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Users of Windows Vista Media Centers who were blocked from recording two NBC shows last week are eager to learn why Microsoft is taking marching orders from broadcasters.

EFF's Danny O'Brien says digital-TV viewers must not lose the rights they owned as analog users.

(Credit: Greg Sandoval)

Microsoft is soon expected to explain why it inserted technology into its Vista operating system that blocked digital-TV viewers from recording their favorite shows. Their current excuse--that Microsoft adheres to regulations proposed by the Federal Communications Commission--makes little sense, as the only rules on controlling recording from broadcast TV were struck down by the courts in 2005.

The controversy began last week, when some Vista Media Center users trying to record from over-the-air digital or basic cable television discovered that they were barred from recording NBC TV shows American Gladiators and Medium.

In what for some was a stunning acknowledgment by Microsoft, the software maker said Windows Media Center honors the flags used by broadcasters to limit recording.

That triggered a wave of speculation. Some people asked if Hollywood had declared war on digital video recorders (DVRs). Some Windows users suspected Microsoft of possibly cutting financial deals with the studios. Others questioned whether a bug within Vista may have caused the block.

To this point, there are more questions than answers. We tried to address a few here.

Are cable and network TV companies trying to undermine the power of DVRs?
There is nothing to indicate that the blocking of the two NBC Universal shows represents some new attempt by the network or the entertainment industry to restrict the recording of over-the-air TV shows. In interviews with CNET News.com, executives of two DVR companies say broadcasters have not pressured them to limit recording--lately, at least.

"I'm not aware of any effort by the industry to prevent people from recording their shows," said Jim Denney, TiVo's vice president of product marketing. He qualified his answer by saying Hollywood doesn't attempt to restrict recording "outside of the regulations already in place, a la CableCard rules." We'll get to those rules later.

One important point to note is that broadcasters frequently block DVRs from recording TV content that isn't broadcast "over the air" (i.e. received by an aerial). Premium cable channels can prevent the recording of movies delivered via video-on-demand, or VOD. But what broadcasters haven't done before is to try to systematically block the recording of content delivered over analog channels or over-the-air digital.

That doesn't mean that they won't, according to Danny O'Brien, a staffer at the Electronic Frontier Foundation, which advocates for Internet users and has launched its own investigation into the NBC block. O'Brien notes that broadcasters have always felt threatened by TiVo and other devices that help viewers skip commercials.

"What the broadcasters and content owners have always wanted is a veto over new technologies," O'Brien said. "They want some way of controlling the powers of devices that they don't like. That's what the fight over the broadcast flag was about."

What is a broadcast flag?
The term "broadcast flag" has taken on several meanings, but it is best known for describing a set of proposals made by the FCC. The commission wanted those that made television software and hardware equipment to honor the flag, a code that broadcasters can insert into the data stream of digital-TV shows that typically place restrictions on the copying of shows.

The courts ruled against the FCC's plan in 2005, saying the regulator couldn't force electronics makers to interpret TV signals a certain way. Since then, those software and hardware companies have had the option of deciding whether to design their systems to obey the broadcasters' flags.

It's important to note that the flag rules were never meant to ban the recording of over-the-air digital broadcasts. They were designed to wall off content, and prevent mass reproduction and piracy. But Vista's remote copy control apparently goes much further and may forbid the recording of broadcast TV shows.

How many people could be affected by this issue?
About 30 million U.S. households are equipped with a DVR, according to research firm Leichtman Research Group. Forrester Research says about a third of the country's households own DVRs and predicts that the percentage will climb to 50 percent by 2010. That number is likely to rise rapidly after February 17, 2009, when all full-power U.S. broadcast television stations will switch from analog to digital broadcasts.

As for Window users, more than 140 million copies of the Vista operating system have been sold, Microsoft said last month. Both Vista Home Premium and Vista Ultimate contain Media Center, though a tuner is needed to record from TV.

What companies have acknowledged honoring copy controls?
It's unclear whether any other software or hardware makers follow a policy similar to Microsoft's.

O'Brien says companies that do "should come clean" and let consumers know that they could be buying a product that may limit their ability to record.

How do CableCard rules apply?
A CableCard is an interface that enables U.S. consumers to view and record digital cable TV. It allows people to bypass set-top boxes and watch cable broadcasts on DVRs, computers, and TV sets, provided that they have been sanctioned by CableLabs.

