Looking At The Redbox Antitrust Fight

from the is-it-an-antitrust-issue-or-not? dept

Law.com has a nice article detailing the legal issues involved in the battles between Redbox and the various movie studios. The main question is whether or not it's an antitrust violation on the part of the studios to block distributors, wholesalers and retailers from selling DVDs to Redbox. The studios want (a) a revenue share from Redbox (b) Redbox not to offer new release DVD movies for rental and (c) Redbox not to sell used DVDs. The reasons are pretty obvious: Redbox is a much more competitive offering. Since it's a lot less labor intensive, it's able to offer the DVDs for much less (both rental and sale), and the movie studios are freaking out, because in their minds, their old revenue streams should never be allowed to decrease.

The statements from the studios on the dispute is incredibly disingenuous:

"The real complaint is Fox won't sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation," said Watson, an antitrust expert who has teamed with Yosef Riemer, a litigation partner in Kirkland & Ellis' New York office, in representing Fox, part of News Corp.'s Fox Filmed Entertainment. "There's nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands."

Indeed, Watson is correct that no seller needs to offer the product at the price the buyer demands, but that's not what's being disputed here at all. Clearly, prior to Fox and some of the other studios throwing their hissy fit, the distributors had no problem selling DVDs to Redbox at the prices Redbox thought were reasonable. The studios sold the movies to the distributors at the usual price, and the distributors sold them to Redbox at the usual price. Everyone should be happy.

But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade. The studios have every right not to sell videos to whomever they want -- but those distributors and retailers can then sell to whomever they want. The studios should have no say in the downstream sales of the videos once they've been sold to the distributor, wholesaler or retailer. That's where the antitrust issue is. The studios are successfully controlling downstream sales.

The studios are either being disingenuous or are just playing dumb when they claim that there's no antitrust violation because end users can still rent movies from Blockbuster or Netflix. But, that's defining the wrong "user" for the market in question. The market is in being able to buy from the distributor/wholesaler, and the "customer" is a retailer like Redbox. And these studios have stopped that customer from being able to make a perfectly legitimate purchase. That's the antitrust issue, and it's amazing that the studios think anyone will believe their false market definition or this bizarre claim that this about Redbox demanding some special price. It's not. Hopefully the judge recognizes that and doesn't fall for the studios simply making stuff up.

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Hollywood's War With Redbox Expanding To Netflix As Well?

from the shooting-the-foot dept

Hollywood really never learns, does it? Following 20th Century Fox's decision to try to stop Redbox from getting movies to rent via its kiosks (to which Redbox has responded by suing Fox), Warner Bros. has joined in as well, but isn't just trying to stop Redbox, but Netflix, too. It wants to force both companies not to rent DVDs until a month after the DVDs are actually released... unless the companies agree to share revenue from the rentals.

There's basically no legal basis for this move, which would only serve to piss off consumers (yet again). These companies are free to buy the DVDs and rent them out, but the studios want a cut of every rental. It's sort of like video game makes demanding a cut of every used game sale, or an artist demanding a cut every time a piece of his artwork is sold. It's entitlement society all over again. Nothing should happen without the original company getting paid. What they don't realize is how this limits them. Netflix and Redbox become less interested in promoting Warner Bros.' movies, because they're now a lot more expensive to those companies. Instead, Hollywood is handing incentives over to these companies to promote other films that don't demand their tithe.

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Custom Toy Blogger Accused Of Infringing On Wolverine

from the take-a-look-at-the-photos dept

Reader shaniac points us to a blog post on a custom toy blog, where the blogger explains how some of his photo galleries of custom toys he made were forced offline due to a DMCA takedown notice from 20th Century Fox, claiming that they infringed on intellectual property from the Wolverine movie. Except, if you look at the images, it seems pretty clear that they've got nothing, whatsoever, to do with Wolverine. In other words, 20th Century Fox appears to have broken the law, in claiming it held the copyright over the figures in those images, when it appears it did not. Unfortunately, the site hosting his content doesn't fully understand that under the DMCA it can re-enable his content if he files a counternotice and 20th Century Fox fails to file a lawsuit within a specified period of time. Instead, it's told the blogger that he needs to get the lawyer from 20th Century Fox to agree that the content doesn't infringe -- and the lawyers don't seem to be responding to any emails, meaning that the blogger is stuck in limbo for no good reason.

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Fox Fires Columnist For 'Reviewing' Leaked Copy Of Wolverine

from the calling-more-attention... dept

Last week, we discussed why it looked like movie studio 20th Century Fox was overreacting to the leak of a workprint copy of the upcoming movie Wolverine. The studio could have easily used the leak to get good publicity. Instead, it's freaking out and rushing around trying to blame everyone. The latest person caught in the crossfire? A columnist for Fox News who downloaded the leaked copy and wrote a review... Since both 20th Century Fox and Fox News are owned by News Corp., the studio flipped out and the writer, Roger Friedman, has supposedly been fired. For what? For actually admitting that the movie was out there? It's not like it hasn't been all over the news. For calling more attention to the fact that the movie can be downloaded? Firing Friedman seems to be getting a lot more attention than the review actually did. Once again, just because you have the legal right to do something about infringement, doesn't mean it makes any sense. Here's yet another case of a Hollywood studio letting its legal rights override common sense, and because of that, it's harming its own reputation.

