October 27, 2008 | By Fred von Lohmann

Hollywood Menaces DVD Rental Kiosks

Hollywood's distaste for disruptive innovation isn't limited to software products like RealDVD. Now it is targeting DVD rental kiosks, like the Redbox kiosk pictured here.

The idea couldn't be simpler, or the innovation more pro-consumer: Redbox makes DVD rental kiosks that rent authentic, Hollywood DVDs. It's just like Blockbuster, only without the trappings of the store, which means kiosk vendors can do it cheaper, quicker, and in more places. Simple $1 per night DVD rentals. Brilliant.

Hollywood apparently doesn't see it that way. According to a lawsuit filed by Redbox, the Universal Studios family of companies have demanded that Redbox sign a "revenue sharing agreement" that would require Redbox to:

  • 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.

What if Redbox refuses? Universal Studios allegedly threatened to cut off the distributors (Ingram and VPD) who sell Universal DVDs to Redbox. I'm guessing this threat is meant to get Redbox cut off by its distributors -- obviously, Ingram and VPD aren't going to be thrilled to lose all of their other customers over the Redbox account.

This is a breathtaking attack on the first sale doctrine, which makes it crystal clear that once you've bought a DVD, you can rent and resell it at any price and on any terms you like. Universal Studios apparently would prefer a world where millions of DVDs are shredded and put in landfills to one where consumers can rent a DVD for $1. (Although this is an improvement over its former corporate sibling, Universal Music Group, which believes that throwing promo CDs away is illegal.)

Hat tip to Paul Sweeting at ContentAgenda, who brought this story to light.

CC licensed photo by Eddie Does Japan

Deeplinks Topics

Stay in Touch

NSA Spying

EFF is leading the fight against the NSA's illegal mass surveillance program. Learn more about what the program is, how it works, and what you can do.

Follow EFF

Pls plan to call your House Rep Monday, "vote no FCC privacy repeal" If your rep is Republican, ask 5 friends too https://eff.org/gopp

Mar 24 @ 4:18pm

A loophole in Australia's copyright safe harbor rules will stay open, endangering local user-generated content sites https://www.eff.org/deeplinks...

Mar 24 @ 1:37pm

In all, @agcrocker addressed the appeals court on NSLs for more than 25 minutes. Here's the full recording. https://youtu.be/ccS06CFkZ5M

Mar 24 @ 1:09pm
JavaScript license information