But a fascinating post by Kevin Smith on the Scholarly Communications @ Duke blog recounts a couple of troubling stories of how publishers are already making outrageous demands that could become the norm if the Kirtsaeng decision is upheld. The first concerns a film:

In response to a faculty request, we purchased a DVD of this film through an ordinary commercial channel. Going directly to a retail outlet in this case was the fastest way to fulfill the request, as librarians will surely understand. But somehow the film's producer found out that our library owned a copy of this film, and they have been asserting to us that we need to buy an additional license, at three times the retail price we paid for the DVD, in order to lend the film.

In fact, so great is the additional control that publishers would have over titles not printed in the US in this situation, that Smith suggests there is likely to be a rush to off-shore operations:

If the Supreme Court does hold that first sale applies only to copyrighted works made in the U.S., publishers will have a strong incentive to move their manufacturing operations off-shore. In making its ruling in Kirtsaeng the Second Circuit admitted as much. If a publisher has its books printed or its DVDs pressed in the U.S., it will be very difficult for it to implement truly tiered pricing [that is, to charge libraries extra for books or DVDs that will be lent out -- something publishers are keen to do.] But if it moves those operations overseas, it might be able to stop libraries from lending materials without a separate, expensive license. It might also be able to forbid libraries from lending certain books entirely, like textbooks. It might even be able to stop students from selling their textbooks second-hand to the next crop of students taking the course. The experiences libraries have had with e-books proves that these goals are important to publishers.

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Motion pictures, as defined in 17 U.S.C. § 101, on DVDs that are lawfully made and acquired and that are protected by the Content Scrambling System, where the person engaging in circumvention believes and has reasonable grounds for believing that circumvention is necessary because reasonably available alternatives, such as noncircumventing methods or using screen capture software as provided for in alternative exemptions, are not able to produce the level of high-quality content required to achieve the desired criticism or comment on such motion pictures, and where circumvention is undertaken solely in order to make use of short portions of the motion pictures for the purpose of criticism or comment in the following instances: (i) in noncommercial videos; (ii) in documentary films; (iii) in nonfiction multimedia ebooks offering film analysis; and (iv) for educational purposes in film studies or other courses requiring close analysis of film and media excerpts, by college and university faculty, college and university students, and kindergarten through twelfth grade educators. For purposes of this exemption, "noncommercial videos" includes videos created pursuant to a paid commission, provided that the commissioning entity's use is noncommercial.

Creators of noncommercial videos provided the most extensive record to support the need for higher-quality source material. Based on the video evidence presented, the Register is able to conclude that diminished quality likely would impair the criticism and comment contained in noncommercial videos. For example, the Register is able to perceive that Buffy vs Edward and other noncommercial videos would suffer significantly because of blurring and the loss of detail in characters' expression and sense of depth.

And the RIAA and the MPAA agree with you. In 2005, their lawyer (now the Solicitor General of the United States) assured the Supreme Court that "The record companies, my clients, have said, for some time now, and it's been on their Website for some time now, that it's perfectly lawful to take a CD that you've purchased, upload it onto your computer, put it onto your iPod."

Movie executives agree as well. Mitch Singer, the Chief Technology Officer of Sony Pictures Entertainment explained to author Robert Levine that the idea for the movie industry's UltraViolet program evolved out of Singer's own frustration with transferring movies between PCs in his home.

So do members of Congress. Earlier this year, Representative Darrell Issa did a IAmA on Reddit. Rep. Issa told Redditors that it was already perfectly legal to make personal copies of DVDs for their own use.

In 2006 and 2010, the Librarian of Congress had permitted users to unlock their phones to take them to a new carrier. Now that's coming to an end. While the new rules do contain a provision allowing phone unlocking, it comes with a crippling caveat: the phone must have been "originally acquired from the operator of a wireless telecommunications network or retailer no later than ninety days after the effective date of this exemption." In other words, phones you already have, as well as those purchased between now and next January, can be unlocked. But phones purchased after January 2013 can only be unlocked with the carrier's permission.

