About two years ago I was on a panel where a speaker said he had just come back from Silicon Valley, and every investor he met said they wanted to get in with any start-up that had a way to get creative works to people more easily, the law be dammed. Asked why they weren’t afraid of breaking the law, the investors said they planned to make as much money as they could during the legal process, get a large user base, and then hopefully sell to a big-pocket company, the way YouTube did with Google.

I thought of that when I first heard RealNetworks, a company struggling to stay relevant as a distributor in the digital age, was going to market a service that essentially allowed multiple duplications of a DVD. DVDs come with protection known as the Content Scramble System, and CSS is licensed out to anyone in the DVD space willing to respect it. At its core, CSS prevents unauthorized reproduction of the DVDs. RealNetworks, a CSS licensee, has decided to market a service called RealDVD that copies DVDs to multiple devices, charging an additional license fee for each device. Hardly what is expected of a CSS licensee.

It’s okay if you’re confused by this business model. Duplication is one of the rights reserved to copyright owners. Licensing for copying to multiple devices is a business model used by many copyright owners in the creative industries. But note, in these cases the duplication and licensing authority came from the copyright owners. Exactly where does RealNetworks get the notion that they have a right to charge consumers to perform activities with DVDs not authorized by the copyright owners?

They call it fair use, but this is a business model, not fair use. It’s a business model based on making money quick and getting consumers accustomed to a service quick before the legal system can play itself out.

And yes, the legal system is at work here. Presumably anticipating an imminent suit, RealNetworks filed a preemptive suit this morning asserting they are in the clear, despite overwhelming arguments against them and not even mentioning their service to copyright owners until mere hours after first announcing it. Hours later MPAA filed their own suit. MPAA argues that RealNetworks violated the Digital Millennium Copyright Act by bypassing DVD copy protection. This seems obvious on its face; even if CSS remains on the copied copy, the CSS on the original copy was intended to prevent any new copies. Thus, the very act of making a copy requires bypassing CSS.

My goodness, this issue has been going on a long time. A company called 321Studios a few years ago sought an exemption under the DMCA from the U.S. Copyright Office for a service that created “back-up” copies for DVDs. The Copyright Office rightly rejected that petition.

Why the obsession with backing up DVDs? There are so many ways to obtain movies now, from pay-per-view and video-on-demand to mobile download to PSP to legal broadband, and yes, you can still rent DVDs from Blockbuster or Netflix. (Which raises another point, there is nothing stopping someone from taking a Netflix DVD, making a copy to keep, and sending the Netflix disc back. This same issue existed with 321Studios.)

RealNetworks doesn’t produce creative works. It has tried to make a living off of distributing others’ creative works. This is not a disreputable enterprise by any means, but it can be difficult in the digital age because ad revenues are not comparable and subscription models are not as popular online. (Compare, for example, the number of people who subscribe to RealNetworks’ music subscription service to the number of people who subscribe to, say, cable television.)

But even if you’re struggling with legal ways to distribute the creative works of someone else, that hardly justifies infringing on the rights of that creator.

The courts will have to settle this, and it will take some time. But common sense suggests that RealNetworks is grasping at straws in thinking it can charge people to practice what it calls “fair use” but what is in fact the domain of the copyright owner through licensing. Unfortunately, this illegal DVD-copying door has now been opened just a bit further, making it that much more difficult for copyright owners to find a place for legitimate business models to flourish. Consumers lose with that result.

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This entry was posted on Tuesday, September 30th, 2008 at 1:20 pm by Patrick Ross and is filed under copyright law, drm, fair use, licensing, piracy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.