The last few days have seen a flurry of TiVo- and DVR-related stories and statistics, including the launch of special commercials on TiVo, but the most interesting article concerned the impact of those TiVo users not watching commercials. The New York Times piece, entitled "Someone has to pay for TV--but who?," begins by mentioning an earlier patent application by Philips for a TV system that would force watchers to pay for the privilege of skipping ads but ends on an even more ominous note for DVR users. The author brings up the point that the basic right to record copyrighted TV programming, as upheld by the 1984 "fair use" decision in Sony Corporation v. Universal City Studios over Sony's Betamax VCR, is the trickiest legal issue posed by widespread DVR adoption. After reading it, I can't help but wonder whether fair use as described in that decision, which was reached before anyone had any idea that recording TV (and skipping ads) would be so easy and so popular, is in jeopardy today.
It's no secret that DVR owners skip ads. The Times quotes a TiVo executive who says 70 percent of TiVo owners fast-forward through commercials. A study by ad buyer Magna Global cited in TV Week puts the figure at 75 percent; a recent Nielsen release implied 99 percent during certain prime-time favorites; and a more recent study by Jupiter Research says 53 percent of DVR users skip ads and mentions that could amount to $8 billion in lost ad revenue.
Whatever the numbers, it seems certain that DVRs are bad news for advertisers who hope to reach eyeballs. And when entrenched business models such as our glorious "commercials pay for free TV" system start to break down, the companies who lose money usually fight back with lobbying that can turn into legislation. What do you think?