Last Friday, the Los Angeles Times published a review that called William Patry's new book, Moral Panics and the Copyright Wars, "a choppy and directionless narrative, sometimes illuminating but too often scattershot, unoriginal and strident. Unsupported claims abound."

Since Mr. Patry's own blog, Moral Panics and the Copyright Wars, has refused to acknowledge or reply to this review, (thus aping its quivering-lipped silence toward certain other critiques), I will note some of the review's high points--especially since it scooped me on a point that I was saving.

My colleagues Berin Szoka and Adam Thierer have written many times about the quid pro quo by which advertising supports free online content and services: somebody must pay for all the supposedly "free" content on the Internet. There is no free lunch!

Here are two two recent examples I came across of the quid pro quo being made very apparent to users.

Hulu. Traditionally, broadcast media has been a "two-sided" market: Broadcasters give away content to attract audiences, and broadcasters "sell" that audience to advertisers. The same is true for Internet video. But watching Hulu over the weekend, I noticed something interesting: Adblock Plus blocked the occasional Hulu ad but every time it did so, I was treated to 30 seconds of a black screen (instead of the normal 15 second ad) showing a message from Hulu reminding me that "Hulu's advertising partners allow [them] to provide a free viewing experience" and suggesting that I "Confirm all ad-blocking software has been fully disabled."

Although I use AdBlock on many newspaper websites (because I just can't focus on the articles with flashing ads next to the text), I would much rather watch a 15-second ad than wait 30 seconds for my show to resume. I think most users would feel the same way. We get annoyed by TV ads because they take up so much of our time. If Wikipedia is to be believed, there's now an average of 9 minutes of advertisements per half-hour of television. That's double the amount of advertising that was shown in the 1960s.

But online services such as Hulu show an average of just 37 seconds of advertising per episode. Amazingly, some shows garner ad rates 2-3 times higher than on prime-time television. Why might ad rates for online shows be higher? Because:

Recently, while preparing a paper on the U.S. making-available right, I ignored a weak argument made in § 13.9 of Patry on Copyrights. The treatise had argued that even if the § 106(3) distribution right encompassed a making-available right, it should not do so as to digital distribution because it was not contemplated in 1965, when the text of the § 106(3) distribution right took the form eventually enacted in the Copyright Act of 1976. In this particular context, no reply seemed warranted.

Since then, I have recalled that this and similar arguments for the special treatment of computer networks and other new technologies may be dead wrong, but they have been made regularly during most recent high-profile disputes about copyrights. Consequently, a more general response is warranted.

My colleague Barbara Esbin recently released a paper interpreting the very-belated Thirteenth Annual Video Competition Report. In "A Tale of Two Reports," Esbin explains that, although the data used in the report is 30 months out-of-date, it illustrates a steady trend of increasing competition among video service providers and increasing sources of diverse information and video programming.

Her conclusion:

"These developments have programmatic significance in at least two ways: they indicate, as Commissioner McDowell foreshadowed in his November 2007 dissenting statement, that the 'diversity of information sources' that Section 612(g) of the Communications Act was enacted to safeguard has already been achieved by market forces without the intervention of the FCC. Second, the proliferation of easily available Internet video programming choices severely undercuts the rationale behind the cable ownership limits Congress authorized the FCC to implement in Section 613 of the Act.40 Serious consideration should be given to the repeal of these provisions, and to a wholesale evaluation of the continued need for much of the Cable Act, now in its 25th year. Soon, rather than worry, as did former Chairman Martin, about the level of profitability of the cable industry, we instead may be worried about its continued viability as more and more subscribers 'cut the video cord.'"

The paper can be found here.

This ongoing series has focused on the growing substitutability of Internet-delivered video for traditional video distribution channels like cable and satellite. YouTube has recently begun exploring adding traditional television programming to its staggering catalogue of mostly amateur-generated content. But now YouTube is going one step farther by exploring the possibility of signing Hollywood professionals to produce "straight-to-YouTube" content:

The deal would underscore the ways that distribution models are evolving on the Internet. Already, some actors and other celebrities are creating their own content for the Web, bypassing the often arduous process of developing a program for a television network. The YouTube deal would give William Morris clients an ownership stake in the videos they create for the Web site.

