Zediva Streams Movies From Physical DVD Players, Argues It’s Legal | Hacker News Reader

Zediva Streams Movies From Physical DVD Players, Argues It’s Legal

techcrunch.com

83 pointskapitalx47 comments

Brilliant. Makes me want to become a customer to support their sheer chutzpah. I guess they must have done at least some legal homework. Not that it matters much when you're baiting the attack dogs of the content industries, whose primary fear seems not to be loss of revenue but loss of control.

> the content industries, whose primary fear seems not to be loss of revenue but loss of control.

As a matter of fact, this company is proposing to stream movies for half of what Netflix does. I'm pretty sure that the studies get less than half the money from this than they would get from Netflix. So yes, there is definitely a significant loss of revenue (or would be, if this company ever got anywhere.)

Loss of revenue per rented movie. Depends on the degree of saturation of the market whether it's true loss of revenue. The video streaming market in Europe has barely been touched; iTunes movie rentals only recently opened up to more regions, and at €3-4 per movie it's very expensive compared to DVD rental.

It's also more difficult, and drastically more expensive than BitTorrent.

Yes yes, and paying for your groceries is more expensive than shoplifting too, can we please not have the discussion where people pretend that stealing stuff is just as good as buying it? Most people are law-abiding citizens.

Can we please not use the "stealing from a shop" analogy as it is not a parallel. Cloning and taking a copy of the groceries would be closer. IP theft is not the same as literal theft. It's similar but this analogy is terrible brain food.

Stop using the S word! Seriously. When you steal something, the rightful owner no longer has the item. You cannot by definition steal digital content. You can merely copy it. Does that result in damages to the original owner? Maybe. Is it stealing? No.

honest question: do you think identity theft should likewise be renamed?

Since identity theft means that the person looses stuff (privacy, high credit score, etc) it seems like it was perfectly named.

"Identity theft" is merely a type of fraud. The victims are the creditors, and what you "lose" (the opinion they have of you) never belonged to you.

Identity theft is a much broader issue than just credit reports.

http://en.wikipedia.org/wiki/Identity_theft

Essentially it's a way to accrue benefits while pushing any negative consequences on someone else. Those negative consequences can be material and not merely opinion. (E.g., your actual bank account can be drained and your checks can bounce.)

Further, opinion does translate into material consequences. Your options largely depend on the opinion that other people have of you.

Even narrowly construed, a mere credit score is a source of opinion that can affect everything from housing (buying OR renting) to employment, to getting a cell phone or any other type of service. Straightening out your credit can be very difficult, and even if you are successful, the fraud was a denial of service attack against your time. Credit bureaus rarely if ever face penalties for maintaining inaccurate information, so the onus is on the person whose identity was stolen.

If you don't think the individual is victimized, I invite you to post all your credentials and see where the experiment leads.

That's a metaphor.

> honest question: do you think identity theft should likewise be renamed?

I don't care about that one so much. The reason is that nobody's agenda is being pushed each time that we say identity theft. We also all know what identity theft is and what it does to the victim. OTOH saying "don't steal music" makes it sound like a different issue than it really is.

I'm pretty sure paying for groceries is drastically easier than stealing them, further hurting the comparison.

Last year? I downloaded a pirated copy of the movie Ink. I wasn't ever going to go to the cinema nor was(and won't) I going to buy it on DVD. I did however buy 2 copies totally about $30 IIRC from the creator directly. This is just one case from one person. Many people who pirate movies also buy the ones they think are worth their money. The think most people like you don't realise is that most of the people who don't pay for any of it in any form wasn't going to do so even if it wasn't available for free. And I too can just blanket everything under a misguided and biased argument; No it's actually more expensive to shoplift because if you were walked out with enough you'd very very likely get caught and you're likely to face some legall challenges not to metion the fact that many people won't hire you unless they have to. That doesn't even take into account the other point you so conveniently misse: it's harder. That point is actually more important than the cost as shown in my case of buying Ink for $30 which is at least 3 times more than it would have cost me to go to the cinema.

I agree, there should be a streaming service in Europe -- It's a huge untapped market, and I wouldn't mind a service like that.

