I have to admit that when I first heard about the whole Redbox concept of renting DVDs from a kiosk I was skeptical
, but that was mainly because previous experiments had all been quite expensive with very limited selection. However, in actually offering super cheap prices ($1 rentals), I've been hearing from many Techdirt readers who swear
that Redbox is fantastic
and, at such a cheap price, often easier
than downloading the movie.
So, wouldn't you know it? Hollywood is trying to block Redbox from doing business.
The company has filed a lawsuit against Universal Studios
for trying to coerce the company into signing a ridiculous, business-destroying agreement -- and threatening to try to stop others from supplying Redbox movies if the company didn't agree. Specifically, Universal wanted Redbox to agree 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.
In other words, Universal Studios is basically trying to kill off Redbox, a company that has innovated in its business model, and, in doing so, effectively trying to circumvent the first sale doctrine by controlling how a copyrighted product can be resold. Universal threatened that if Redbox did not agree to these business-destroying clauses, it would stop supplying movies to any distributor who supplies Redbox. Effectively, that would mean that those distributors would stop supplying Redbox, rather than lose Universal as a supplier. This is, quite clearly, a case of corporate bullying. It's also yet another example of how the movie studios want to stop any innovation
in the industry that doesn't come directly from the studios.