CableLabs, a consortium created by the cable industry, must certify all CableCards. Microsoft's Vista operating system supports CableCards, and this can effectively turn a sanctioned PC into a DVR.

CableLabs require CableCard-equipped devices to come with DRM and adhere to commands from broadcasters. Those commands include "copy never," "copy once," and "copy freely." Typically, consumers bump into these flags only when trying to record video-on-demand or pay-per-view programming from premium cable channels. VOD is often protected with a "copy never" or "copy once" command.

To date, it is unclear whether any broadcaster has intentionally tried to use the "copy never" or "copy once" commands to limit recordings from over-the-air digital or basic cable. It's safe to say the practice isn't common. But EFF says the block of American Gladiators proves that it can be done, and O'Brien expects that broadcasters will be under pressure to try it in the future.

Do DVR owners have any rights?
You bet. "You have a fair-use right to record TV content, as specified by the Supreme Court in the now-famous Betamax case," O'Brien said.

"The important thing to remember," he added, "is that digital-TV viewers must not lose any of the rights they owned as analog users."

(Credit: Redlasso.com)

Three of the largest broadcast TV networks have sent a cease-and-desist letter to RedLasso , a little-known but rapidly growing video syndication site.

Fox News Network, NBC Universal, and CBS sent a letter on Monday, accusing the company of "building a business based on the unauthorized syndication of" the content owners' news, sports, and entertainment shows.

RedLasso records TV shows and then indexes clips so users can find, pull, and embed them on other Web sites. Reporter Liz Gannes over at Newteevee.com saw this one coming. Two weeks ago, Gannes noted that RedLasso had grown from 2 million unique users in November to 24 million in April.

Gannes wrote: "Now might be a pretty good time to get permission."

She added later that RedLasso executives told her they were on good terms with broadcasters. The executives' assertions, however, are untrue, the networks said in their letter to RedLasso. In the letter, the entertainment companies wrote that such statements "falsely convey an affiliation...when there is none."

At a time when the networks are giving their content away for free, one has to wonder why RedLasso would even get into this business. Anyone can go to Hulu and grab embed code for many NBC Universal shows without violating the law.

I was in Los Angeles for the Digital Hollywood conference earlier this month and there was plenty of discussion about the influx of Silicon Valley entrepreneurs moving in to make deals with the studios. The big entertainment companies were more open to cutting deals than ever, insiders told me.

They also said that partnerships awaited those that could help the entertainment industry solve problems of advertising, marketing, and syndication on the Internet.

Executives from King of Prussia, Pa.-based RedLasso were unavailable for comment.

Disclosure: CBS has agreed to acquire CNET Networks, publisher of News.com. The deal is expected to close in the third quarter.

A week after some users of Vista Media Centers were prevented from recording two NBC Universal shows, the network acknowledged Monday that it inadvertently blocked some people from recording the shows.

The owners of Windows Vista Media Centers were prevented from recording American Gladiators and Medium last Monday. At the message board The Green Button, Vista users gathered to complain about receiving a prompt that informed them that the broadcaster had "prohibited recording of this program."

"We made an inadvertent mistake," an NBC spokeswoman said in an interview with CNET News.com. "We're not aware of any other complaints, and we believe we have addressed the problem."

For a week, fans of digital video recorders wondered if Hollywood was trying to force DVR (digital video recorder) owners to watch commercials. Historically, TV and cable networks have resented DVRs for enabling viewers to jump past ads. The Federal Communications Commission proposed rules that would require electronics manufacturers to set up their technologies to block recording at the request of TV networks.

The courts ruled that the FCC was out of bounds, but there is nothing to stop Microsoft or other electronics makers from choosing to adhere to flags.

The NBC spokeswoman said the network had no intention of blocking the show but declined to specify how the error was made. Flags that have been issued accidentally aren't uncommon, some industry insiders say. While acknowledging that it "fully adheres to flags used by broadcasters," Microsoft said that it was working with content owners to reduce the number of false flags.

"The success of the entire distribution chain is dependent on all involved maintaining the necessary checks and quality control so that coding is correctly applied," a Microsoft spokeswoman wrote in an e-mail to News.com.

