Sunday, 4 September 2011

FOX first major US network to charge for catch up content online

NEW YORK - Fox is to become the first major broadcast network in the US to put its content behind a paywall. Fox Networks and Fox Broadcasting – owned by News Corp – have announced that from early September  new episodes of Fox shows – such as the hugely popular ‘Glee’ and ‘Family Guy’ – can no longer be watched for free on the broadcaster’s website. 

Viewers will have to wait eight days after the show has been aired to continue to watch the content for free or they should subscribe to a participating cable or satellite service if they wish to see shows the day after they have been aired. ‘It will be interesting to see how consumers in the US respond to Fox's proposal and whether it really drives subscriptions to the partner pay-TV services”, says Helen Anderson, a Senior Associate at SNR Denton in London, in a response to Fox’ announcement. “The move may end up fuelling the illegal piracy that the media companies are so keen to prevent.”

Martin Kratz, a Calgary-based Partner at Benett Jones, thinks “it remains to be seen if the 8 day delay is sufficient frustration for the internet savvy viewer to encourage them to seek out the immediate pirate version”. He thinks Fox made a brave decision because “once customers get used to free content on the internet how can you get them comfortable with paying for it?” Kratz believes that in this case Fox has sought a “compromise position” by making the programs available for free after 8 days, and “for those viewers who absolutely cannot wait, the program would be available immediately, on a subscription based service”.

Fox’ move is closely watched by other major broadcasters in the US, such as ABC, NBC and CBS. Erecting a paywall is considered to create many new commercial opportunities, but is also seen as possibly undermining the companies’ traditional advertising and subscription revenues. Fox’ decision “reflects a move away from pure advertising towards a hybrid advertising/subscription revenue model”, explains James Johnston, Partner at Davis & Gilbert LLP in New York City. “Fox complained the pure ad model was not generating sufficient revenue. The advertising/subscription hybrid one creates two potential revenue streams”.

Kratz, believes Fox’ “move may also be seen as a way to drive traffic to the television show itself as the free internet versions can affect the ratings which affect rates for advertising”.  

Although other US broadcasters are expected to follow if the Fox format turns out to be successful, Anderson does not think “it is likely [the Fox model will] translate to the UK catch up services” because of a difference in approach. “Fox sees the commercial opportunity to be the ‘first-view’ window immediately after broadcast and then allow longer free access, the UK sees the commercial opportunity to be more a free taster window followed by pay services.”

Copyrights apply at all times. Published previously in E-Commerce Law & Policy, August issue, CPP, copyrights apply at all times, London 2011. Picture: