Monday, August 17, 2009

Hollywood battles discounted DVD rentals

In my recent post about the pricing of e-books, I mentioned that 20th Century Fox (among other studios) has concerns about the $1 per night DVD rentals offered by Redbox kiosks devaluing their movies in consumers' eyes. Fox proposed withholding their DVDs from Redbox until 30 days after the initial release of a DVD. Two additional chapters in this story (as reported by PaidContent):

1) In response, Redbox sued Fox.

2) And, going a step further than Fox did, Warners now proposes a similar delay in providing DVDs to Netflix.

Expect more battling lawsuits as each party tries to assert its power and control over pricing and availability.

The first-sale doctrine allows the purchasers of copyrighted works to dispose of them as they see fit: sale, rental, gift, garbage. That is what originally allowed stores to rent video tapes.

Thus, some Redbox employees are now buying DVDs at retail outlets in order to stock their vending machines. Warner and Fox have no recourse over this tactic; but, given the price-points, this is not a long-term solution for Redbox.

I'm all for the efforts to keep the prices of movies and books from dropping. After all, I've made my living in the entertainment and media business for decades. And I'm writing a book.

But I do see the arguments (especially in this economy) for making some prices somewhat lower.

Anti-trust and other regulations prevent the studios, publishers, and retailers from getting together in a room to discuss this. So we'll continue to see individual companies pursing various tactics, until an unofficial consensus is reached.