Hollywood Studios’ Fight With RealDVD Is Counter Productive
by Bob BarrLast week, I listened to a speech at Georgia Tech in Atlanta, presented by Yaron Brook, President and Executive Director of the Ayn Rand Institute. I was enthralled by Brook’s eloquent and forceful defense of the free market. In this time of rampant government meddling in the economy, it was refreshing to be reminded of how the free market rewards those who work with its forces rather than against them. If only the Hollywood studios had been in that audience and heard the message.
For months now, the major studios have been waging all-out war against technology companies that are developing devices that offer consumers the ability to watch their DVDs on their own computers and televisions under circumstances that give them maximum flexibility. Heaven only knows how much the studios have paid in fees in order to have their legal surrogates wage a war of words and briefs against relatively small companies like RealNetworks and Kaleidescape that are trying to fill this market niche. RealNetworks has been hit particularly hard by the aggressive court action lodged against it by the studios.
Why is Hollywood beating up so badly on RealNetworks? What sin did this company commit that has caused such legal violence to be visited on it? Was it pirating Hollywood movies? Was it committing a fraud on consumers by advertising something it did not deliver? Was it perhaps handmaiden to a Bernie Madoff Ponzi scheme? To the Hollywood studios, it was something much scarier – allowing consumers to exercise their “Fair Use” rights.
What RealNetworks did that landed it on Hollywood’s Black List, was to have the audacity to listen to the market and give consumers something they wanted at a time when Hollywood was not growing to meet the needs of these same consumers. RealNetworks had figured out that consumers wanted the capability to store their own DVDs on their own laptops and home computers, so they could then watch them at their leisure and without having to load each one into the computer every time they wanted to play it. Based on its market research, RealNetworks then developed a product that would do just what the consumer desired, while also protecting the studios’ rights – the RealDVD system. Unlike the ubiquitous assortment of illegal DVD rippers than can be located with a simple Google search on the Internet, RealDVD is the only product that allows consumers to save copies of their own, legally-purchased DVDs to their computers while also preventing people from burning copies. While this would seem to be the likely start of a beautiful friendship between RealNetworks and the movie moguls, it unfortunately was just the beginning of Real’s troubles with the Hollywood studios.
For more than a year now, RealNetworks has been fighting an expensive and difficult defensive action in federal court in San Francisco, as the major studios seek to permanently stop it from marketing its RealDVD product. In fact, last August, the judge presiding over the case temporarily enjoined the company from selling its product.
Rather than licking its wounds and moving to other products, RealNetworks is determined to fight this assault on competition and free enterprise. Just this week, for example, it formally appealed the August 11, 2009 order issued against it by U.S. District Court Judge Marilyn Patel. Ayn Rand would be pleased with RealNetworks’ attitude.
What neither Ayn Rand nor any free market advocate would understand, is the manner in which the studios are proceeding against RealNetworks. It makes no sense from a business standpoint, and if anything shows that the movie industry is destined to make many of the same mistakes that the music industry made. Consider that DVD sales are down significantly in the current slow economic climate. Would it not make sense for Hollywood studios to take steps to encourage consumers to buy DVDS? And, insofar as offering a product that makes it easier for consumers to record, store and view their DVDs would cause them to purchase more DVDs, why would the studios fight tooth-and-nail against a company whose goals are essentially the same as Hollywood’s?
Perhaps because at least one of those major studios – Disney – is developing its own technology to make it easier for consumers to digitally store and view movies? In a recent interview, for example, Disney chief exec Bob Iger indicated his company would shortly begin marketing its “Keychest” system that would do just those things.
Even the DVD rental industry, which is fighting its own battles with the Hollywood studios, understands that DVD sales generate significantly more income for the studios than do rentals. Yet those very same studios that are taking steps to increase sales of their movies and limit rentals, are tone deaf to the work of companies like RealNetworks, whose product also would encourage sales of these silver discs.
Hollywood, which continues to toy with the idea of bringing Ayn Rand’s free market opus, Atlas Shrugged, to the silver screen, would be well-served to actually read and digest the novel’s admonition to use if not embrace the forces of the market place, rather than oppose the very forces that could help it. Such a tactic would be in the industry’s “enlightened self interest,” and it would benefit all concerned. Unfortunately, the moguls who head the studios apparently don’t have time for such lessons
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33 Comments
An excellent example of exactly why the Hollywood paradigm of evil corporations, and anti-capitalism is completely upside down.
Government would do much more good for We the People if they would stop attacking corporations and industries that supply things we want, and did a much better job of investigating the one's they cozy up to.
In other words, our problem isn't the corporations government attacks, its the ones government is in bed with.
Why is anyone surprised when Hollywood shoots itself in the foot? Long before RealDVD, Hollywood has been aiming both barrels at its toes and pulling the trigger. The bullets are the 'hate America', 'hate Christianity', 'hate the military' films Hollywood keeps shoving down our throats – except we won't swallow. Even when those bombs paint Hollywood's balance sheets as red as their feet, Hollywood still keeps making films we don't want to see. So if they're THAT dumb, why expect them to display common sense when it comes to something like RealDVD? We're not talking logic here – we're talking Hollywood. (They don't call it 'Lala Land' for nothing.)
I have no idea how RealDVD works, so let's throw this scenario out. Person A has RealDVD installed on his computer. His friend B has a movie that A wants to watch. What would stop A from using RealDVD to copy B's DVD onto A's computer? That would keep one more sale of that DVD from happening. That may be what the studios are afraid will happen.
Again, this is off the top of my head. If anyone knows more about the program and how it would work, please enlighten me.
Basically, that could happen, but the one-off copying of a persons DVD makes up a miniscule amount of the piracy going on. If they want to stop piracy, they need to look off-shore. China, Thailand and a few other countries scattered across the globe are the biggest pirates out there. But, since there is nothing hey can do about that, they scream and cry at the only offenders they can, American and companies that they think aid in it.
"Unlike the ubiquitous assortment of illegal DVD rippers"
Who says they are illegal? You are allowed to make a backup of your movies.
I'm not really familiar with the program either, but what you suggest is equally possible now. But now, the borrower just has a limited time frame (the length of time the friend lends the DVD) to watch it. All that is removed is the need for the physical disc.
While I hate Real Networks (their players and codecs are horrible), I think I hate the DMCA even more (and while we're at it, the MPAA, RIAA, and Sony Pictures as well). The DMCA is very clear, and leaves no wiggle room. Which means that it's perfectly legal for people to make their own backup copies of media, just as long as it's impossible for them to do.
This nonsense brought to you by Bill Clinton, who signed this law in 1998.
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Seems to me that instead of spending their money on fancy legal teams to fight Real Networks, etc.–the studios could be spending the money on developing a superior product. Oh wait, is that capitalism?
David vs Goliath. I hope capitalism wins.
or…… what would stop B from just loaning A his hard copy of said movie? will hollywood go after those people next? maybe they just wont let us see their movies at all anymore because we are to stupid to understand how 'important' a film like 'Che' is. hollywood sucks.
Very interesting article. I always find government picks and chooses when to get involved and who to back based on political expediency. Cable and satellite operators, as well as others tend to operate in an environment where true competition gets stifled with help from politicians who are, no doubt, cozy with lobbyists.
Embrace the technology, or die by the technology.
This is a good point, and not just cable either. There has been a tremendous amount of consolidation in the media/entertainment companies. The entire cable/TV/Music/Movieindustry functions as a series of monopolies, lateral monopolies, oligopolies and other non-competitive business structures. Government should enforce anti-trust laws on these industries.
I also wonder if Mr. Barr has an interest in, or represents Real Networks, or does his essay about Ayn Rand just happen to focus on this specific issue out of altruism?
As long as there have been ways to copy, there has been the battle to control the ability. Remember wax imprint rings? Well, probably not. I barely do.
