current paper diary system. Hanson also noted that each of the finalists "share the capability for multi-media measurement."
Clear Channel set a March 3, 2006 target date for the selection of a "final measurement method," with a test planned for the spring and "implementation" later in the year.
Arbitron's "Radio-First" rollout schedule would begin introducing PPMs as the method for radio ratings beginning in April 2006.