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 of technology law story? We’d love to hear from you on radio@out-law.com.
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.