Point is – things are changing. I am a conservative, so I prefer that change happens slowly, with thoughtful purpose, and for the greater good. But this technology has started to morph yearly, every decade further removed from the previous. Comes a time when you gotta go with the flow and not fight the change until it settles out. The music industry is learning that, it's time film and TV does too.
Yep. You beat me to it. Real Networks is bloated garbage adware that will never have dominant market share.
I think it's funny, as the MPEG2 format approaches obsolescence, that anyone even cares what people do with their DVDs. I clone all of mine…because I paid for them and because I can.
B loans the hard copy to A, who uses RealDVD to put a copy on A's hard drive. Now, both have copies but only one has been purchased. That was the point I was trying to make.
Bravo. These same idiots hated that we could copy tapes or record radio and TV. It's all nonsense and yes, hollyweird sucks.
You are allowed to make backups of your movies, but the DCMA states that it is illegal to use any software to do so.
Boggles the mind, doesn't it?
Hollywood's re-write of Atlas Shrugged:
Atlas is born to a white mother and black father who soon abandons the family.
Despite these hardships, Atlas graduates from Harvard Law School and becomes a successful community organizer.
Eventually, Atlas becomes President of the United States and takes the entire weight of the world's problems onto his shoulders.
But, Atlas is attacked by evil capitalists and Christians who mistakenly blame everything on poor Atlas.
So, Atlas resigns and lets the world destroy itself.
I predict at least 10 Oscars.
Hollywood sat on their hands while the Internet exploded around them and were probably the only major industry not to embrace the technology. Because of this, they fell way behind on the curve and can't even play catch-up now unless they use legal intimidation to do it. Hollywood can't figure out how to deal with the Internet because they did nothing early on and therefore is out to destroy it now through the use of the court system. The Music industry was the same way.
What the Hollywood and music industry can't fathom is that file sharing actually does help to promote as well as sell their product. People today are less inclined to by a movie or even rent it based on a 30 second trailer which often is the best part of the movie. The same goes for the music industry. If these two industries would put out some quality work (as well as duct taping the mouths of some of the obnoxious "talent" that babbles on about politics constantly) rather than the garbage they have been marketing for the past 10 plus years, the sales would be soaring.
The big problem is that Hollywood and the music industry want things done their way. No other way is acceptable to them. Both live in their own little world where they feel they should have absolute say.
It took 15 years for the record companies to figure out people would accept noting less then the computer files not the silver plastic discs the record companies insisted on selling them. They wasted 25 years worth of profits pointlessly fighting their own consumers – driving most to piracy who would have never done so previously, before spending a dime on how to make the new business model work. The same dumb business schools produced the same dumb execs at the studios. Hollywood pitched the new high def dvd's as a stop gap because they are pointlessly fat with encryption but with this strategy against Real Networks now they are just forcing consumers to download via netflicks, blockbuster or itunes where the studios margins are less. I'll work out how to store my dvd collection and so will probably most of you, just like we did with our cd's. The studios are – Dumb de dumb dumb da!
This has a lot to do with corporatism. The advertisers are pressuring networks and studios to stop "ease of access" to movies on dvd, because they simply can't get consumers to buy into advertising that is placed into the movies as easily as they can with network television commercials and Virtual News Releases on the local news.
As more and more people become dispondant with the indoctrination from national networks, they tune out and watch movies. Studios are less likely to make an entire movie promoting a single product and advertisers are losing money when consumers aren't pummelled and impulse buying on a regular basis.
The tech for ripping your dvds has been around for years, and anyone who wants to spend 30 minutes on the net can get what is needed. The real argument is ease of use. Most of us would happily purchase a flick from the studios, if it wasn't a total pain in the ass to do so. When I want to purchase a film, I want the film, I don't need 3 freaking hours of extra crap that didn't make the final cut, nor do I need a commentary track.
Here, in my man-cave all my films sit on hard drives, waiting to be shuffled over to my TV. Clean, quick, painless.
I will settle for nothing less.