Netflix's CEO says, “We expect DVD subscribers to decline steadily every quarter, forever.” The latest laptops don't even come with DVD slots. So where are film enthusiasts suppose to rent their flicks? Online, of course.

Streaming movies offers instant gratification: no waiting, no driving—plus great portability: you can watch on gadgets too small for a DVD drive, like phones, tablets and superthin laptops.

For all of the apparent convenience of renting a movie via the Web, there are a surprising number of drawbacks. For example, when you rent the digital version, you often have only 24 hours to finish watching it, which makes no sense. Do these companies really expect us to rent the same movie again tomorrow night if we can't finish it tonight? In the DVD days, a Blockbuster rental was three days. Why should online rentals be any different?

[P]erhaps most important, there's the availability problem. New movies aren't available online until months after they are finished in the theaters, thanks to the “windowing” system—a long-established obligation that makes each movie available, say, first to hotels, then to pay-per-view systems, then to HBO and, only after that, to you for online rental.

Worse, some movies never become available. Star Wars, Raiders of the Lost Ark, Jurassic Park, A Beautiful Mind, Bridget Jones's Diary, Saving Private Ryan, Meet the Fockers, and so on, are not available to rent from the major online distributors.

Of the 10 most pirated movies of 2011, guess how many of them are available to rent online, as I write this in midsummer 2012? Zero. That's right: Hollywood is actually encouraging the very practice they claim to be fighting (with new laws, for example).

“Unfortunately, it is not possible to release or have all our titles in the market at once.” Oh, okay. So they're not available because they're not available.

Listen up, Hollywood: Nobody ever went out of business offering a good product for sale at a reasonable price with an eye toward pleasing the customer. You should try it some time.

It is legal in New Zealand to use methods to get around these regional codes and make the DVDs watchable but Judge Harvey said the TPP would change this.

"Under TPP and the American Digital Millennium copyright provisions you will not be able to do that, that will be prohibited... if you do you will be a criminal - that's what will happen. Even before the 2008 amendments it wasn't criminalised. There are all sorts of ways this whole thing is being ramped up and if I could use Russell [Brown's] tweet from earlier on: we have met the enemy and he is [the] U.S."

As part of an exclusive one-year partnership with Twentieth Century Fox Home Entertainment, the malls will have a wall with cover art and QR codes for many the studio’s home videos. People who want to buy the movie or TV show can download a smartphone app called Fox Movie Mall, available for both iPhones and Android devices. It will enable them to scan an image and go directly to a Web site to complete the purchase for a DVD or Blu-ray disc shipped free to their home.

Kaleidescape has carefully designed its products to protect the rights of content owners. The hard-disk copy of each DVD retains all of the DVD CCA's scrambling and adds more encryption. The Kaleidescape System is a closed system that prevents DVDs from being copied to the Internet, to writable DVDs, or to computers or mobile devices. Furthermore, you cannot download a pirated movie from the Internet to a Kaleidescape System.

Every Kaleidescape customer must agree to copy only the DVDs that he rightfully owns, and must reaffirm this agreement upon copying each DVD. Kaleidescape Systems identify rental discs and prevent them from being imported. This combination of business practices and technology has been so effective that after years of searching for evidence that Kaleidescape's customers use their systems to steal content, the DVD CCA admitted in writing that Kaleidescape has done no harm to any of the motion picture studios, and was unable at trial to show any harm to the DVD CCA itself.

Kaleidescape was founded in 2001 to bring consumers a fantastic experience for enjoying their movie collections. The Kaleidescape movie server makes digital copies of DVDs and Blu-ray Discs to hard disk drives so families can play back their movies instantly from any room of their home. A movie starts directly from the beginning, without forcing the family to endure advertisements, trailers, and confusing menus. With the company's wide-ranging innovations, customers can jump directly to the greatest scenes and songs in movies and concerts, and small children can start their movies all by themselves.

