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Optus should know there’s no such thing as a free lunch … or sporting telecast

Telecommunications company Optus lost its bid to gag AFL boss, Andrew Demetriou from speaking out against its “TV Now” service, which allows customers to watch AFL or NRL broadcasts near live. Demetriou…

Optus may be offering a great service to customers, but is it right? AAP Image/Dave Hunt

Telecommunications company Optus lost its bid to gag AFL boss, Andrew Demetriou from speaking out against its “TV Now” service, which allows customers to watch AFL or NRL broadcasts near live. Demetriou described it as “akin to stealing” as Optus is not paying for the content.

The dispute between Demetriou and Optus flared with a Federal Court judgement that said the telco was not in breach of copyright laws with its TV Now operation.

After the Federal Court ruling, Optus took out full page newspaper advertisements declaring they “didn’t think it was right, or indeed Australian” to be prevented from offering the TV Now application to its customers.

For now the Federal Court says the Optus service is legal; but is providing content for free morally “right” or “Australian”? Many would say it is as Australian as coming back from a holiday in Bali with a suitcase of cheap DVDs.

In fact, most Australians have now come to expect, even demand, that news, entertainment or computer software be free. But we seem to forget that no content is entirely free, that someone always pays.

Great expectations

These issues are nothing new, but many companies are struggling to find a way to deal with it. Major newspapers are now belatedly trying to convince their readership that online content has to be paid for. Since 1995, Foxtel has been selling subscriptions for television, a service many Australians (supported in part by legislation) feel they should get for free.

Companies like Foxtel may find it hard to compete. Flickr/frigginawesomeimontv

Former Foxtel CEO, Kim Williams, was promoted to become chief executive officer at News Limited last November, not because he knows how to operate a printing press, but because he understands how to run a subscription-based media business. This is most recently demonstrated by the latest changes in access to the Herald Sun website.

Big deals

Unlike the model of compelling content attracting advertising, the key to a subscription business is the continuing engagement of its customers. The content that does that best is live (or near live) sport. As Rupert Murdoch is famously reported to have said, “if content is king, then sport is emperor.”

That is why the Federal Court ruling was so significant for Optus. By giving its customers access to sporting rights, particularly the major football codes, engagement and satisfaction go up, while churn - the number of customers who sign up and then leave – drops.

Foxtel is 50% owned by Telstra so it knows only too well what the rights to popular sports means for customer retention. That is why it paid $153m to the AFL for what it thought was the exclusive mobile and digital rights.

This is not just a stoush between two telephony heavyweights where Optus was clever enough to give Telstra a black eye. The AFL is shouting the loudest because it is the sporting organisation that has the most to lose. Telstra has hardly said a word. It can afford to honour its deal with the league and take on Optus at its own game. It’s a game society should not allow to happen.

Nothing’s free

During this year’s Australian Open tennis tournament, there were numerous reminders during the Channel 7 coverage, that Optus customers could watch the tennis on their mobile phone. Optus paid for that right. Telstra could, if they invent their own version of TV Now, offer its customers tennis coverage next year without paying a cent for the rights – if the Federal Court judgement stands. The AFL and NRL are fighting the judgement and have been given leave to appeal to the full bench of the Court.

Foxtel and the Nine Network spent millions of dollars buying the rights to this year’s London Olympic Games. They will spend several million more, sending teams of production staff to London.

What is to stop Channel 7, through its Seven West affiliate, Vivid Wireless, from offering its customers access to the Olympic Games? Apart from the cost of the infrastructure and customer service, it will cost Seven next to nothing.

Flow on effects

Sports fans may see less community-based programs as an effect of the Federal Court ruling. Flickr/thomasrdotorg

If the revenue sporting organisations, like the AFL, receive from exploiting media rights is slashed, there will be a reduction in the number of community-based programs those sports offer. The social capital of sport will be irrevocably eroded.

Once again, whenever content is offered for free, someone else pays.

Journalists long ago made the connection between the ability of their employer to make money from what they write and their own job security. If tomorrow there is an “app” that allows readers to leap over the newspaper pay-wall, is society prepared to accept that journalism will, in future, have to be publicly funded? Governments may need to fund not only the ABC and SBS, but a National Journalism Service too.

The morality of stealing from the rich

The pace of technological change has opened up a huge lead on the law. Technology is a lap ahead. Copyright legislation may be updated to bridge the gap, but the real solution lies within society.

The public can decide what tomorrow looks like rather than leaving it up to the corporate giants. It might be Australian to beat the system and get something for free, but there needs to be a financial value placed on content. That is what is right.

