It's fair to say that people always had ways to avoid commercials on TV. Long before the days of the VCR, people who didn't want to watch the ads would stretch their legs, get a snack, or change channels during the commercials. Once the VCR came around, people could fast-forward through the breaks.
Of course, just because people could skip the ads doesn't mean they did; if nothing else, inertia probably kept at least some people from fast-forwarding through the ads.
Earlier this month, however, Dish released a new feature that can overcome the inertia. The company's new AutoHop allows people to record shows and play them back without any ads. AutoHop itself is an add-on to another Dish feature, PrimeTime Anytime, which allows users to record the entire primetime lineup of all of the major networks.
The TV networks aren't amused, to say the least. This week, CBS, NBC and Fox sued Dish for breach of contract and copyright infringement. "The U.S. broadcast networks cannot provide the news, sports and entertainment programming they have historically created and offered if the revenue-generating ads are systematically blotted out on an unauthorized basis by distributors like Dish," NBC says in its complaint.
For its part, Dish has filed a motion for declaratory judgment legitimizing its technology. "Dish is simply making it easier for viewers to refuse to be a captive audience and to exercise the well-accepted choice to skip a commercial," the company argues.
The lawsuits present issues that don't lend themselves to easy answers. On one hand, the Supreme Court ruled almost 30 years ago that consumers have a fair use right to record shows for purposes of time-shifting. That decision seems to imply that consumers also have the right to fast-forward through the programs they have recorded -- though that precise question doesn't appear to have been resolved by the courts.
But clearly Dish is correct when it says that viewers have never had to watch the ads as a condition of receiving the programs.
Nonetheless, at a certain point the process of recording and ad-skipping might become so frictionless that courts will rethink whether certain types of DVRs are legal. After all, the networks are correct also when they say that their business model requires advertising.
Copyright expert James Grimmelmann, a professor at New York Law School, tells MediaPost that the networks can make the argument that this technology allows users to go beyond time-shifting. At first glance, it's not clear who will win this battle in court. A prior lawsuit against ReplayTV, which also offered ad-skipping technology, fizzled out after the company filed for bankruptcy in 2003.
AutoHop isn't the only challenge facing the TV networks at the moment. They're also embroiled in litigation against Barry Diller's Aereo, which enables people to watch TV shows on iPads and other devices. If the TV networks lose all of their cases against new, disruptive technology, they might not be able to remain viable businesses, Grimmelmann says.
At the same time, he points out, a courtroom victory could prove costly for Dish. That's because Dish distributes TV programs and could face higher licensing fees if it wins this litigation. Of course, the same wouldn't apply to stand-alone device manufacturers.