Movie Industry Bent on Killing Itself Like Music Industry Did

I haven’t blogged about this in a dog’s age, but when I realized that Real DVD had lost in court to the movie industry, I had to post something.

Back in April I blogged this:

You might remember Judge Marilyn Patel from her ruling against Napster in A&M Records vs Napster, the ruling that sent the music industry into a death spiral of war with its customer base and insured that the universal jukebox which was so close in the year 2000 would not exist in our lifetimes.

Now she’s hearing another big case pitting tech innovators against media conglomerates who don’t even know what’s in their own interests.

Sure enough, as anyone could have predicted, Judge Patel ruled against Real DVD and by extension, against fair use, freedom of information and ultimately against the interest of the very media companies she ruled in favor of. When 90% of U.S. consumers believe they should be able to make backup copies of the DVDs they purchase, its a futile battle to try to prevent them from doing so.

And just as with Napster, whose centralized servers potentially gave the music industry greater control of how music was distributed online, Judge Patel has ruled illegal a product made by a legitimate company that offers STRONGER copy protection than that used on DVDs.

From the LA Times editorial board:

When Hollywood tries to preserve last century’s business models and “release windows” that restrict availability, it risks missing the opportunity that new technologies present to increase consumption. Redbox, whose kiosks promote impulse rentals, is just one example. Other targets include companies that use new technologies to improve consumers’ experience with the movies and television shows they’ve acquired. Last week, for example, the major studios and an affiliated licensing group won court rulings against products that enable consumers to copy DVDs onto a PC or home video jukebox — even though the resulting copies were better protected against piracy than the original DVDs.

RealNetworks’ RealDVD software and Kaleidescape’s home servers drew fire in part because they can make permanent copies of the rented or borrowed discs. But people who are so inclined can do that already with tools that are cheaper and less restrictive. More important to the studios, RealNetworks and Kaleidescape add value to a movie collection by making it easier to manage and watch. In so doing, they increase the incentive to own a movie rather than just rent it.

One lesson from the technology industry is that there is a trade-off between controlling products and unleashing the innovation that spurs growth. Just look at how well the iPhone has fared since Apple invited independent developers to create applications for it. Hollywood should remember the principle underlying the case against China: Centralized control stifles a market. Rather than trying to stop potentially disruptive technologies and business models, Hollywood should find a way to harness them.

This is just another example of our sclerotic and corrupt system choking itself. When short-sited industries write their own regulations intent solely on protecting rental incomes and antiquated business models, everyone loses, including the big Hollywood moguls.

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Nat Wilson Turner

2 CommentsLeave a comment

  • There’s something intrinsic in big corporations that makes them cut their own noses off to spite their faces. I am not sure exactly how it works. Perhaps there are books out with better analayses of the phenomenon. You see it constanstly in examles such as:

    – technology compnies that refuse to upgrade their IT, forcing a company who proclaims to be at the head of the tech curve to limp along on out-dated equipment

    – GM, who had the electric car over 10 years ago, simply deciding to put it’s entire inventory into the car compactor, despite the fact that consumers in a test program overwhelmingly demonstating they were willing to pay top dollar for them. Where is GM now? Sucking wind, and ironically enough, talking about marketing hybrids to help themselves.

    – Xerox deciding not to market the PC as developed at its PARC labs, because they were afraid that PCs would compete with copy machines.

    I am sure everyone who has ever worked at a large corporation has similar maddening examples of how companies decide to shaft themselves in the marketplace for the stupidest of reasons.

    Yet these decisions are made at the highest levels by very well-educated people with advanced degress in business and technology plus years of real-world experience.

    How does that happen, and why does it happen so often?

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