RecordTV expecting legal trouble

Concerned about a Hollywood backlash, startup says it's just a video recorder for Web users. Lawyers not so sure

RecordTV.com is not sure whether its "free Internet VCR" service is legal or illegal. But the Los Angeles-based startup expects to find out sooner or later.

"I've spoken with six lawyers and the response has been mixed. But they all agree that at some point I will be challenged," RecordTV.com founder David Simon told ZDNet News.

RecordTV.com, which lets its 50,000 registered viewers record TV programs and then watch them online via RealPlayer, shares some striking similarities with iCraveTV -- the Toronto-based startup that rebroadcast TV programs on the Net until it lost a court battle with entertainment-industry heavyweights such as News's Twentieth Century Fox and Fox Broadcasting; Walt Disney's ABC and Disney Enterprises; Sony units Columbia TriStar Television, Columbia Pictures Television, Columbia Pictures Industries, Metro-Goldwyn-Mayer Studios and its Orion Pictures; and CBS.

RecordTV.com, though, hopes to avoid iCraveTV's legal troubles by acting more like a VCR than a broadcaster. According to Simon, the big distinction between the two companies is that iCraveTV served as a broadcaster because it had live content, whereas RecordTV.com does not offer live content.

"I would hope and assume that we would fall under the same exemptions that a regular VCR would. We're not broadcasting live content," he said.

Simon said RecordTV.com has not yet received any legal challenges, but the company is just starting to get a following. Currently the site says it gets 200,000 hits per day and has 50,000 active users.

The site was conceived in November as a virtual VCR for Simon's children, who had TVs and PCs in their rooms but no VCRs. It moved online at the beginning of the year and has been public since March.

The quality of the content is limited to good audio but poor pictures. The site records content at 56Kbps and uses the RealPlayer viewer. Users with higher than 56K connections won't get any better quality but regardless users can't get enough of the service.

Simon said he is hoping to attract capital for some much-needed expansion, as well as to save up for a potential legal defense.

The site is overwhelmed with the demand. The last two days the site has been virtually unusable because of bandwidth problems. Upgrades are expected; another T1 line should be installed Tuesday, and a T3 line is expected within the next eight weeks.

While Simon has spoken with several interested investors, he hasn't raised any capital. The site has revenue coming from several advertisers, and Simon said he expects that the site can be profitable on just advertising.

Simon sees a larger potential value in the site. "The most valuable asset is the immediate ratings information we can provide. I could tell you who is going to be watching what and when, right away. But that would be anonymous information. I wouldn't give up specific viewer information."

RecordTV.com is so concerned about legal issues that it is even leaving out certain features that could cloud the distinction between VCR and broadcaster. Users can't record a show that has already aired, nor can they watch shows recorded by other viewers. They also can't play live television programming.

"Right now, the industry is applying an old law to a new technology, and eventually the two have to catch up," Simon said. "We're just a VCR with a really long cord."

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