And just like that, the technological world takes a step backwards. It's akin to when Concorde was decommissioned; the standard way to sell streamed movies may become to have a physical copy, with all the limitations that causes. This time it's due to legal restrictions.

Whilst this change will hopefully benefit customers and help lower prices, anyone can see that this is not the optimal solution.

Actually I think it might work the other way.

At the moment Netflix can't get licenses to stream the vast majority of movies. But if this business model works and is legal then Netflix can say "Hey look, your fancy new movie is going to get streamed over the internet anyway, you might as well license it to us".

I imagine the studios make more money on average getting fifteen cents per watch from Netflix than selling a physical DVD to these other guys and letting them play it until it wears out.

So this business might encourage a shift that works out to everybody's advantage: the consumer, the studios, and the existing dominant player Netflix. Everybody's advantage, that is, except for this guy, who finds himself driven out of business as soon as Netflix starts streaming every title in their library.

Or they just charge $1000/copy for 'rental' DVDs with a license saying that the retail DVDs can't be rented.

That's what used to happen in VHS days - the rental copy to blockbuster was $100, then 6 months later the retail copy came out for $10.

I'm curious to see wich kind of legal weapon the movie companies are going to use to fight this one.

I expect something like forbid playing rental dvds on players more than 10 feet away from the TV... This is going to be sick.

Oh, that's easy. This company claims that the user is the only thing legally involved, and they have merely provided tools which the user is using to watch DVDs that happen to be physically located elsewhere. Therefore they are entirely uninvolved and therefore can't be said to be in violation of anything, indeed, they shouldn't even be a party to the suit; if the movie companies want to sue anyone, they will claim, it should be the end-users. The companies will claim that this is not simply a tool and that the company is actually involved in serving out streams that they do not have a license for and are therefore violating copyright.

The reason why this will be an exciting lawsuit to watch is not that the arguments are subtle or difficult to predict in advance, it is that they are both oqually correct. What's wrong isn't either of these arguments, it's the foundation of law they are built on, which simply can not handle this conflict. I've been waiting for this one to pop up for years. There are numerous other minefields like this waiting too.

BTW, the temptation to physical metaphor is strong here, but as always should be resisted. There are no physical metaphors that adequately capture the Internet and this is no exception. No, this is not merely like stringing a big wire across the internet, there are critical ways in which that differs from this situation. For instance, when I physically own a DVD it isn't possible for anybody else to know what I'm watching, and if the manufacturer goes out of business nothing happens. (Remember, it only takes one relevant difference to sink your argument-by-metaphor, which is why it's such a terrible argument technique and basically should simply never be used for Internet issues.) On the other hand, this is also quite clearly not identical to Netflix-style streaming, as it also has relevant differences. (So, from another point of view it is fair to say both arguments are also equally incorrect.)

You can argue the ethics quite fruitfully, but I believe the legal answer to this can only be said to be undefined. There is literally no provision for this anywhere in copyright law, in fact copyright law is fundamentally built on the premise that it is possible to cleanly separate copyright issues into various distinct "domains" (books, music, movies, etc) which don't cross or interact. As computers and the Internet blur these domains together and create some news one, the law really can't deal with this. The system is not built to handle the idea of you owning something and consuming it from a distance, either, the particular undefined thing this company is trying to wiggle through.

(Which won't stop a ruling shutting these guys down this time, but at some point the law is really going to have to address this problem head on.)

Unfortunately I think you're right that there will probably be a ruling that just shuts them down. Having worked for a company that was sued by large media companies and lost, I can say that while the suit was extremely complicated, the individual details were mostly glossed over as irrelevant. (for instance, the difference between a website and desktop software) The court knew where it wanted to end up, and wasn't all that concerned about how it got there.

As hackers, we'd like to think of the legal system as a big piece of software that responds consistently to commands, but for better or worse it isn't.

I think one could make a not-entirely-unreasonable argument that by streaming the DVD you're making an unauthorized copy of the data on it.

What are they doing, after all? They read bits off the DVD, make another set of bits which contains essentially the same information compressed, and transmit it to a remote location. Sounds like making a copy to me.

