Blog Ipsa Loquitur

Movie Studios Sue Streaming Movie Site Zediva via Wired.com’s Epicenter:

Zediva.com, which officially launched in mid-March, rents new release movies without permission from the studios, by letting its customers rent a DVD player and disk from afar. Only one person can rent a given disk at a time. That, the company argues, puts it in the same legal bucket as a traditional video rental store.

Zediva’s wrong, of course. Renting a movie and taking it home with you to watch on TV is a private performance that is protected by something called the First Sale Doctrine. Renting a movie and watching it in the video store is a public performance, which is one of the exclusive rights the copyright holders (movie studios) retains.

The First Sale Doctrine gives the purchaser of a copyrighted work some rights to enjoy the work, based on good old common sense. For instance, think of the difference between Starbucks selling you a movie on DVD, and Starbucks installing a flatscreen in the bathroom and charging admission to watch a movie.

Even if the movie studio didn’t intend to give me the right to watch the DVD, they sold Starbucks a DVD, and when Starbucks sells me that DVD, I’ve acquired that right under the First Sale Doctrine.

Filed on under Legal Theory

I’m happy to hear that the spirit of compromise is alive and well in Congress, but NPR brings up a good point.

Photo credit: NPR Money

Filed on under The News

Harvard Law School has published more than a century’s worth of its exams for anyone who’d like to prove to themselves that taking law school exams for 127 straight years would suck. The Wall Street Journal’s Law Blog observes that property exams have become undeniably easier in the last century-plus. I wondered the same for Criminal Law. Presented for your evaluation, from 1872’s Criminal Law exam:

  • What is necessary to constitute the crime of treason?
  • What is necessary to constitute the plea of not guilty?
  • What is the difference between larceny from the person and robbery?
  • What is a felony? What a misdemeanor?

Meanwhile, the first question to 1995’s Criminal Law exam (presented after a two-page hypothetical situation that you can read in riveting detail here):

  • Should D be prosecuted for rape? If he is prosecuted for rape, to what extent and in what respects is his mental capacity relevant to his guilt or innocence?
  • With respect to B’s death, is D plausibly liable for any form of homicide?
  • For what crimes, if any, is the waiter in the bar or the owner of the bar plausibly liable?
  • With respect to the events that took place in July, of what crimes, if any, is D liable?

I’m going with the WSJ Law Blog on this one. I’m going back to 1872 and getting my fancy Ivy League J.D. — heck, tuition was less than $150 a year back then!

Filed on under The News

Congressman Scott Randolph:

“The point is that Republicans are always talking about deregulation and big government. But I say their philosophy is small government for the big guy and big government for the little guy. And so, if my wife’s uterus was incorporated or my friend’s bedroom was incorporated, maybe the Republicans would be talking about deregulating.”

Currently a Project of the ACLU-Florida.

Filed on under Irreverently Irrelevant

I’m more than a little surprised by the rapid ascent of Hulu Plus. Take a look at these first quarter numbers:

  • They have 50% more advertisers in Q1 2011 than Q1 2010
  • On pace for $500 million revenue in 2011 (up 90% over 2010)
  • On track for 1 million subscribers (up from 0 in 2010)

I think the ad-supported model is working out pretty well so far. If Netflix (which has 20 million subscribers) is buying TV series, then why can’t Hulu someday? Showtime, HBO, AMC, NBC, and the rest are increasingly becoming middlemen.

So what happens to middlemen?

I think we all know: they get squeezed out in the digital age. In January, I wrote about Hulu’s new President, who had made statements to the effect that ‘online video is killing TV, because people expect entertainment for free with advertising.’ I pointed out that the big broadcasters like CBS, NBC, and ABC had done this for decades and made boatloads of cash in ads.

Let Me Rephrase That

The more accurate statement isn’t that online video is killing TV, it’s “the lower ad revenue from online video is not enough to replace the huge ad revenue we make from broadcast/cable video, and online video is getting more popular as broadcast gets less popular.”

