Hollywood Wins Lawsuit, Losing the War

American media companies have a long and storied history of failing to come to terms with the Internet. The newspaper companies are seemingly entering the die-off phase of their failure to evolve. The music industry seems to have stumbled into an accomodation (thanks to iTunes) with the new technologies. Now the movie industry is thrashing around, trying to stop the future from happening to its sacrosanct business model.

A group of Hollywood studios including including Paramount, Sony, Universal Studios, and Walt Disney filed suit against RealDVD a few months back. Now they've won a ruling in U.S. District Court that has essentially taken RealDVD off the market.

From PC World

The argument stems from the Digital Millenium Copyright Act of 1998. Circumventing encryption technology on digital media was made illegal by the DMCA. According to Patel's decision, RealDVD broke through a DVD's Content Scramble System code in order to transfer movies onto hard drives.

But RealDVD was very stringent with its copying program. The basic package allowed for only a single digital copy to be placed on your hard drive. After paying extra licensing fees, you could transfer the digital copy onto as many as five other hard drives. Disc-based burning was never an option.

Meanwhile, programs such as the VLC Media Player flaunt the law and provide software that allows for real-time copying. So why is the MPAA hard up for RealDVD and not these other products? It seems to me that the MPAA has chosen a battle against RealDVD to set an example but is perhaps ignorant of the proliferation of DVD-ripping programs available.

...

It's sad that RealDVD, with its sophisticated and lawful approach to DVD-copying, had to swallow the wrath of the MPAA. It's also clear that the DMCA needs to be updated to reflect the changes in media distribution 11 years later. It's perfectly legal to rip music from a CD and upload it onto an iPod for personal use; why can't a person do the same with their own copies of movies? The assumption is that everyone using a program such as RealDVD is a criminal bent on ripping as many Netflix movies as possible, rather than a law-abiding citizen who simply wants to watch flicks on the go. For an organization that supposedly has its finger on the pulse of moviegoers, the MPAA strikes me as horribly distrustful and curmudgeonly in its approach to modern times.

This is quintessential self-defeating corporate behavior. The studios have succeeded in taking a responsbile actor out of the marketplace, to be replaced by less responsible actors. In the end, technology is changing with or without the permission of the Hollywood studios. DVD sales are plummetting and there is no business plan in place to deal with the future that is now.

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Comments

[Max Keiser - Huffpost Blogger]

Thanks for this blog. I agree. What most in Hollywood don't understand is that aside from pricing considerations there is a moral imperative for Americans to push back against the copyright cartel as hard as they possibly can in order to protect free speech and innovation rights. Hollywood; a highly protected and subsidized industry in America dominated by the price fixing actions and anti-competitive behavior of the talent agencies; WMA, CAA and ICM who owe their existence to political lobbying rather than creative output. The so-called pirates are doing the job that should be done by any American interested in free speech and innovation rights.

[BlackJAC]

Based on my experience, there's no incentive to innovate without copyright. Why bust your hump to create something if you're just going to get jackrolled for it like Nikola Tesla did his entire career?

[BlackJAC]

Spare me the Napsterite fantasy that people will pay for something they like if they can have if free of charge. That's as much of a scam as the reading fees nefarious agents charge. "We don't like it enough to give you your fair share, so you're sierra-oscar-lima while we reap the benefits."

DVD sales aren't down because of technological advancement. They're down because there's a recession on and DVDs are a luxury item that can be rented rather than purchased, and that's before we get into video-on-demand. I've never even thought of backing up my DVD collection to my computer, because said collection is so extensive that I'd probably need a server farm of my own just to hold it all. This isn't about having the stuff in question, because retailers often have clearance sales and Blockbuster even unloads some of its old inventory at discout prices; I got BOILER ROOM for $4 at Marshalls, a clothing store. It's about the untalented wannabes avenging themselves on the people who got the signed deals.

[Ozarks]

Can't say I agree with your conclusion DVD's are a luxury item and "they're down because of a recession". If we get video-on demand, simultaneous release of DVD's with Theater Release combined with FCC Ala Cart pricing requirements for cable, DSL ( AT&T's fiber optic mini-substations) and Satellite offerings ; all of which can be characterized as political/tech advancement you may see the Hollywood model of Oligarchy fixed pricing, phony accounting practices and big time salary requirements of these "celebrities" go the way of Fat Sam.

[BlackJAC]

Yet you're still paying for the VOD service; the price is reduced due to a lack of need for packaging or a theater to show it in. It still doesn't change the fact that the people who champion intellectual property theft are incapable of creating any intellectual property themselves.

FYI, there's no job security in entertainment. That's why the paychecks are so huge: it's supposed to last you a good long while because the same forces that brought you to the top yesterday can send you back to the gutter tomorrow.