[....]

Over the years, Americans have amassed over 13 billion DVDs and Blu-ray Discs – about 110 per household. This means that many American families have a few thousand dollars tied up in a library of movies they hoped to enjoy over and over. However, with collections that size, families soon realize that it takes so long to find what they're looking for that it just isn't worth buying more discs. This frustration has led to a well-publicized 58% decline in revenues from the sale of DVDs since 2006.

The Kaleidescape System eliminates that frustration. Because it's so easy and fun for Kaleidescape customers to enjoy their movies, they start buying movies again, and with a bigger appetite. The average Kaleidescape family owns 506 movies on Blu-ray and DVD.

“I publish three newspapers and first started in news when I was news director at WLVA in 1987. I was aware of the sensitive nature of the story and was cautious and responsible,” McDermott told us via email. “The quote I printed is accurate. I cannot speak to whether the Netflix representative was telling me the truth but I asked him to verify what the Netflix users were saying (that it was pulled after her death) and the guy came back and said what he said. I tripled checked to get the quote accurate.

“He said that he had checked with two supervisors and that the ‘main’ one told him why it had been pulled.

“Personally I believe that the kid told me what his supervisors said. I can’t imagine that they were pulled after her death in some bizarre coincidence.

“Also, it is important to note that Netflix is not the bad guy in this. Unless they lie now.”

Copyright owners include with many DVD and Blu- Ray disc purchases digital copies of motion pictures that may be reproduced to mobile devices and computers pursuant to licenses. Blu-Ray disc purchasers can also take advantage of "Managed Copy" services that are scheduled to launch in the U.S. later this year. Movie distributors and technology companies are also making available services such as UltraViolet, which enables consumers to access motion pictures on a variety of devices through streaming and downloading. Many movies and television shows are also available online through services such as Comcast Xfinity, Hulu and Netflix, or websites operated by broadcasters or cable channels, which consumers can enjoy from any U.S. location with internet access. With all of these marketplace solutions to the alleged problem PK points to, it is unlikely that the presence of CSS on DVDs is going to have a substantial adverse impact on the ability of consumers to space shift in the coming three years.

The MPAA had two specific suggestions. First, consumers could re-purchase access to a subscription service such as Netflix of Hulu. They did not dwell on the fact that 1) this would require you to pay again to access a movie you already own; 2) these services require a high speed internet connection in order to work; 3) There is a reasonable chance that the movie you own is not available on any of those services at any given time; and 4) MPAA member studios regularly pull videos that were once available on those services off of those same services.

The MPAA’s second suggestion was even less helpful. In their comments, they pointed to Warner Brothers’ DVD2Blu program. This program allows people to use their existing DVDs as a coupon towards the purchase of a handful of Warner Blu-Ray disks. They did not dwell on the fact that 1) this program is limited to Warner Brothers films; 2) the program is limited to 25 exchanges per household; 3) while some Blu-Ray disks include digital copies that can be moved to other devices, it is unclear how many of the disks in the DVD2Blu program include that option; 4) only 100 movies are included in the entire program; and 5) each exchange costs at least $4.95 plus shipping (which, for the record, is about as much as it would cost to buy the digital file from Amazon.).

In fact, granting PK’s proposed exemption would be directly counter to the purpose of this rulemaking. It would undermine emerging business models that increase access to creative works in precisely the manner Congress intended the DMCA to promote.

It is clear that access controls have increased consumers’ options with respect to motion pictures in digital formats. The Register should not interfere with that progress. Instead, she should endorse it.

To understand how Netflix actually profits from uncertainty, it is helpful to imagine a handful of idealized Netflix customers, as Bassamboo and his colleagues do in their paper. The only thing all the customers have in common is that when a hot new movie comes out, they all want it. If Netflix imposed late fees on its customers, the company could be sure that every customer who wanted a particular new release would return their last-viewed movie, and automatically be sent that new release, within a narrow window of a few days.

