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Networks look to rein in RedLasso - May 21, 2008

The dispute between the TV networks and news clip service RedLasso appears headed for court. On Tuesday, lawyers for NBC, CBS and Fox sent a cease and desist letter to the VC-backed start up giving it until May 29 to stop any and all "acts of reproducing, distributing, and publicly performing and/or displaying the Content Owners' copyrighted content." Or else. Assuming Redlasso declines to comply (if it were inclined to stop it already would have) the next step is surely a lawsuit.

Though still in beta, RedLasso has become the go-to source of news clips for political bloggers, including Huffington Post and Perez Hilton. Redlasso records news shows and makes them available on its web site usually within an hour of their original broadcast. It then lets users create their own short clips using a search function and time codes and embed the clips in their blogs.

In a likely preview of the coming litigation, RedLasso COO Al McGowan claimed in comments to TechCrunch yesterday that the short clips the company generates fall within the fair use exemption in copyright law and that RedLasso is willing to share revenue with its "content partners." The networks call it unlicensed syndication of their content (although they also shrewdly include charges of trademark infringement and unfair competition, which, of course, have no fair use exemptions).

So here we go again. Another likely lawsuit over a new, unlicensed re-use of copyrighted content and the limits of fair use. As with similar cases, however, the real conflict between the networks and RedLasso is not over exclusive rights. It's about how and where value is created on the web and who is best positioned to capture that value. By insisting on framing it as an issue of exclusive rights--however clear-cut the law--the content owners all but assure themselves of gaining little even if they win the case.

As Media Wonk has argued before, the web rewards enablers more so than publishers. To thrive on the web, the networks need to think more like the former than the latter.

Historically, studios and networks invested money to create a piece of content. On closed networks like broadcast or cable TV, capturing that value was a fairly straight forward matter of making the content available and selling advertising around it.

But the web is not a closed network. Simply making content available does not create much value because exclusivity is effectively impossible. Instead, web users create their own value, by repurposing content for their own ends. And the operators best positioned to capture that value are generally those that provide the tools that enable users to create it.

The exclusive rights granted to copyright owners give them hand in negotiating a share of the value created. But only if they play it. Simply shutting down one particular tool, or attempting to define all acceptable use cases as part of a traditional licensing deal, ult♠imately only limits the amount of value that users can create and that content owners can capture. The goal ought to be to maximize the total value created by enabling users to create it, and then structuring a deal to capture an acceptable share it.

The exclusive rights of copyright owners do not extend to an exclusive claim to all the potential value created by the use of their work. And for copyright owners' own good, it shouldn't.


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