Meanwhile, the larger issue for some is that Microsoft and possibly other hardware and software makers will honor broadcast flags.

"Customers need to know who Microsoft is listening to and how that affects their equipment," said Danny O'Brien, a staffer at the Electronic Frontier Foundation, an advocacy group for Internet users.

The EFF says it's important for consumers to know whether their DVRs can be controlled by entertainment companies.

Microsoft has acknowledged that Windows Media Centers will block users from recording TV shows at the request of a broadcaster.

"Microsoft included technologies in Windows based on rules set forth by the (Federal Communications Commission)," a Microsoft spokeswoman wrote in an e-mail to CNET News.com. "As part of these regulations, Windows Media Center fully adheres to the flags used by broadcasters and content owners to determine how their content is distributed and consumed."

The software company was responding to questions about why some users of Windows Vista Media Center were prevented from recording NBC Universal TV shows, American Gladiator and Medium on Monday night.

The "rules," in which the spokeswoman is apparently referring to are those proposed by the FCC, which would require software and hardware makers honor "broadcast flags." The flags are code that broadcasters can insert into the data stream of TV shows that typically require restrictions on the recording of the shows. What she didn't say is that the "rules" aren't rules at all.

The courts struck down the FCC's proposal in 2005, saying the regulator lacked the authority to tell electronics makers how to interpret the signals they receive. Since then, Microsoft and other manufacturers have retained the option of whether to honor the flags.

News that the world's largest software maker has voluntarily agreed to help broadcasters control the recording of their shows is bound to outrage enthusiasts of digital video recorders, as it represents the biggest threat to the practice known as time shifting since the FCC's attempt to require flag adherence.

"Microsoft has put the requirements of broadcasters above what consumers want," said Danny O'Brien, a staffer at the Electronic Frontier Foundation, an advocacy group for Internet users that is looking into Monday's block. "They've imposed restrictions way beyond what the law requires. Customers need to know who Microsoft is listening to and how that affects their equipment. Right now, the only way customers know what Microsoft has agreed to is when the technology they've bought suddenly stops working. Microsoft needs to come clean and tell its customers what deals it has made."

The question of whether NBC Universal issued a flag for American Gladiator has yet to be answered. The network said last week that it needed time to look into the matter. Microsoft's spokeswoman did not offer any information on whether NBC Universal activated a flag. The software company did, however, inform us that accidents do happen.

"In some cases content may be incorrectly flagged in the actual broadcast, which may affect the consumer's TV experience," Microsoft's spokeswoman wrote. "The success of the entire distribution chain is dependent on all involved maintaining the necessary checks and quality control so that coding is correctly applied thereby avoiding any unexpected outcome."

The Electronic Frontier Foundation has begun investigating why Microsoft Vista Media Centers were blocked from recording two NBC Universal shows Monday night.

The group, which advocates for Internet users, said indications are that NBC sent a "broadcast flag" that triggered the block. But Danny O'Brien, EFF's international outreach coordinator, said the block couldn't have occurred unless hardware and software makers honored the network's request to prevent users from recording the shows. It appears Microsoft may have obeyed NBC Universal's broadcast flag.

NBC Universal and Microsoft said they need time to look into the matter.

The incident began when several dozen users of Vista Media Centers from across the country gathered online at a message board, The Green Button, to complain about being prevented from recording NBC shows American Gladiator and Medium. As they tried to record, a prompt informed them that the copyright holder prohibited recording.

Initially, the problem seemed to affect only users of Vista Media Centers who were recording from digital cable. Since then, there has been a report that a user of a Toshiba-made digital video recorder suffered the problem. In addition, O'Brien said Thursday that he has also interviewed someone who was blocked and was recording over-the-air digital.

O'Brien said he spoke to a Vista user who said he was trying to record Raleigh, N.C.'s HDTV channel WNCN-DT1 when the prompt appeared.

"(He) was attempting to record the program using Silicon Dust's HDHomeRun external tuner," O'Brien said in an e-mail. "(This) decodes the digital TV signal, and sends it over Ethernet to many digital TV receivers, such as MythTV or Windows Media Center. As Silicon Dust says on its Web site, their decoder merely passes on the data stream, and does not interpret the broadcast flag field itself."

O'Brien is concerned that Microsoft could have obeyed the broadcast flag, "despite the successful work of thousands of users to defend Microsoft's right to innovate and our right to fair use."

