More Loosely Connected Thoughts about Video Rental, First Sale

1.  Matt would appreciate this: “Copyright Category Confusion and Its Consequences: Online Transmissions and the Rights of Exclusive Use Under Copyright.”  I like this bit in particular:



” The first sale doctrine is not triggered, however, until a distribution occurs; if an online transmission is deemed a reproduction but not a distribution, the first sale doctrine would not apply to the user’s copy. No rental for profit would then be permissible without the permission of the website copyright owner.”


2.  The other day, I considered renting a movie from MovieLink.  I always like to see how these new DRMized offerings work – I like playing around with them, seeing what actions produce error messages, experiencing the service’s (dis)ease of use.  Experiencing the service first hand gives me a feel for its potential for success and the current state of the industry. 


Plus, I was tired of studying, and I didn’t want to pay the two dollars back and forth on the subway.  I didn’t want to pay 5 dollars just to rent a 3 dollar video.


So I access the website, and they’ve got the perfect movie for brains fried by studying: JackAss the movie.  I click on it, and what do I see?


A price tag of five dollars. Five dollars. To rent a movie. Over the Internet. Their price is higher than Blockbuster’s.  Not to mention the DRM.


The movie execs should know better. Supposedly, they’re the lucky ones, because they get to learn from the music industry’s Napsterization. The MPAA can avoid the RIAA’s mistakes. And, the MPAA knows where it has to end up – closer to iTunes, farther from PressPlay.  Right now, the movie industry is in PressPlay territory. Sigh.

First Sale, Video Rental, and Bowers (Mostly Questions)

Here’s one of the biggest semi-myths about copyright: video stores are only allowed to rent out movies because the MPAA has given them permission.


It’s a myth because of the first sale doctrine.  Video stores can do what they wish with the particular copies they purchase.  (Interestingly enough, this is not true for sound recordings and computer programs.)


I’d say it’s only a semi-myth because (I think) most video stores do enter into licensing agreements these days.  Check out this article for a brief history of the video rental industry (with comparisons to libraries).  In the 1980s, the movie industry tried various licensing schemes to hamper the video rental industry.  Today, the two industries enter into mutually beneficial agreements, like this one.


So, a couple of issues come to mind.  First, how was the movie industry able to price discriminate against rental stores in the first place?  How did they determine who was purchasing copies in order to rent them out?  How does anti-trust law look at this sort of price discrimination? (Perhaps I should try to find this at my library.)


Second, look at page 12 of the Universal-Blockbuster agreement linked to above. Section g states, “No First Sale: Blockbuster agrees that the license of a Copy … under this Agreement … shall not be deemed a ‘sale or other transfer of ownership’ within the meaning of Section 106(3) of the Copyright Act, … and shall not render Blockbuster an ‘owner’ of the Copy … within the meaning of the Section 109(a) of the Copyright Act…. Blockbuster expressly agrees that as license it has no right to ‘sell or otherwise dispose of the possession of any Copy … except as expressly provided in this Agreement.”  This seems like something similar to Bowers. It’s a contractual agreement that nullifies the public’s rights in copyright.  Unlike Bowers, it’s an agreement with a quid pro quo that is clearly acceptable and acknowledged by both parties.  Blockbuster agreed to this not because it had to, but because it wanted this special arrangement.  But is this difference significant enough?  If the Supreme Court takes this case, and reverses, how will it draw the line?


Would this sort of license be ok in a typical consumer context, say, when purchasing a CD?  If you were given the option of purchasing a CD for 10 dollars with no restrictions, or purchasing the same CD but without the ability to copy for 5 dollars, would that be ok? Proponents of DRM repeatedly cite the benefits of this sort of price discrimination.  Is this active undermining of fair use as a right bad?  Is it only bad because of unfair conditions within the current marketplace?  Or is it bad generally, because we should have a right to copy? Should we follow the lead of the Lofgren bill in this regard, nullifying such contracts?