Join the conversation

10 Comments sorted by

  1. Paul Atkinson

    Social Worker

    Journalism wouldn't be the first industry to suffer at the hands of technological development but it would be a first if moral pleading could salvage it. Copyright laws and the millions spent on anti-piracy software may slow the demise but it is probably time to start having a serious discussion about pubic funding. I have always been happy with the low key way the ABC covers sporting events and commercial news journalism hardly covers itself in glory.

    As for the AFL's community programs (the only apparent 'flow on effects') are you serious? I am a big fan of the game but it is a bit of a stretch to argue that their glossy corporate social responsibility gigs make a meaningful difference to the community sector.

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  2. Daniel Heath

    logged in via Twitter

    This article sidesteps the main issue of the case.

    It isn't a question of free vs non free. The decision is whether you may restrict customers from format shifting content which they already have access to.

    In this case, the Optus customers are watching something which is on free-to-air TV via their mobile phones. The TV companies paid the AFL for those rights.

    Who is the AFL to tell me what type of device I can watch free-to-air TV on?

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  3. Rudi Schoebel

    logged in via Facebook

    The AFL has sold the free-to-air rights twice and in this case Telstra has bought a dud. I agree with Daniel in that Optus is providing a service, which is already freely available, in a format that many people may find more convenient. The free-to-air TV stations bought these rights which were paid for by their advertisers whose advertisements also appear in the Optus service.

    Nothing is stopping me from emulating Optus' service by recording free-to-air on my PVR and then immediately streaming it to my website for me to watch on my smartphone - claiming the free-to-air TV and Internet rights are separate things is ridiculous, and any legislation that attempts to do so will be irrelevant in a year or two anyway.

    It all reminds me of the days when we were told recording to our VCR was illegal...

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  4. Teflon Id

    logged in via Twitter

    Even should there be a reduction in the number of community-based programs such sports offer as a result of less sponsorship dollars, I dare suggest that people are still capable of spontaneously organising such sporting activities amongst themselves, such has always been the case in spite of the rampant corporatisation and monetisation of sporting activity. For that same reason, I would suggest you are overstating the notion of the 'social capital' of sport being 'irrevocably eroded'. What was the value of that social capital in the early 70s when sport was mostly an amateur pursuit ? What is its value now in the age of professional athletes ? Regardless, there are plenty of other forms of social capital that people are always empowered to build independent of a corporatist framework.

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    1. Joshua McDonnell

      logged in via LinkedIn

      In reply to Teflon Id

      I didn't read this comment until I had already posted mine. I'm glad someone else sees this perspective. You are spot on, and it is a fact of life that some people overlook. Great comment!

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  5. David Healy

    Retired

    Rudi's nailed it. Trying to legislate out of existence something any reasonably proficient tech user can do anyway has zero future.

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  6. Mark Summerfield

    logged in via Twitter

    Technical issues aside, the main reason why this article is completely wrong is because it falsely equates use of the TV Now service with immoral 'stealing from the rich'.

    The content streamed by TV Now is free-to-air TV, and contains the same advertisements as the original broadcast. When used in the manner to which the AFL/NRL/Telstra objected, i.e. in near-live time, there is not even any way to skip or accelerate through the ads.

    So of course we, as a society, are paying for this content…

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  7. Gregory Hill

    logged in via LinkedIn

    The author of the article keep using this word "free", but the content is paid for by consumers watching advertising. Unless I've grossly misunderstood Optus' TV Now product, they are not editing out the ads. It's still "free-to-air" (advertising-supported) content, displayed to the consumers as if they were at home on the couch watching a recording in their living room.

    Are the advertisers unhappy that people are watching their ads on their iPads? I'd suggest not - an ad impression is better…

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  8. Joshua McDonnell

    logged in via LinkedIn

    "If the revenue sporting organisations, like the AFL, receive from exploiting media rights is slashed, there will be a reduction in the number of community-based programs those sports offer. The social capital of sport will be irrevocably eroded."

    Come on. In recent years the television rights to AFL games has risen beyond comprehension - to the extent where one station alone cannot afford it. How much of this goes to the community? It goes to setting up new teams in NRL heartlands (for commercial…

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  9. Angus M-a-c-i-n-n-is

    logged in via Twitter

    I thought The Conversation was meant to be the antidote to vested interest pieces like this, not the publisher of them.

    It is ridculous to suggest that "the social capital of sport will be irrevocably eroded" becuase a means of extracting funds out of the pockets of punters (which appeared, effectively, out of thin air) may disappear in much the same manner in which it appeared. Before there were any mobile and digital rights to sell, there was still, surprisingly enough, professional sport (and grassroots sport) in this country.

    Welcome to False-Premise-Ville; population, Lowden, D.

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