What he's referring to, of course, was the FCC's attempt to make software and hardware makers obey broadcast flags. The courts overturned the requirement, and now software and hardware makers are free to honor the flag or not.

O'Brien said the EFF is looking into the matter because it believes consumers should know before buying a DVR or recording system like Microsoft's Media Center whether they will help block shows.

Update at 7:10 a.m. Wed., May 14: A correction was made to this story. See details below.

Some users of Windows Vista Media Center say they were blocked from recording the NBC Universal TV shows American Gladiator and Medium on Monday night.

"Restrictions set by the broadcaster and/or originator prohibit recording of this program," the error message read.

At Thegreenbutton.com a message board popular with DVR enthusiasts, those affected tried to figure out what was causing the block. When this kind of thing happens, people immediately question whether TV and cable networks are trying to thwart time-shifting technologies and force people to watch commercials again. Even though it's rarely done, content providers do have the ability to communicate with some time-shifting hardware to block the recording of shows or broadcasts.

"This is indicative of why the current DRM schemes are flawed," said Marcel Good, an IT director in Northern California and one of the people prevented from recording the NBC shows. "It affects people who intend to legally consume content. They have no intention of stealing the content. The people who want to steal already have ways around DRM."

On Tuesday, the cause for the block of the NBC Universal shows was still unclear. Representatives from both the network and Microsoft said they would need time to look into the matter.

Until they do, here are the few available clues. Most of those who posted at Thegreenbutton were Vista users recording digital cable with ATI cablecard tuners.

A TiVo spokeswoman said the DVR company received no customer complaints about being blocked from recording.

This isn't the first time a Vista Media Center user has complained about being barred from recording. A person identified as Alex from Canada wrote 14 months ago at Thegreenbutton: "Often a small number of my shows fail to record, and in the Windows event log I see errors about 'copy protection set by the broadcaster.'"

The shows Alex tried to record came from the Toronto-based W Network. Alex was running Windows Vista Ultimate 32bit and when attempting to record the show Friends: Trial by Jury received this message in Media Center's event logs: "Friends was not recorded. Recording of this content is prohibited by the content provider."

Jessica Zahn, a program manager in Microsoft's Media Center TV group, who according to Thegreenbutton has volunteered to answer questions at the site, apparently responded to Alex (a Microsoft spokeswoman said she could not confirm the message came from Zahn). The person who responded under the username JessZahn said the problem had either one of two causes.

"The broadcaster is setting the 'Copy Never' flag and Media Center's behavior is expected or Media Center is misinterpreting data it receives," and someone at Microsoft would need to study the stream of the show to know for sure.

What remains unclear, however, is whether those who posted complaints at Thegreenbutton shared the same cable provider.

I'll update this story as soon as I get more information.

Correction: This story erred in stating when Alex in Canada posted to Thegreenbutton.com. The post was from March 2007.

Executives at NBC Universal know they must walk a fine line in creating a Web series designed to showcase an advertiser's product or service. To some, it sounds like a recipe for disaster.

"If it's cheesy," said Vivi Zigler, NBC's executive vice president of digital entertainment and new media, "if it doesn't fit, if it's inappropriate, it won't work for us. It won't work for the brand. We're dead."

The network on Friday said it has directed writers, producers, and actors including Rosario Dawson to create stories that incorporate brands, such as Microsoft, Intel, and Cisco Systems into the story lines.

Like many other Web sites that offer video, NBC Universal is searching for new ways to pitch ads to Internet users, a group that has been reluctant to accept Web commercials.

The big question is, how will the network avoid alienating audiences if writers have to cuddle up to brands? I can't imagine how hard it would be to write an entertaining script while trying to tuck a commercial into the plot--and, indeed, executives at NBC Universal said they can do it.

Cameron Death (pronounced deeth), NBC Universal's vice president of digital content, said the network will start by learning what message the advertisers want to convey and which consumer groups they want to reach. "We work with the brands to get right insights and then use our history of storytelling at NBC," Death said, "to make it come alive in the viewers' imagination."

Death and Zigler declined to discuss specifics about how the brands will be displayed, but Zigler said it won't be traditional product placement. "This is not about a soda on a table and having someone take a sip," Zigler said. "This is about organic storytelling."