This is not an online video killed the TV star” situation — this is a “supply killed the oligopoly” situation. There was nothing inherently better about having three TV channels. Sure the signal:noise ratio was skewed in favor of signal, because it cost so much money to keep a TV studio running (electricity having been invented the previous week, of course) that before you let a Lucille Ball stand in front of a camera, you make sure she’s funny.

But there were plenty of flops in the Era of Three Channels. The emergence of cable and satellite television gave us dozens, then hundreds, and now thousands of viewing options. Now you’re not splitting the eyeballs (and ad revenue) three ways, you’re splitting it three hundred ways. Oh, sure, no one is watching the Golf channel’s reruns of the 1979 Chevy Pinto Classic, so it’s not three hundred equal ways, but the supply of stuff to watch went up. No worries, right? The TV star is going to be okay.

The Digital Dilution

Now how did the oligopoly get even more diluted? The Internet. YouTube. Hulu. Netflix. The signal:noise ratio has skewed in favor of noise, but there is thousands of times more signal today than there was in 1960. Thirty-six hours of video are uploaded to YouTube every minute. Hulu has programming from 264 networks. Netflix accounts for 20% of the entire US internet usage during primetime TV hours. That’s insane.

The demand has grown, but the supply has exploded. It’s not online video that’s killing the TV star, it’s competition. The ad revenue isn’t necessarily going to go back up to where it was in 1960, or 1980, or even 2000. NBC and Fox own Hulu: they’re hoping to make some money off whatever kills the TV star. But it is killing the TV star.

And when this whole online video thing replaces broadcast as the dominant delivery method, who knows? Maybe there will be titans who emerge as having superior services, selection, or just lobbied the shit out of Congress and the FCC to murder net neutrality. Maybe the digital landscape will come to resemble the analog landscape, and ad revenue for these titans will be astronomical, because in the future there are more eyeballs. (Either because everyone watches TV Wall-E style in the future, or because we’re cyborgs with extra eyes.)

Filed on under The News

The much-smarter-than-me Nilay Patel on the Amazon Cloud Player and the coming round of “music locker” services.

A new type of music service has got the music labels in a tizzy — they say Amazon isn’t licensed for streaming, and talk of lawsuits has already sprung up, as has a perception that Amazon legally over-extended itself with the service. That perception has only been heightened by word that Amazon and Sony are now negotiating, and there’s already some bad precedent for Amazon — MP3.com lost a lawsuit over a very similar service back in 2000. (I remember the case well; I was in college when it was decided, and it directly influenced my decision to go to law school.)

But I think there’s a very real chance Amazon will emerge scot-free from all of this, because Cloud Player is built on top of massive amounts of bandwidth that simply didn’t exist for previous entrants in the market. In fact, by pursuing Amazon here, the labels might hurt their own cause in a fatal way. Let’s take a look.

When I first heard that Amazon’s new service didn’t have the legal blessings of the music industry, I was nonplussed. Why on earth would you poke the music industry? Have you seen the first page of Google search results for RIAA? They’re apparently almost as famous for suing people as they are for commoditizing music.

It’s not suicidal, though. The RIAA’s actually never sued people for turning a CD into a bunch of MP3s, even though it’s almost certainly a violation of the “anti-circumvention” provision of the DMCA. Their reluctance to sue for CD -> MP3 or MP3 -> iPod is pretty well-founded, too. Even though currently in the Second Circuit, the DMCA has no Fair Use exception, that the RIAA hasn’t been willing to start suing for ripping CDs is illuminating.

Patel points out that Amazon’s just adding a link to the chain: CD -> MP3, and then MP3 -> Amazon. If the first copy is okay, why can’t the second? Read Patel’s post; he really points out how the RIAA has painted themselves into a corner with their shortsighted business and legal strategies over the last decade.

Filed on under Legal Theory