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THE MORNING BUZZ: The Video Industry and the Studios Stand on Common Ground Against the Computer Industry

4 Mar, 2002 By: Stephanie Prange

Last week, the entertainment industry had a showdown with the technology industry over copyright piracy in a hearing before the Senate Commerce Committee.

Walt Disney Co. president and CEO Michael Eisner accused some computer manufacturers of encouraging and profiting from piracy, calling it the industry's "killer app."

The home video industry not so many years ago was in another showdown with the studios over the First Sale Doctrine, a principle of federal copyright law that in essence allows a commercial entity that has purchased a copyrighted work to control subsequent sale or rental transactions. Again, the studios were trying to grab as many copyright rights as possible, and a new industry wanted to establish some standard of fair use of those copyrights.

The studios lobbied hard to get Congress to repeal the doctrine, but they were ultimately unsuccessful. As we all know now, their fears were unfounded. The end of the battle over First Sale unleashed pent-up demand for viewing movies in the home and ultimately gave the studios an even bigger revenue stream than theatrical distribution.

The question this time around is: Are the studios crying wolf yet again? It seems to me there are some very important differences between what happened with the VCR and what we have seen with digital copying, especially over the Web.

Movie copying over the Web has had a dry run of sorts. The proliferation of digital copying of music over the Internet or audio file sharing has already affected the music industry -- and music retailers as well. Cassette and CD shipments are down, according to a recent report by the Recording Industry Association of America, which fingered piracy as the prime culprit. Might not unregulated copying of DVDs over the Internet produce similar results for our industry?

Also, computer copying of movies doesn't satisfy a pent up demand in the same way the video rental business did. Consumers who want to view movies in their home need only go the their local video store – or order a pay-per-view or video-on-demand movie, for that matter – to do it. These options didn't exist decades ago. The computer makers are only looking to capitalize on the successful home viewing model for movies this industry pioneered – and if copy protection isn't put into place, they'll facilitate the service with a hard-to-beat price; for free.

While many in this industry may sympathize with those fighting the studios, it seems to me in at least in this case the video industry finds itself on the copyright holders' side – as long as the studios don't threaten the First Sale Doctrine. During last week's hearing, Intel EVP Leslie Vadasz took a shot at the Motion Picture Association of America's Jack Valenti, noting that he at one time referred to the VCR as the "Boston Strangler" of the film industry. The computer makers are linking their struggle with the VCR battles this industry fought decades ago, but are they truly our brethren? I'd be interested to hear readers' thoughts.

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