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Tuesday, August 2, 2011

Judge Halts Weird Online Movie Service Zediva

Posted By on Tue, Aug 2, 2011 at 10:15 AM


In March, Zediva, a really weird online movie-rental service, told Wired that "it doesn't expect legal trouble over its service," which allows users to watch actual DVDs, played on actual DVD players, via the Internet. A couple of weeks later, the Motion Picture Association of America sued Zediva, and on Monday a judge ordered it to pull the plug on its business. Most likely, the judge said, the court will rule against the company.

At Zediva's Santa Clara headquarters, there are hundreds of DVD players, each containing preloaded discs Zediva employees purchased from retail stores. Users choose which of the top 100 newly released movies they want to watch, and Zediva's software allows them to control the DVD players from their computers.

This isn't streaming, Zediva contends; it's the private "rental" of a DVD (as when you rent a disc from a video store), not a "public performance," as streaming is legally considered to be. This novel legal theory relies on the "first sale doctrine" in American copyright law on which the traditional video-rental business rests.

Streaming media, which involves making a copy of the contents of a DVD, isn't covered by the doctrine. That enables the studios to impose restrictions on services like Netflix, which is why streaming is often such a hassle. For example, once you start watching, you have to finish within 24 hours. It's why movies often disappear for several months during the so-called HBO window. And it's why newly released DVDs aren't concurrently made available via streaming. Zediva was conceived to get around these restrictions, and by all accounts, it seems to have worked pretty well during its short life.

It's easy to side with Zediva against the big bad movie studios. Much like the music labels before them, they have waged war on their own customers by suing them for illicit downloading and making it unnecessarily difficult and cumbersome to obtain their products legitimately. Everybody hates them, and for good reason.

But c'mon. Did Zediva really believe it could get away with this? Apparently so, since it got at least one round of venture financing and, presumably, had some lawyer somewhere tell its creators they had a shot in the courts. On the other hand, it wasn't that big an investment. A roomful of DVD players, a few hundred discs at a time, and just five employees doesn't cost all that much. Wired noted that, by charging $2 a pop, Zediva started earning profits on each DVD after just 13 views.

So, maybe it was worth it just to push the limits of copyright rules. In a weird way, Zediva's legal argument, though ultimately (and predictably) ineffectual, at least highlights the total inadequacy of intellectual property law to address the problems posed by ever-changing technology, as well as the clunky approach media companies always take when it comes to online distribution.

Dan Mitchell has written for Fortune, The New York Times, Slate, Wired, National Public Radio, The Chicago Tribune, and many others.

Follow us on Twitter at @TheSnitchSF and @SFWeekly

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Dan Mitchell


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