Hollywood Again Tries To Stop Innovation: Threatening Redbox DVD Rentals

from the felony-interference-with-a-business-model dept

wait 45 days after a DVD's release date before renting it;

pay a royalty of 40% of gross rental revenues;

promise that prices never dip below $0.99 per night; and

destroy all previously rented DVDs rather than offering them for purchase for $7, as Redbox currently does.

I have to admit that when I first heard about the whole Redbox concept of renting DVDs from a kiosk I was skeptical , but that was mainly because previous experiments had all been quite expensive with very limited selection. However, in actually offering super cheap prices ($1 rentals), I've been hearing from many Techdirt readers who swear that Redbox is fantastic and, at such a cheap price, often easier than downloading the movie.So, wouldn't you know it? Hollywood is trying to block Redbox from doing business.The company has filed a lawsuit against Universal Studios for trying to coerce the company into signing a ridiculous, business-destroying agreement -- and threatening to try to stop others from supplying Redbox movies if the company didn't agree. Specifically, Universal wanted Redbox to agree to:In other words, Universal Studios is basically trying to kill off Redbox, a company that has innovated in its business model, and, in doing so, effectively trying to circumvent the first sale doctrine by controlling how a copyrighted product can be resold. Universal threatened that if Redbox did not agree to these business-destroying clauses, it would stop supplying movies to any distributor who supplies Redbox. Effectively, that would mean that those distributors would stop supplying Redbox, rather than lose Universal as a supplier. This is, quite clearly, a case of corporate bullying. It's also yet another example of how the movie studios want to stop any innovation in the industry that doesn't come directly from the studios.

Filed Under: business models, dvd rentals, dvds, hollywood, innovation

Companies: redbox, universal