The technology, peer-to-peer, significantly lowers the cost of delivering Internet TV, while a legal loophole has allowed the service to expand its UK offering, without formal licensing agreements. The company’s business model also occupies a somewhat grey area, whereby an advertisement is displayed for 5 seconds every time a user switches channel, meaning that, technically at least, Zattoo isn’t placing ads inside of third party content.
As of this week, Zattoo users located in Britain can access all five of the country’s “terrestrial” channels: BBC 1 & 2, ITV 1, Channel 4 and Channel 5, including the ability to opt-in to various regional versions. Because each channel carries a public service remit, under section 73 of the UK Copyright Act, cable operators can re-transmit broadcasts live and uninterrupted without first seeking permission. Zattoo is effectively piggybacking the existing cable television provision after being given “in-depth legal advice by two major London media law firms and a QC on its legitimacy”, the company’s UK & Ireland Country Manager, Alexandra Illes, told last100 in an email.
“Zattoo works on a strictly legal basis”, says Illes. Formal licensing agreements exist with all broadcasters whose channels are not directly covered by the UK Copyright Act.
“Nevertheless, we have been negotiating with all these broadcasters since the beginning of 2007 seeking a co-operation beyond the rights established by the law.”
Assuming that Zattoo doesn’t need consent from any of the five terrestrial channels, there’s no doubt that section 73 wasn’t written with the Internet in mind. Two other issues also arise: the broadcaster’s themselves may not have the online rights to some of their own content in the first place, and Zattoo’s re-transmission has the potential to obscure viewing figures — the currency of the television industry — since they aren’t included in the official ratings. “The key to attracting advertisers”, TechCrunch UK’s Mike Butcher notes.
“We do cooperate very closely with broadcasters, providing detailed statistics to them, which they can include into their own on-line statistics. Further, we are talking to the official TV measurement bodies in every country”, says Illes.
Of course, users don’t care about these kind of legal or industry issues, they just want access to the widest range of Internet TV as possible. And to that end, Zattoo is going from strength to strength.
Also see: Interview: Zattoo co-founders