THE APPLICATION OF COPYRIGHT LAWS & OTHER CONSIDERATIONS IN THE USE OF LIVE TELEVISION IN IFE Prepared for the World Airline Entertainment Association by Michael Childers President & CEO, LightStream Communications Group

3 Key Areas of IFE Evaluation n The Technology System n The Content Issues n The Business Model

Key Issues n Legal Issues n Administrative Considerations n Technology Implications What are the key issues airlines need to consider when evaluating “live-to-air” IFE, i.e., satellite- delivered programming?

Legal Issues: 2 Categories –Regulatory Considerations –Copyright Laws

The United States 1976 Copyright Act (U.S. Code, Title 17) classifies motion pictures in two broad categories: n Private Home Use n Public Performance Exhibition Copyright Law

To perform a motion picture “publicly” under the law means “to perform or display it at a place open to the public or at any place where a substantial number of persons outside a normal circle of a family and its social acquaintances are gathered.” - (Section 106 [4]) “Public Performance”

–Over-the-air network television –local syndicated television –cable television –pay television –satellite television including DBS –videocassettes, discs, DVD Private Home Use:

Two Public Performance Groups: n Theatrical n Non-Theatrical Public Performances

n The timed sequence of release of product through various markets on a price-sensitive basis. n Used by content providers to protect price structure. “Windows of Availability”:

IFE is a non-theatrical public performance. n The right to publicly perform content is exclusive to the copyright owner. n No content provider impacting IFE grants any downstream market any primary or secondary use license to include service to aircraft. IFE = Public Performance

The decision as to whether to license content for use in a public performance market through only a single venue, or to permit secondary use separated via windows of availability, is also exclusive to the copyright owner. Secondary Use

IFE is a non-theatrical public performance. n The right to publicly perform content is exclusive to the copyright owner. n No content provider impacting IFE grants any downstream market any primary or secondary use license to service aircraft. n Rights not expressly granted in distribution contracts are reserved by the copyright owner. IFE = “Exclusive Window”

“… the same programming in the air that your passengers get on the ground, including PPV movies…” “… 30 TV channels at a cost competitive with other forms of IFE programming…” Claims Made by Sellers

“A performance made available by transmission to the public at large is ‘public’ even though the recipients are not gathered in a single place… The same principles apply whenever the potential recipients of the transmission represent a limited segment of the public, such as occupants of hotel rooms...” - House Report, supra, at U.S. House of Representatives Report accompanying 1976 Copyright Act accompanying 1976 Copyright Act What about PTV?

“If the same copy… of a given work is repeatedly played (i.e., ‘performed’) by different members of the public, albeit at different times, this constitutes a ‘public performance’.” - Z.M. Nimmer, 8.14 [C3], at “Nimmer on Copyright” What about VOD?

Exhibition inside an aircraft, transporting a substantial number of persons outside a normal circle of a family and its social acquaintances, constitutes a public performance regardless of whether it is a corporate or commercial aircraft. What about corporate jets?

For an airline to have the right to transmit onboard via satellite or other means the content of the Disney Channel, B-Sky-B, CBS, NBC, BBC, ITV, DirecTV, Star TV, HBO, Canal Plus, etc., separate licenses to each program must be obtained from the copyright owner of each program. A Separate License for Each Program

The 4 Cost Centers in IFE: n Hardware/Software Delivery Systems n Content License Fees n Program Delivery Costs n Administration of Content Licenses Administrative Considerations

n You can avoid seeking third party licenses to individual programs on a specific channel by obtaining output licenses from broadcast services who produce 100% of their own programming. n But these are a small minority… is there enough? “Output Licensing”

Channels Hours ,500 one-hour segments half-hour segments segments broadcast days individual program segments You do the math:

Separating Delivery from the Programming –It may be more practical for the airline to license programming separate from delivery. –Is the interest in “live TV” content-driven or delivery-driven? –Perhaps you can license specific programs and pull in their satellite signals selectively rather than delivering all the output of each channel. Other Considerations

–Is it really “live TV” or is it “live” delivery of pre-recorded programming? –People in IFE referring to “live TV” may often really mean “real-time, fixed- schedule” programming. Live-to-Air-TV

Technology Implications n What of Replay TV, TiVo and Web TV? n A paradigm change in TV viewing is about to happen. n Is real-time, fixed-time programming a thing of the past? n If satellites are used only to download to a hard drive for subsequent VOD access, will there be channel identities and configurations in the future?

Questions & Answers