Audio Video News

In the United States, the government's traditional stance on big business has been to accommodate independent distributors whenever possible. The policy has long been seen as a way of encouraging competition and preventing the growth of monopolies; automakers don't operate their own dealerships, and cable providers typically don't produce their own programming. In general, you can't own the "pipes" and the "water," too.

It's possible that policy will not be enforced in the sale of movie downloads by the film industry directly to consumers. A report released August 29 by the US Copyright Office may pave the way for studios to sell films directly to the public without having to accommodate online competitors such as AOL TimeWarner or Blockbuster. In its report to Congress, the Copyright Office stated that it "sees no reason to amend copyright laws to allow video retailers or other parties to sell or rent copies of downloaded movies without additional permission." The 1000-page effort is the result of a request by Congress that the Copyright Office issue a status report in the wake of the passage of the Digital Millennium Copyright Act of 1998.

Lobbyists for the video rental industry had worked hard to get the office to extend the "first-sale doctrine" to cover re-transmission of copyrighted works. First-sale allows video retailers to rent out tapes and DVDs without having to first obtain authorization from the holders of the copyrights. The Copyright Office believes that online video retailers should be required to get specific permission from film studios to rent or sell their products' digital downloads. "From what we've reviewed so far, we feel the Copyright Office has come to a proper conclusion," stated Ron Taylor, spokesman for the Motion Picture Association of America (MPAA).

Five major studios (MGM, Paramount, Sony, Universal, and Warner Brothers) recently announced that they would begin offering movies in a downloadable format sometime in the near future. Retailers have argued that allowing studios to sell direct to the public would be anti-competitive and could result in consumers' paying more for movies than would be the case if there were more widespread distribution. The Copyright Office report determined that the threat of piracy from unauthorized downloading "outweighs the pro-competitive gains that might be realized" by giving retailers the freedom to transmit movies without prior arrangement with the studios, which hope to see the issue resolved through licensing agreements, not through federal regulation.

MPAA officials believe that the report will help usher in a new era of downloadable films because the studios won't have such severe worries about piracy. Private use isn't as much an issue as wholesale piracy, agreed both representatives from the film industry and opinion writers from the Copyright Office. Just as with computer software and compact discs, consumers should be allowed to make backup copies of films they have legally purchased, the report stated.

The Video Software Dealers Association (VSDA) was none too happy with the report. "It's clear that the office did no independent inquiry into what's really going on in the market," said VSDA president Bo Andersen, "because those kind of restrictions [licensing agreements and copyright protection-Ed.] are part of the business models that are already being rolled out."