Back in 1909, Congress declared that it would be “unwise” for the copyright owner to have “any control whatever” over copies placed in the stream of commerce. Slicing a deep wedge between ownership of copies and ownership of copyrights, it took the judicially-recognized “first sale doctrine” one step further, applying the right to redistribute without regard to whether the acquisition was by means other than sales (such as by gift, or by license to reproduce it via download). Section 109 says that if you own the copy, you can rent, lend, gift or sell your copy without permission from the copyright owner.

That all worked great when movies were on VHS tapes and DVDs. It used to be that you could find far more titles on Netflix than practically anywhere else, and when Redbox came along offering 99-cent DVD rentals, the studios could not legally stop the practice, since Redbox owned the DVDs and was free to rent them at whatever price it wished. 99-cent rentals meant that streaming licenses for the same movie could not be too steep.

But technological advances make it more difficult to take a movie off of your shelf and lend it, sell, it, rent it, or give it away, because your “shelf” is now your hard drive. You can still give away your copy of the movie, provided you give away your entire library residing on that storage medium.

Meanwhile, Netflix began streaming. Using a pitch along the lines of “we can pay the warehouse fees and postal service, or we can pay the studio a license fee,” Netflix was able to negotiate streaming rights (public performance licenses) at rates that, for the studios, might offer a better deal than the wholesale price of Netflix’s DVD purchases. Streaming took off.

But then, as Netflix gained a critical mass of subscribers, it began reducing its DVD title inventory, began producing its own movies and shows that required no license fees to stream, and had every reason not to pay for the right to stream movies the addition of which were unlikely to produce enough new subscribers — or cause enough subscribers to cancel — to justify the license fee.

As a result, DVD sales and availability to the public has shrunk dramatically, and streaming licenses have simply not taken up the slack. Adding to the injury, “exclusives” tend to guarantee the creation of silos, such that one needs to pay several different streaming services to get even a reasonable fraction of what used to be available. Disney wants its own silo.

There is hope, though. Thanks to US and Canadian court interpretations of the reproduction right, it is clear that shifting the work from one physical medium to another without copying is not infringement. Video industry veterans (that I am honored to work with) have recently disclosed a patent-pending process that will once again let people lend, rent, gift or sell a copy without conveying their entire library, by use of a process that shifts the work from one medium to another, such that no copy is ever made.

While some copyright owners might fear a return to the heyday of video rental, when their biggest customers were video rental stores, I suspect that many more will welcome a means to get their works out there, which is the primary purpose for granting a copyright. The intent is to maximize distribution to the masses, not maximize profit from an elite segment of the population. We need secondary markets to thrive, simply because some people will never be able to watch a movie by paying the primary market prices.

And there is a significant up-side in more movies becoming available. Just as many more movies were made when it was feasible to make a movie “direct to video” without a theatrical release income stream, smaller independent filmmakers will be able to reach wider audiences without having to get thousands of video stores to buy their movie. They used to share DVDs freely within the industry, trying to get the attention of distributors who might be willing to stock, sell and ship to video stores. If demand was low, the movie would never see the light of day. With online space-shifting, filmmakers need only persuade one video store to buy them, if that video store is able to shift the movie from the DVD to the customer’s hard drive a thousand miles away. With just one video store willing to cater to true videofiles rather than just focus on niche films or new releases, we can reach the entire country – or the world. Plus, movies that appeal mostly to niche audiences, such as foreign language films or movies from particular regions or cultures can finally gain more widespread access. The fan of Bollywood movies can rent them even if there is no Indian community nearby that might warrant a local merchant carrying them, so long as the online space-shifting retailer has a copy available for space-shifting. If demand is high, the retailer will buy more copies, benefitting the filmmaker.

Bottom line: the sooner that true space-shifting comes to market, the sooner that these silos can become irrelevant, and the sooner studios will offer reasonably priced streaming licenses to all licensees in order for them to compete with the space-shifting delivery, just as they used to provide more attractive streaming licenses to compete with DVD-rental delivery.