What Mr. Barr declines to mention is that this case is not about philosophy, not about freedom, it is not about politics – it is very specifically about a contract dispute. I'm truly surprised that he feels so strongly that government should regulate business contracts between American corporations. My understanding of libertarian free-market philosophy must be flawed.
The DMCA also passed the House by voice vote during Senator Barr's term, so let's not even go there.
Having adopted Tivo since day one literally – I can can tell you that I and most of my co-workers and family & friends have not seen ANY commercials for many, many years until – - – - Hulu. The commercials on Hulu are short and only one at a time and if you want to watch shows for nothing hey that's fair. I still tend to buy the best tv series on dvd anyway – I can't stand broadcast network tv. I've tried watching when stuck in hotels and I want to jump out the window. Except for news and talking heads I just can't do it any longer. Sorry networks, you could cut your commercials down to match Hulu and I'd watch you when your schedual matched mine but otherwise – forget it!
I don't have any specifics on this particular process, my guess is that's on purpose, proprietary secrets.
But I am a computer guy, specifically internet security, so I can make guess.
My guess would be a two part encryption package. Install encryption software on the computer with a special "key" or code unique to the individual computer. When copying the DVD to a hard drive, encryption software in the DVD would work with the encryption software on the computer, thereby deriving a file which can only be unencrypted by that individual computer.
I don't see how that would help if everything was installed and loaded on portable hard drive, which could then be simply handed to another person. But of course you can do that anyway by simply handing them the physical DVD.
I believe you are allowed to do that, make one back up for your own personal use.
I always find government picks and chooses when to get involved and who to back based on political expediency.
It's based on money. Namely political donations through lobbyists and PACs. For years Microsoft spent zero dollars on lobbying. And when they achieved preeminence, suddenly the Justice dept. gets curious over anti-trust. Now a days MS employees an army of lobbyists and donates (last I heard, a couple of years ago) Around $1.3 million. Suddenly the Justice dept. decides MS is no longer in the monopoly business.
And as long as I'm on the subject, economics 101 shows there is no such thing as a true monopoly with out the government artificially creating it via legislation. Suppose a company is really that good, they drive all their competition out of business. They are the only provider. They can charge what ever they want. What happens next? Some one else comes in with a similar product or service, and starts underselling the monopoly, poof, it's gone.
There's only two ways around that, either buy off the police and use brute force to destroy their competitor, or even better, buy some politicians and have them pass laws making your competition illegal or too expensive so they have to rise prices.
Either way, it's government creating it.
If the DVD is encrypted, you have the right to make a backup, BUT, it is illegal to use any software to unencrypt the DVD, effectively stopping you from making a backup.
If that doesn't blow your mind, imagine what is lurking in the
socialized medicinehealth care reform bill.Didn't know that, then again I've never tried to copy a DVD. I was referring to cassettes and albums, which I should have pointed out. When you buy vinyl (does anyone even do that anymore?), you can make one copy onto cassette for your own use. And when it wears out, you can make another, like having a gold copy, as we used to say in the early days of the computer industry.
I know what's in the health care reform package. The politicians are correct, there is a massive crisis, but they're lying about where that crisis actually is. Medicare and Medicaid are rapidly going broke. When that happens, government will be forced to ration care. Then every one who fell for government's promises of cradle to grave care will realize what every one who doesn't buy into it knows, it's all a giant lie.
The politicians can't have that, no can they? I believe the real goal is rather than have a bunch of people on a sinking ship and a bunch off it, they want every one on it so they can continue to hide the truth.
So, Atlas resigns and lets the world destroy itself.
You had me at "Atlas resigns".
Side note: Only a megalomaniac would assume that only he can stop the world from destroying itself.
Notice how AARP, GE, Big Pharma et all jumped in with the totalitarian Maoist thugs?
Yup, competing by legislating your competition into an uncompetitive situation via corrupt politics is antithetical to the very core of American values. It will all fail in the end EVEN if it succeeds, as that path leads straight DOWN FOR ALL – even for the dictator wanna be kings!
Hello Studios, Obama!
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