The first show, called Gemini Division, is a sci-fi thriller starring Dawson. She's a New York City cop who stumbles on a conspiracy to replace humans with clones. The show, which is expected to appear at video portal Hulu, will unfold over 50 four-minute episodes starting this summer.

NBC is also testing the advertising in-show strategy on TV, but Zigler said the Web is the perfect place for experimentation.

"We can get high production values on digital and still be cheaper than TV," Zigler said. "It gives us an opportunity to try some new things, and we won't break the bank."

In the latest example of how commercialism continues to creep into art, NBC Universal has plans to create programming designed to highlight a sponsor's products, the company said Friday.

The new shows, which will appear on NBC Universal digital properties, are being produced by the company's Digital Studio division and units, in conjunction with the Omnicom Group, one of the world's most powerful advertising and marketing companies.

One of the first shows to emerge form the partnership will be an Internet sci-fi show called Gemini Division, starring actress Rosario Dawson. The show's planned sponsors are Acura, Intel, Microsoft, and UPS.

Just how the program's creators will weave the commercial products into the story line without alienating an audience that might feel manipulated is anyone's guess.

Sony Pictures Entertainment last year began offering advertisers the chance to have their products take more of a starring role in Web productions.

Gemini Division and shows like it from NBC Universal will likely be offered by Hulu, the video portal created by the TV network and News Corp.

SAN FRANCISCO--NBC Universal would like to have its TV shows distributed once again through Apple's iTunes service, a top executive said Wednesday, but he called for antipiracy measures to help protect his business' revenue.

George Kliavkoff, chief digital officer at NBC Universal, didn't specifically mention Apple by name in his request, but it was clear he had the iPod maker in mind when it came to combating people's consumption of pirated content.

George Kliavkoff, chief digital officer at NBC Universal

(Credit: Stephen Shankland/CNET Networks)

"If you look at studies about MP3 players, especially leading MP3 players and what portion of that content is pirated, and think about how that content gets onto that device, it has to go through a gatekeeping piece of software, which would be a convenient place to put some antipiracy measures," Kliavkoff said in an onstage interview at the Ad:Tech conference here. "One of the big issues for NBC is piracy. We are financially harmed every day by piracy. It results in us not being able to invest as much money in the next generation of film and TV products."

Apple's iTunes service has become the largest music retailer in the United States, but relations between Apple and NBC Universal are strained. In 2007, NBC Universal pulled its TV content from iTunes when the two companies disagreed about pricing. Kliavkoff made it clear that he'd like the conduit back, though.

"We'd love to be on iTunes. It has a great customer experience. We'd love to figure out a way to distribute our content on iTunes," he said, but wouldn't comment on any negotiations. "We have film distribution with iTunes so yes, we do talk to Apple," he said.

Price appears still to be a sticking point. NBC Universal sets a wholesale price for content it offers to distributors, and then distributors are free to set the retail price.

"They can mark up the price and make a profit or use it as a loss leader to get people in the door," Kliavkoff said. "It's really difficult for us to work with any distribution partner who says 'Here's the wholesale price and the retail price,' especially when the price doesn't reflect the full value of the product."

"The music industry guys would have something to say about how the pricing has affected their product over the last few years," he added.

The Apple-NBC Universal spat has been a game of brinksmanship over which company needs the other more. Analysts at Forrester Research think Apple needs the content more than NBC needs the distribution.

NBC Universal, through a 50-50 partnership with NBC and News Corp., has its own mechanism to view entertainment TV shows on the Web: Hulu. However, the site doesn't offer downloads and doesn't support mobile devices, at least today.

Hulu is in part an attempt to combat piracy on Google's YouTube, Kliavkoff said.

"It used to be that at the end of Saturday Night Live, YouTube would have clips up faster. You can fight that all you want, but until you provide a place to go at 1:05 a.m. Eastern time that has the digital short, you won't get anywhere." Now, with Hulu, viewers can get the same content through legitimate channels.

YouTube, he added, is a "fantastic promotional vehicle for some of our product," such as trailers. And it's the "market leader for amateur content." But sites like Hulu will change its position for professionally produced video, he predicted.

"I think that balance will shift a little bit. I think at the end of the day people, more often than now, will want to see professionally produced content," Kliavkoff said.