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VOD Streaming Into the DVD Window?

17 Apr, 2004 By: Holly J. Wagner

A new service being tested could stream DVDs over the Internet — possibly before the titles reach the pay-per-view/video on demand (VOD) window — if it doesn't fall afoul of studios and other content providers, or even copyright law.

With cable TV providers hanging their futures on VOD, Internet VOD off to a slow start and DVDs selling like hotcakes, DVDStreamer.com blends DVD with VOD by streaming DVDs over the Internet, complete with navigation and bonus materials.

A source reported that Netflix is in negotiations with studios to provide DVD-based VOD when it launches its efforts late this year or early in 2005, but a Netflix spokesman would neither confirm nor deny that report.

DVDStreamer.com, based in Coral Springs, Fla., lets members view an unlimited number of DVDs from its list of titles for a $15 monthly subscription fee. Viewers sign up, then stream the titles over the Internet. They need only a software media player like Windows Media 9, but can watch movies without having a DVD drive on the receiving computer. A Web site offering downloads of a proprietary player software offered by an apparent parent company, Flashdust, had been downloaded 1,787 times. Another site showed 46,270 downloads.

Protected by First Sale Doctrine?
A spokesman for DVDStreamer.com said the new business model is protected by the First Sale doctrine.

“Our system is a prototype of a technology specifically designed to operate under the rental provisions of the First Sale doctrine of Title 17 U.S. copyright law (same as Blockbuster Video/Netflix) and as such would not require explicit agreements with content providers,” the spokesperson said.

“The Digital Millennium Copyright Act (DMCA) prohibits circumvention of technical protective measures (such as DVDs with CSS), which we do not do. Our DVDs are played by a licensed DVD decoder/player, and the raw resulting output is captured, recompressed and unicast (streamed to one recipient),” he said. “There is no law that prohibits this, or that mandates local viewing. Since we are providing rental and remote viewing of the particular copy that we own, one rental at a time, we are able to operate in compliance with both DMCA and Title 17 First Sale doctrine.”

But others aren't so sure.

“There are a lot of copyright and DMCA questions that need to be answered and gangs of highly motivated movie studio lawyers to ask them,” said Fred von Lohmann, an intellectual property attorney with consumer watchdog group the Electronic Frontier Foundation (EFF).

“The First Sale doctrine (section 109 of the copyright act) only applies to rental or redistribution of a lawfully made copy. It does not entitle you to make further copies (as would likely be necessary to create “server-side” copies from which to stream DVDs), nor does it entitle you to publicly perform the work (transmission to the public is a public performance under copyright law),” he said. “Almost no one has yet managed to navigate the legal waters around transmitting your own DVDs over a home network, much less DVDs owned by someone else over the Internet. Their service is out deep in uncharted copyright waters.”

If it catches on — and if it does not violate copyright laws — the service could move Internet-based VOD into the rental window, since it relies on the same DVDs at the same time they become available in the marketplace.

Legal Challenges Likely Ahead
“We think they've got some interesting legal challenges that they are going to face,” said Sean Bersell, VP of public affairs for the Video Software Dealers Association (VSDA). “We think that in this case, one of the legal difficulties is that the streaming, as we understand it, involves the creation of a copy on the computer. Therefore, they would need a license to do that. The second issue is whether streaming to a remote computer is a public performance. They assert that it is not, but we don't know that that is settled law. I think they are inviting legal challenges to their service for those two reasons.”

The VSDA supports the First Sale rights upon which the rental industry is built, Bersell said, “but that does not trump the copyrights of content providers. That's going to be an issue for the studio lawyers to tackle.”

A spokesperson for the Motion Picture Association of America (MPAA) declined immediate comment.

DVDStreamer.com could also bring bonus materials to Internet VOD.

“Our technology provides for remote viewing of physical DVD discs, inclusive of all DVD content, menus, bonus material or any other DVD player-compatible materials or functions included on the disc,” the site spokesperson said.

The downside for consumers is that since the site keeps a 1:1 ratio — it buys limited copy depth and allows only one rental viewer at a time per disc — titles may be out of stock when they are requested.

“We can offer unlimited DVDs because we only rent you the DVD for the time that you are actually watching it, usually only a few hours,” the site states.

Like the server-based VOD services Movielink.com and Cinemanow.com, the service is available only to U.S. customers with broadband Internet connections. Titles are copy-protected, according to site information.

Titles listed on the site at press time included Runaway Jury, Intolerable Cruelty. Thirteen, Lost in Translation, Mona Lisa Smile, School of Rock and The League of Extraordinary Gentlemen. The site front door touts “hundreds of movies.”

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