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In An Alternate Universe, How 20th Century Fox Could Have Responded To Wolverine Leak

from the just-calm-down... dept

A bunch of folks have been sending in the story of how an early version of the movie Wolverine has leaked online, well before the movie goes to theaters. The NY Times even describes this as unprecedented and eats up the movie industry's claim that this is some huge problem. Not surprisingly, the NY Times article was written by the same reporter who recently wrote an article basically repeating unproven movie studio claims that piracy was damaging its business -- a point disproved weeks later in the same NY Times (by a different reporter) noting that the movie business is seeing a huge surge in attendance.

As has been pointed out over and over again, there's very little evidence that movie "piracy" cannibalizes film attendance. That's why the most "pirated" films are also the biggest box office hits. It's not too hard to figure out why: people go out to the movies for the social experience, not just for the content. And putting in place smarter business models can help drive more people to the actual theaters, even if they saw the content online first.

But, of course, that's not how the industry sees it, and 20th Century Fox has wasted no time in going after anyone sharing the film and trying to hunt down who leaked it. That is, of course, the company's right. But, it does seem that its resources might be better spent focusing on giving people a real reason to go see the film in the theaters.

If anything, it seems the real fear is that the version that's been released isn't very good -- and that's what will keep people away from seeing the film in the theater. That "early word of mouth" that studios have been blaming for bad box office turnout. And, certainly, you can understand why it would be upsetting to the studio to have an unfinished version out there (especially if it's missing many of the sound effects and special effects). But, even so, instead of going all legal and threatening, the studio could have responded in a way that built anticipation to get people to actually go see the movie.

Why not be straightforward about it, saying, something along the lines of:

Hey Wolverine fans! We know that you're all looking forward to the release of the movie next month. We're excited too! By now you may have heard that an early totally unfinished version has been leaked online. It's missing a whole bunch of stuff -- including some amazing special effects -- and honestly, this version isn't a finished product at all. We think you'll get a much better overall experience by waiting for the full finished product, but we certainly understand that some of you just can't wait (trust us, we feel the same way!). If that's the case, please, feel free to check it out, but please remember that this isn't even close to the final version. If anything, think of this as a "behind-the-scenes" peek of just what a movie looks like before all the real "movie magic" gets put in there. If you do check it out, we hope you'll join us May 1st to check out the finalized version as well on the big screen the way we intended for you to see this awesome movie. It's just a month away!

Sure, I just made that up on the spot -- but if Fox had released a statement like that, just think of the reaction among the folks who this unauthorized version would likely reach. Rather than being treated like criminals, they'd be treated like fans -- and with a bit of honesty. Personally, it would make me a lot more likely to want to go (pay and) see the movie when it came out. Would it really have been that difficult to do that? It certainly would be a lot cheaper and more effective than "spending the day demanding that copies of the film be removed from the largely anonymous swath of Web sites that swap movie files" as the NY Times reported folks at Fox Studios did.

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Fox About To Get Paid For A Movie It Had Absolutely Nothing To Do With

from the screwy-copyright-laws... dept

Back in August, we noted just how silly it was that 20th Century Fox was suing Warner Bros. Studios over the movie The Watchmen. Fox had purchased the rights to make a movie out of the graphic novel decades ago, but decided not to make the movie. After the project bounced around at a few different studios, Warner took it on, and the movie is considered one of the most anticipated blockbusters of 2009. Yet, in a somewhat surprising move (since he'd originally said a trial would be needed next year), a judge has ruled that Fox does, indeed, own a copyright interest in the movie. This almost certainly means that Warner will come to some form of a settlement pretty quickly, so as not to delay or hinder the movie in any manner. In effect, that means that Fox is about to get a pretty big pay day for doing absolutely nothing on a movie that it didn't want to make. That seems to go against everything copyright is supposed to stand for.

Now, obviously, it's pretty stunning that Warner would make this movie without its lawyers being sure that Warner owned all the rights to the film, but as we wrote in the original post, it seems rather silly to sell movie "rights" in the first place. There are plenty of mechanisms to make sure that the original creator of a story can get paid when his or her story is adapted that don't require copyright -- and allowing multiple parties to try to make a film out of a single story should lead to better overall film making. Fox didn't want to make this movie, so Warner stepped up and made a movie that many are expecting to be fantastic. Why should Fox be rewarded for its own failure to make a movie?

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