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TV Networks May Hate FilmOn, but Its Online Business Is Smarter Than Theirs

Well, score one for the broadcast networks: just before the Thanksgiving break, a federal judge granted a restraining order against, one of several companies streaming broadcast TV over the Internet -- without the approval of the networks themselves. All four major broadcast nets -- ABC, CBS (BNET's owner), Fox and NBC asked for the order. (And here, I thought restraining orders were for stalkers.)

It may seem obvious that it's not good to steal a signal, but, of course, there's more to this than meets the eye. FilmOn claims that what it's been doing is perfectly within U.S. copyright law, and took the opportunity of the slap-down by the Feds to trumpet its, well, success. It said in a statement following the ruling that during the brief period in which it was streaming network content, it garnered 30 million users, and proved it was a workable idea:

We have, in essence, shown full proof of concept of the FilmOn delivery systemâ€"proving that millions of viewers will watch our superior television service online, all with commercials, adding millions of extra impressions that enhance network's value to its viewers and advertisers.
Not that you can make much of a case for taking content without approval (just ask Judith Griggs of now-defunct Cooks Source about that), but there is one positive thing about FilmOn's model: by just streaming the broadcast signal, instead of putting broadcast content online, it shows several times more commercials than other models that put broadcast content on the Web. It doesn't take much time fooling around with the network-controlled Hulu to realize it doesn't carry nearly the ad load that broadcast does, and, frankly, that's not something the networks should want viewers to get used to.

FilmOn says it's in discussions with "TV networks affiliates" (i.e. not the networks themselves) and also looks forward to building a "legitimate and collaborative business model" with the networks. While starting out a relationship with a restraining order doesn't usually bode well for its future, the broadcast networks would do well to realize that this skirmish with FilmOn isn't without its lessons. There are benefits to streaming network broadcasts online, whether FilmOn is doing the streaming or not.