TiVo inventor on changing TV
OUT-LAW Radio, 10/05/2007
We talk to Mike Ramsay, the man who invented the TiVo, the
machine that redefined television and put the wind up the
entertainment industry.
A text transcription follows.
This transcript is for anyone with a hearing impairment or who
for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew
Magee.
Hello and welcome to OUT-LAW Radio, the weekly podcast that
keeps you up-to-date on all the twists and turns in the world of
technology law. Every week we bring you the latest news and
in-depth features that help you to make sense of the ever-changing
laws that govern technology today.
My name is Matthew Magee, and this week we have an in-depth
interview with the British man who changed television forever: Mike
Ramsay, inventor of the TiVo television recorder.
But first, the news:
- Thousands of Marks and Spencer worker identities under threat;
and
- Government may ban premium rate TV phone ins
Thousands of Marks and Spencer workers could be targets for
identity theft after a company laptop theft exposed their personal
information. It is thought that 26,000 employees are affected.
The laptop contained employee’s salaries, dates of birth,
addresses and national insurance numbers as well as their telephone
numbers. The computer was in the care of a printing company which
was to write to the employees on the machine regarding their
pensions. It was then stolen in a theft that was described as
opportunistic rather than planned.
Marks and Spencer has said that if the data falls into the hands
of people adept at committing identity fraud, then workers are at
risk of being impersonated. It told the BBC that it was offering
employees free credit checks.
The Government will ban television premium rate phone-ins if the
industry cannot better regulate itself, broadcasting minister Shaun
Woodward has warned.
Woodward said that the Government takes the spate of recent
mistakes and breaches of regulators’ codes “very seriously”, and
that it would ban the use of the premium rate numbers for TV
quizzes if the industry and regulators could not effect change.
Quizzes and premium rate phone-ins are regulated by overall
media regulator Ofcom and premium phone line regulator ICSTIS.
Recent premium rate scandals have involved votes for programmes
going uncounted, potential participants being encouraged to call
expensive phone lines when finalists had been chosen and they had
not chance of winning, and a child visiting a television studio
pretending to be a winning telephone contestant.
That was this week's OUT-LAW news.
When Sex and the City’s Miranda sighed exasperatedly that she
wanted to dump Stevo for her TiVo, the little box in the corner
grabbed the world’s attention. In a show that for many captured the
late '90s zeitgeist, it was an extraordinary cameo for something
which, after all, was just a consumer durable.
But for its millions of devotees in the US TiVo has never really
been just another gadget. The pioneer of hard disk TV recording, it
introduced such now-familiar concepts as live TV pausing, series
links and predictions of a viewer’s preferences.
It also scared the living daylights out of the media industry,
prompting executives to refer to the company as the devil
incarnate. Because of its ability to skip adverts, it threatened
the very livelihood of US network television. TiVo executives were
thrown out of TV networks’ offices, and the company was forced to
rely on Supreme Court judgments just to prove that it wasn’t
breaking the law.
The inventor of this extraordinary, controversial machine is a
Scot who moved to Silicon Valley 30 years ago and never looked
back. Mike Ramsay told me just how hairy it got when the company
had the massed ranks of multinational entertainment companies lined
up against it.
Mike Ramsay: I won’t name names here but one of the very large,
top three media companies came to us and said that we should agree
to disagree on the legalities of this. They felt that it was unfair
that we were making money on their content and of course we felt
that it was for fair use and they said look what we’ll do is we’ll
offer you a licence to our content and we’ll make that licence
royalty-free and as long as you acknowledge that you need the
licence to use the content, and we surmised that the royalty-free
thing would be temporary, right? And so we said no. And so I think
that those kind of tricks were the dangerous ones.
In 1999 the company released the first TiVo box and the
reception from its users was ecstatic. In fact, the Sex and the
City episode which dragged the name TiVo firmly into the mainstream
touched on a crucial point: to those who owned one, TiVo was a
cult. Ramsay soon learned to capitalise.
Mike Ramsay: The one thing that was going for us was that
anybody who had TiVo loved it. It became a very emotional thing, it
was like 'it changed my life'. And that was as relevant to somebody
down the street as it was to the cast of Sex and the City or Ellen
Degeneres or Oprah Winfrey or whoever it was that had TiVo, they
became emotionally involved in it so it was natural that they would
talk about it on their shows or the scriptwriters had TiVo and so
they would end up writing it into the show. We worked hard at
building relationships with the media industry, we’d sponsor
charity events, we’d get involved in causes that high profile
people cared about and it was amazing how the little things really
made a huge difference and at the end of the day it built the TiVo
brand.
What was very striking was how simple an idea the TiVo was and
how few competitors emerged as soon as it was launched. I asked
Ramsay why there weren’t 200 me-too products a year after it
launched.
