Blockbuster Inc. said Wednesday that it had reached a deal for exclusive United States rental rights to movies from the Weinstein Company, whose founders created the Miramax studio and sold it to Disney.
The deal will keep all movies from Bob and Harvey Weinstein’s new production company out of the hands of Netflix, the online service that competes with Blockbuster, the nation’s largest movie-rental chain.
I’m really not sure I understand how this is possible. Doesn’t the First Sale doctrine make it possible for Netflix to buy DVDs through any legal channel and rent them to anyone it wants without having to get permission from the copyright holder?
(via Ezra Klein)
First Sale only comes into play if Netflix can purchase the movies in the first place. When a title is a new release it is sold to a vendor at a fairly steep price before it’s regularly available for sale to consumers. The gap between the new release pre-sale and consumer availability is usually weeks, but can be months depending on the title. Basically this cuts Netflix and any other video rental outfit out of that new release opportunity.
Nathan I think you are thinking of the way VHS used to work. In the DVD space since day one there have not been rental windows. When a DVD is released it is released at a purchase price of $15-30. There had been discussions of creating a rental window but it never happened. Blockbuster and Netflix never have an advantage to rent before people can buy.
However to Ed’s point I think there is agreement’s in place to share rental profits with the original producer. If those agreements aren’t in place then it is unlawful to profit from the regularly purchased DVD. Something similar to public presentation.
Never underestimate the resources of independent video retailers. Any video retailer can purchase copies of these titles and turn around and rent or resell them.
What was left out of the most articles is a little something known as the FIRST SALE DOCTRINE. The law allows for you to utilize that legally purchased copy [or copies] in the manner you see fit. This applies to your ability to rent or resell the DVD [it doesn’t grant copying rights]. Here is a link to that:
http://www.lib.ncsu.edu/scc/tutorial/copyuse/copybas3.html
So, no matter how hard BB and Weinstein try, and no matter how they promote this effort, they cannot get around this. Sale copies will be availible to distributors and outlets other than BB. These copies can legally be converted to a rental unit by a video retailer. Independent retailes can order these in as sale pieces and just open them up for rental. Weinstein/Genius cannot stop this.
BB’s copies will carry a BB disclaimer. The sale copies offered elsewhere may try to carry a FOR SALE ONLY disclaimer, but that is only a smoke screen. If a store offers a paid-for copy of BOBBY or SCHOOL FOR SCOUNDRELS or UNKNOWN or THE GATHERING or other included titles, no amount of verbiage can negate the stores right to turn around and rent that to their customers, under the First Sale Doctrine.
In the end, video retailers have the right and ability to purchase copies of these films through offered distribution and outlets, and put them in their rental inventory, or resell them to you, if that is their desire. It is this right that independent video store retailers have availible to them to allow them to continue to be the best choice in home entertainment for you.
Adrian Hickman
TLA Video, Philadelphia
IDEA [Independent Dealers of Entertainment Association]