Bassamboo and his colleagues discovered that for a hypothetical Netflix-like service with late fees, the company would have to stock as many copies of a new release as it has customers. Given that all those customers would probably only rent it once, the company would be hard-pressed to either remain profitable or offer a compelling subscription fee.

On the other hand, when Netflix allows customers to keep DVDs indefinitely, the point in time at which they return old discs and automatically request a hot new release is staggered. Some customers are going to return a disc the day a new release comes out, while others will take a few days or even weeks to return their last movie and request the new one. The longer customers wait to request that next disc, the more times Netflix can rent out individual copies of its new releases. It is this re-use of discs, or “multiplexing,” that makes the Netflix model possible.

So according to the MPAA, piracy cost them $58 billion last year, making movie piracy a bigger industry than the GDPs of 10 American states. To put it even starker perspective, look at it this way. The film industry gets about $10 billion from the box office, and about $30 billion from the after market of DVDs, streaming, etc. So they’re claiming that piracy costs them almost two-thirds of their business. At $10 per DVD, every household in the United States would be buying an additional 50 DVDs per year if they weren’t so busy downloading. The technical term for a statistic like that is “fictional.”

See, they also claim that 29 million adults have ever illegally downloaded a film. But since that’s only 13% of the adult population, it makes the figure even more absurd. By their own estimate, those adults in question would have on average purchased an additional 200 DVDs each year if only they were still on dial-up. The problem with these absurd figures pulled out of the air, is that even if they are an accurate measure of how many movies are being illegally downloaded, it is not a measure of loss. As has been argued countless times, a bunch of zeros and ones do not cost the industry a dime unless they actually represent something that would have been bought otherwise. Anyone think the average downloader would actually have bought 200 more DVDs? Hell, are there even 200 new DVDs released per year?

The RIAA argued that courts had carved out 4th Amendment exceptions already. So far, it said, warrantless searches have been allowed at such businesses as automobile junkyards and repair shops, mines, gun and liquor stores, nursing homes, massage parlors, pawn shops and wholesale fish dealers.

The common trait, the trade group contended, was that the businesses were in "closely regulated" industries in which "the pervasiveness and regularity of the government's regulation reduces the owner's expectation of privacy in his business records."

"We're literally talking about walking into a plant, walking up to the line and ensuring that, indeed, the discs are in compliance," he said. "I don't think the scope of the search is something a regulator needs to be worried about."

Where Netflix can buy 10,000 copies of a major title for $150,000 to mail out, it will need to spend about $16 million to license it for streaming. Such a hundredfold increase in price can obviously be deleterious to profits especially since Netflix still has to maintain its mailing centers, and buy DVDs, for the subscribers who elect to continuing using the mail-in service either because they prefer DVDs’ higher quality and features or they don’t have the apparatus to receive digital streaming.

Consumerist reader Joseph brought this to our attention after he spent $3.99 to rent the DVD of Scott Pilgrim Vs. The World from Blockbuster. When he went to the disc's main menu and attempted to watch the Blooper Reel special feature, he was greeted by a screen telling him: "This disc is intended for rental purposes and only includes the feature film. Own it on Blu-Ray or DVD to view these bonus features and complete your movie watching experience."

"There were two conclusions we came to," said Dennis Maguire, president of Paramount Home Entertainment. "There hasn't been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money" than if the studio held back its DVDs to Redbox for a period of time.

The AACS technology and licenses do not permit ripping of Blu-ray discs unless the copy has been authorized by the content owner, either by setting the Copy Control Information appropriately (and nearly all BD movies are set for “Copy Never”, just like DVDs), or by individual authorization through the Managed Copy process, which we anticipate rolling out at the end of this year or the beginning of 2011.