Mike Ramsay: Because it was really hard to do. This was one
of the most challenging technical projects I’d ever been involved
in. They ask why, because you know we do get asked “how hard can it
be” right, you know, it’s a hard disc. As you layer down these
design problems you realise that this had never been done before
and if anyone had tried it before it probably would have cost
$10,000 or $100,000 to do it and we were building something that
was going to cost $100.
The television industry threw everything it had at the company,
with lawyers working around the clock to prove that TiVo was
illegally profiting from content the network had paid for.
Mike Ramsay: There was all sorts of arguments about your
right to watch television in the United States is a right that is
only granted if you watch the commercials, right, and it’s only
granted in one place, right, so you can watch television but you’ve
got to be in one place and you’ve got to watch the commercials. So
it was these kind of arguments that were floating around and we
were seeking legal opinion on that and they were as well. But at
the end of the day it was the Sony Betamax ruling that was a
Supreme Court ruling that came out of a lawsuit that Sony was
involved in when they first came out with the VCR and they were
sued by the networks because they were copying material and the
results of that ruling gave people freedom to record for personal
use. We actually hired an executive out of the media industry to
join us with the prime purpose of establishing relationships with
the networks. So we did that and they’d throw us out their office
and they’d be very upset and we’d see these press articles on “Oh,
TiVo’s going to destroy the TV business, in fact it’s going to
destroy the US economy” and we’re evil and all that stuff. It
became very clear, I think, as they sought legal opinion that in
fact it was recording for personal use, it was within that Supreme
Court ruling. Very hard to argue against that. Yes, we’re making
money but it was providing a service, that had nothing to do with
the content itself it was how it was arranged. And so I think they
became more at ease with it and over time they realised that this
was not a TiVo thing, we created a DVR that had a life of its own
and it was going to exist independent of us and so over time the
climate changed, but initially it was kind of interesting.
While consumers might see TiVo as the box in the corner of the
living room, Ramsay has always said that his company isn’t in the
machine business, and that it will have fully matured when its
become entirely a service.
Mike Ramsay: From the beginning of the company we decided
that the business model for the company is really a service
business model and that selling hardware was not our game, so we
charge a monthly fee for the service. And yes, you buy the
hardware, and yes we get revenues from the hardware but in terms of
how the financial community looks at the company, they don’t count
that and we don’t count it. And so we realised that we can’t just
go around custom building hardware, it’s too expensive to do that.
So we did a number of deals, the first one we did was Direct TV who
are the largest satellite service provider in the US and they
incorporated TiVo into a Direct TV receiver. We did a couple of
other things, we initiated a licensing business and we actually
sold technology licences to consumer electronic companies,
typically Japanese companies. We did a deal with Sony, with
Pioneer, Toshiba, and a number of others. And I’d say that the
trend very much is towards that integration of the hardware so that
our business model becomes much more of a pure service business
model.
Ramsay was in the UK to talk to the Entrepreneurship Club at
Edinburgh University, where he got his degree. After a career at
Hewlett Packard and Silicon Graphics he founded his company with $3
million in venture capital investment he received before he even
had a business idea, this, needless to say, was back in the heady
dotcom days of the first internet boom. He hoped to impart some
Silicon Valley wisdom to the UK, where he says that there’s the
right talent, but not the right money.
Mike Ramsay: There’s no question in my mind that the talent
is here. The people, the entrepreneurs are here and they’re every
bit as passionate and smart and savvy as any of them in Silicon
Valley. I think increasingly we’re seeing technology being applied
in places where it doesn’t matter where you are, right? You could
take six people in Orkney and they could invent the world, right?
So you’ve got talent, you’ve got location independence, I think
that the issue is money. The sources of funding for young
entrepreneurs is not nearly as fluid here as it is back there. As a
result I think what happens is that companies that could be high
potential are not able to raise the funds that they want and they
re-set their expectations to something that fits with the funds
that they can get, and if those expectations are below critical
mass the company won’t break out and that’s a shame.
Ramsay is now working with what he calls “very raw” startups in
Silicon Valley, saying he relishes the challenge of exciting,
disruptive technology dreamed up by young twenty-somethings in the
Valley hothouse. Unlike the likes of Napster, Kazaa or others
accused of industry-wrecking copyright violations, Ramsay can be
justly proud of one thing whatever happens next: He took on the
entertainment industry, and won.
That’s all we have time for this week, thanks for listening.
Why not get in touch with OIUT-LAW Radio? Do you know
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Make sure you tune in next week; for now, goodbye.
OUT-LAW Radio was produced and presented by Matthew
Magee for international law firm, Pinsent Masons.