This kind of deal would make Internet video even more of a substitute for traditional subscription channels--thus further eroding the existing rationale for regulating those channels. But what's even most interesting about this development is that YouTube's interest seems to be driven primarily by the possibility of reaping greater advertising revenues on such professional content than on its currently reaps from its vast, but relatively unprofitable, catalogue of user-generated content: 

Digital video recorders (DVRs) may turn out to be the "last gasp" of cable, satellite and other traditional multichannel subscription video providers. If users can get the same basic functionality (on demand viewing of the shows they want) over the Internet for free or paying for each show rather than a hefty monthly subscription, Who Needs a DVR?, as Nick Wingfield at the WSJ asks:

Among a more narrow band of viewers -- 18- to 34-year-olds -- SRG found that 70% have watched TV online in the past. In contrast, only 36% of that group had watched a show on a TiVo or some other DVR at any time in the past.

That last figure is a fairly remarkable statistic. Remember that DVRs have the advantage of playing video back on a device where the vast majority of television consumption has traditionally occurred -- that is, the TV set. Although it's also possible to watch shows over the Internet on a TV set through a device like Apple TV and Microsoft's Xbox 360, most people watch online TV shows through their computers -- which have inherent disadvantages, like smaller screens and, in most cases, no remote controls.

Indeed, if users are going to buy a piece of hardware, why buy a DVR when they can buy a Roku box or a game console like the XBox 360 that will put Internet-delivered TV on their programming on their "television" (a term that increasingly simply means the biggest LCD in the house, or the one that faces a couch instead of an office chair)--and save money?

This is precisely the point Adam Thierer and I have been hammering away at in this ongoing series. The availability of TV through the Internet and the ease with which consumers can display that content on a device, and at a time, of their choosing are quickly breaking down the old "gatekeeper" or "bottleneck" power of cable. Let's see how long it takes Congress and the FCC to realize that the system of cable regulation created in the analog 1990s no longer makes sense in this truly digital age.

This ongoing series has explored the increasing ability of consumers to "cut the cord" to traditional video distributors (cable, satellite, etc.) and instead receive a mix of "television" programming and other forms of video programming over the Internet. As I've argued, this change not only means lower monthly bills for those "early adopter" consumers who actually do "cut the cord", but, in the coming years, a total revolution in the traditional system of content creation and distribution on which the FCC's existing media regulatory regime is premised. This revolution has two key parts:

1. Conduits: The growing inventory--and popularity--of sites such as Hulu, Amazon Unboxed and the XBox 360 Marketplace (or software such as Apple's iTunes store), that allow users to view or download video content. Drawing an analogy to the FCC's term "Multichannel Video Programming Distibutor" or MVPD (cable, direct broadcast satellite, telco fiber, etc.), I've dubbed these sites "Internet Video Programming Distributors" or IVPDs.
2. Interface: The hardware and software that allows users to display that content easily on a device of their choice, especially their home televisions.

While much of the conversation about "interface" has focused on special hardware that brings IVPD content to televisions through set-top boxes such as the Roku box or game consoles like the XBox 360, at least one company is making waves with a software solution. From the NYT:

Boxee bills its software as a simple way to access multiple Internet video and music sites, and to bring them to a large monitor or television that one might be watching from a sofa across the room. Some of Boxee's fans also think it is much more: a way to euthanize that costly $100-a-month cable or satellite connection. "Boxee has allowed me to replace cable with no remorse," said Jef Holbrook, a 27-year-old actor in Columbus, Ga., who recently downloaded the Boxee software to the $600 Mac Mini he has connected to his television. "Most people my age would like to just pay for the channels they want, but cable refuses to give us that option. Services like Boxee, that allow users choice, are the future of television." .... Boxee gives users a single interface to access all the photos, video and music on their hard drives, along with a wide range of television shows, movies and songs from sites like Hulu,Netflix, YouTube, CNN.com and CBS.com.