How do you play a DVD on a modern TV? HDMI. Same exact type of "copy".

If you "rent" the player from them as well as the movie, then it is the same fair use that allows you to play a DVD on your tv.

HDMI, or whatever--even via analog makes up to 5+ copies just to get out of a modern TV (D->A from your player, A->D to your TV, several copies and augmented copies into a buffer handling picture processing, scaling, and motion smoothing, and then pixel elements in an active matrix LCD store their values in embedded transitors, and the physical twist of the liquid crystals is another copy, not to mention the light travelling through the air, the copy your retina makes as it scans the TV, the persisted gradually degrading copy that makes it into your mind)).

The difference being that those copies are authorized by the copyright holder and this one is not.

You're right in that that's an obvious counterargument. I don't know how it would play out in court. I don't wish to argue that my "this is a copy" argument is undefeatable, but I think it's sufficiently plausible that this is what the copyright holders will argue when it comes to trial.

Scenario 1: Your DVD player is connected to your TV with a cable.

Scenario 2: A DVD player is connected to your TV via several cables (The internet).

I don't see a great difference there, other than the length of the cable.

And this is why geeks make bad lawyers. "Surely," they say, "if A is allowed, and if by a set of trivial extensions we can turn A into B, then B must also be allowed". But the law looks at A and B and sees two very different things, draws a hard boundary which might not make any particular sense, and doesn't care about careful analytic arguments.

Here's another copyright problem. If I have a party and screen a DVD to ten people, that's fine. If I have a party and screen a DVD to twenty people, that's fine. But if I have a party and screen a DVD to five hundred people, I'm holding a public screening and it's not allowed under the terms of my DVD license. How can this be? It just is.

That's a separate issue though. Screening a single physical DVD to a party of people simultaneously is illegal.

But me connecting a really long cable to a DVD player and connecting it to my TV. There's no way that can be illegal. There is no A and B in your argument. There is 'A'. Connecting a DVD player to a TV using a cable.

I guess, it's actually like renting a digital copy (since most of the time it will be served through cache, right?), just you aren't able to serve more copies at the same time than you legally possess.

That's smart.

I think if they had to argue it in court, they will present the cache as an irrelevant technical detail, just like how fleeting copies of frames from a DVD are stored in buffers and decoded when playing the DVD on a traditional player.

The Doctrine of First Sale allows people to rent out DVDs, and people in lawful possession of a physical object like a DVD to watch them (but not make a copy); if the transient data stored in DVD players for the purposes of decoding and playing a DVD don't count as copies.

US law explicitly gives the copyright owner exclusive rights to authorise who can "display the copyrighted work publicly" - but if it is only going out to one person, I suspect that they might not be able to prevent it.

Wow, that's not a very scalable business. You need one physical DVD player for every concurrent customer, inventory of all of the DVDs sufficient to handle peak demand, and a small staff of bored employees keeping the right DVDs in the drives.

In other words, you still have all of the worst features of owning a DVD rental store.

yes, but your 'rental store' can now be a warehouse in Mexico -- no need for expensive real-estate or US employees. As for putting the right DVD to play -- jukeboxes have been doing that since the '50s, it's not exactly impossible to automate.

Keeping the inventory is a problem. But you could probably play an in-demand DVD a dozen times over a weekend, while netflix or blockbuster could only rent it out once or twice.

You'd have to make enough over time (accounting for growth) to make up for the cost of the DVD players (and video capture cards or PCs) and the cost of the DVDs themselves, plus operating costs. I honestly wouldn't be surprised if they're running a few token DVD players and the rest streaming from a server (artificially limiting play count) in the hopes that they can buy time and traffic to work out some kind of deal with the movie companies.

With a dvd player costing $30 or less retail, it shouldn't be hard to get 500 of them at $15. Hook up some IR remote infrastructure, automated switching of the output signals and you should be ready to serve 500 customers at a time for 25k. (for an order that size or a bit bigger a Chinese outfit may even be willing to wire the IR receiver so that there is a direct control line hanging out of it, ready to be hooked up the control server) He has a very small library says the article, so not even a need to actually switch dvd's; even if he does, two high school kids @ $7.25/hour (or nearshore to Mexico for even cheaper labor) can keep up with switching those 500 machines if he has automated the ejecting and sorting of the newly to insert dvd's (that is even assuming that there are no two customers who want to the same movie, and I think the movie rental is heavily long tail, so half of those machines will probably have the same movie in them for weeks on end).

