Networks warn about a iPhone app (revenues at stake)

Published Jan. 11, 2010
By Steve Behrens

Is public radio having one of those Betamax moments when technology slaloms and hurdles right over rights deals and overturns media business models?

Not if the public radio networks can help it.

NPR, Public Radio International and American Public Media jointly wrote to stations Nov. 2, warning them to “exercise caution” and examine contracts offered by tech services vendors to check whether they’d lead to violations of the stations’ rights deals with the networks.

The memo (text) was signed by Kinsey Wilson, digital media chief at NPR; Cory Zanin, executive v.p. of Public Radio International; and Jon McTaggart, chief operating officer of American Public Media.

Their memo isn’t very specific. The main concern it raises seems to be: Who gets to sell ads on websites that offer their programs on demand?

NPR’s Wilson told Current last week that the network will elaborate on the memo as soon as it can. “We are in the midst of a very thorough review of our own licensing practices and third-party rights considerations,” he said, and will do the utmost to clarify its position. APM referred a reporter’s call to Wilson at NPR.

The new technology in question would let listeners use network programs in ways “beyond those contemplated by” rights deals, the memo says.

Present rights deals permit stations to put network shows on the stations’ live web audio streams, the memo says. “But our current licenses generally do not cover time-shifted, on-demand digital content.” Nor do rights contracts with some independent producers, the memo adds.

Compared with streaming, on-demand digital audio is a premium product that can be paused, rewound and replayed. It’s valued by users because they can easily get exactly the content they want without waiting through a program, and it’s prized by web publishers as a place to run ads.

Reading the memo, the leaders of at least one technology company believed the warning was about their latest product. Sky Blue Technologies Inc., of Lafayette, Ind., makes the Listener Interactive Public Radio App that’s designed to let iPhone users pause, rewind and search the company’s database of the broadcast day, find content in archives of program streams and podcasts and fast-forward to exactly what they want.

Chris Baker, v.p. of Sky Blue, says five public radio stations were ready to sign up for custom iPhone apps from his company when the NPR-PRI-APM warning came out, and all dropped out.

The company is better known for its Radio Bookmark product, a tiny station-customized memory-chip doodad with a button that listeners can squeeze when they want to mark a radio segment they want to return to. If they plug the bookmark into their computer at home, it taps into Blue Sky’s database of radio schedules and takes them to the web page where the audio file is archived.

That database is now the foundation for Blue Sky’s iPhone app.

Baker sats NPR isn’t pleased to see an
iPhone app with search and other features that is customized to put the sponsoring station upfront. It greets users with that station’s whole schedule of programs, including national shows, while an NPR app initially presents users with an NPR-dominated menu.

“They’ve made sure people can get to NPR content,” complains Baker, “but when stations want to do the same thing, they write an e-mail that says, ‘Careful, careful, careful!”

The networks’ memo gets more precise about what an iPhone app might facilitate that “would likely not be covered by our existing agreement”: It could give users “time-shifted on-demand access to Morning Edition, Marketplace or The World under a station’s branding—creating an opportunity for the station to monetize that content directly”—probably by selling ads.

“The more you think about this, the more it starts looking like Rupert Murdoch v. Google,” observes fundraising consultant John Sutton, who’s working with Sky Blue. “Everybody is trying to protect a piece of pie they don’t know exists.”

An all-out rights war of poaching and retribution won’t erupt because the stations and networks are family; they have to get along. If the stations want to sell ads adjacent to on-demand audio, the network memo hints, they’ll be happy to negotiate new program fees with the inlaws.

The networks memo

To: General Managers and Legal Counsel
From: Kinsey Wilson, Cory Zanin and Jon McTaggart
Date: Nov. 2, 2009
Re: Digital Rights

In the past year, an increasing number of third-party service and technology providers have begun approaching member stations with products designed to extend the utility, effectiveness and reach of their digital service offerings.

Some of these services have the potential to provide real benefits to stations. And each of us wants to ensure that our individual licensing arrangements keep pace with the latest technological innovations.

We urge you to examine such arrangements closely before entering into any contracts (most of which will require you to warrant that you have full rights to the content enabled by these services and indemnify the service provider against any third party cause of action).

In some cases, these services may enable uses beyond those contemplated by the license agreements of NPR, APM and/or PRI (as well as our contracts with independent third-party producers whose content may be carried in our programs).

Broadly speaking, NPR, APM and PRI have separately granted stations the right to live-stream their over-the-air broadcast feed. But our current licenses generally do not cover time-shifted, on-demand digital content. There are also special requirements surrounding digital music rights.

So, for example, a commercial iPhone app or desktop player that provides time-shifted on-demand access to Morning Edition, Marketplace or The World under a station’s branding – creating an opportunity for the station to monetize that content directly – would likely not be covered by our existing agreements, which have been crafted to ensure that we are within our rights with respect to the use of third-party content.

As such technologies gain traction in the marketplace, each of us recognizes that we need to examine our license agreements with stations so that stations might take advantage of those opportunities. And we’re separately examining ways we can clarify the situation for stations in the coming months.

In the meantime, though, we urge you to exercise caution as you review proposed services and technologies from third-party providers. And if you have any questions about specific content, please feel free to contact the appropriate network.

Sincerely,

Kinsey Wilson, NPR
Cory Zanin, PRI
Jon McTaggart, APM