I'd think it's massively scalable. Not enough capacity? Call your Chinese guy and you can double or triple it in two weeks. Or when worse comes to worst, drive around for an afternoon and empty the bargain bins of all Walmarts in the area.

So let's say you got labor costs of $1000/day if you keep a couple of spare employees at all times and have them work around the clock. Depreciation of inventory is 250/day (very generous - 50k costs depreciated in a year). Rent a warehouse, buy paper clips, 250 a day. Thing that I'm most uncertain about is bandwidth, let's say 300 a day? (2 gb/movie, 3000 rentals a day (see below), 0.05 cent per gb in bulk) His largest expense is going to be the lawyers, let's say a full time one at full rate, 1000 a day.

Total costs 2800 a day. Now let's say he's running at half capacity and at all times, only 1/2 of the players are active (on 2 hour movies). He charges $1 for each movie, way below market rate - premium content here in the EU is 6 euros, about 8 dollars, but let's say he goes for rock bottom prices. That's still $3000 a day, putting him in the black. Including 30k+ a month in legal fees. With every additional sale being 95% profit. If this sticks, which I doubt it will, he's got a good deal.

(this assumes 3000 rentals a day. I don't know how much this really is. Netflix has 10 mil subscribers, they claim; let's say each rents out one movie a year. That's 27k a day. So you'd have to be about 10% of Netflix's size to make that).

Why even bother having someone to switch DVDs if you can get the players so cheaply? Just assign a disk to a player and treat it as a unit, and don't touch it unless it breaks. You could even wire up the unit to be controlled by software and powered off when no one wants to watch that movie. I suppose it would increase space usage, but it would greatly simplify operations if you don't have to depend on a person to load and unload devices.

I imagine that the AV cabling and switches could get pretty expensive with that many players.

If it takes off, I imagine they'll start building some clever custom hardware. It's not going to be an enormous rack of Sony DVD players with big black cables coming out the back of each.

Would it be more expensive than what netflix has to do with physical rentals? No.

Running at half capacity seems rather optimistic. Especially if business is primarily concentrated in the US timezones then there should be a heavy peak load in the evening and not much action in the morning. And if you're regularly overrunning your capacity in the evenings then people are going to get frustrated with your service (imagine going down to the local video store and having them tell you that unfortunately they're completely out of all movies...)

OK, then add another 250 a day for double the equipment. Now he only needs average occupation of 25% and he's still at break-even, without discounting for the other costs savings that will show up once you start going into that much detail (like only having to have one guy swapping DVD's at night). Like another poster remarked, for $1000 labor a day, with the numbers above, you can get 5 times the amount of dvd players (eliminating labor completely if you have one player for each CD you offer, and I guess you need a help desk...) and still come out to the same numbers.

Maybe I'm way off the mark on some of these numbers, I don't know; I'm not familiar with this industry. The 'generic' parts of it are realistic though, I think.

You could have a robotic arm doing the disc changing. The SCARA types are pretty cheap these days (just checked ebay and used ones are $2-5K US). Without human contact the discs should last a very long time. And the robot would be a fraction of the cost to operate of your 7.25 employees.

So Zediva is pursuing the redbox strategy, except by streaming instead of physical rental.

Most movies have a sticker on them saying not for rental (rental ones have a sticker saying not for resale).

They could also claim this was a public performance.

I wouldn't mind if I could dump all my DVDs into a box, send it to someone and have them stream them to me when I want, to any device I want.

That's actually VERY similar to the system I am setting up... but with an added secret component. see an earlier post with some signup codes for the private test: http://news.ycombinator.com/item?id=1825578

as of right now I believe only 2 of the codes on that page have been used.

It would be nice if they could stream a digital version (non-optical copy), but still buy the physical copies and keep track of how many were in use at one time as to not "use" more than they own.

Great! We need even more complex laws ...

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