[Infowarrior] - Why Hollywood Hates RealDVD

[Richard Forno]

October 10th, 2008
Why Hollywood Hates RealDVD
Legal Analysis by Fred von Lohmann

http://www.eff.org/deeplinks/2008/10/why-hollywood-hates-realdvd

Why does Hollywood hate RealDVD so much? Here's a hint: it has nothing  
to do with piracy and everything to do with controlling innovation.

Earlier this week, a district court in San Francisco extended the  
temporary restraining order (TRO) blocking RealNetworks' distribution  
of its RealDVD software, at least until a full-dress preliminary  
injunction hearing can be held sometime in late November. Although  
reporters have done a good job reporting on the hearing, they have not  
answered a more basic question: why does Hollywood care so much about  
RealDVD in the first place?

It's not about piracy. After all, those who want to copy DVDs have  
plenty of free, widely available, easy-to-use software to choose from  
(e.g., Handbrake, DVD Shrink, Mac The Ripper). And those who want to  
skip the tedium of DVD ripping altogether can easily download movies  
from unauthorized sources like The Pirate Bay. In short, Hollywood  
can't possibly believe that the $30, DRM-hobbled RealDVD software  
represents a piracy threat in an environment rife with easier options.

So why unleash all the expensive lawyers to kill RealDVD? Answer: to  
send a message about what happens to those who innovate without  
permission in a post-DMCA world.

As we've said for years, DRM systems like the Content Scramble System  
(CSS) used on DVDs are not principally about preventing piracy.  
Rather, DRM is the legal "hook" that forces technology companies to  
enter into license agreements before they build products that can play  
movies (Hollywood lawyers candidly admit this "hook IP" strategy).  
Those license agreements, in turn, define what the devices can and  
can't do, thereby protecting Hollywood business models from disruptive  
innovation.

This arrangement reverses the previous innovation status quo. Where  
non-DRM'd content (e.g., books, broadcast TV, the CD) is concerned,  
innovators do not have to ask permission before building new products  
that can copy and play copyrighted works (e.g., the photocopier, the  
VCR, the iPod). But where DRM'd content like DVDs are concerned,  
Hollywood intended the DMCA's anti-circumvention provisions to slam  
the door on that kind of disruptive innovation. After the DMCA,  
technology vendors would have to ask permission, sign licenses, and  
make concessions, if they were going to build things to play DRM'd  
Hollywood movies.

So it's not that Hollywood implacably hates personal use format- 
shifting and space-shifting -- rather, Hollywood wants to make sure  
those new features happen on Hollywood's terms ("pay us again"), on  
Hollywood's timetable ("later"), and only after valuable concessions  
have been wrung from technology companies ("watermark detection,  
compliance & robustness requirements, down-rezzing").

That's why RealDVD is such a threat. By reading the existing CSS  
license carefully, Real (and Kaleidescape before it) found a way to  
create a new product category without first getting permission from  
(and paying obeisance to) the Hollywood studios. Real's defection  
represents a threat to several schemes that Hollywood has been working  
on for throttling DVD innovation over the next several years. For  
example:

     * Managed Copy: Hollywood has been negotiating for years with  
technology companies over "Managed Copy," a mechanism that will allow  
limited copying of DVD and Bluray discs onto PCs and portable devices.  
"Managed Copy" has been promised for years, yet has not materialized,  
thanks to power struggles inside the organizations that run the  
relevant DRM licenses (DVD-CCA for DVDs, AACS-LA for Bluray). In the  
course of these negotiations, Hollywood has managed to wrest several  
important concessions from technology vendors (including requiring  
that computers do watermark detection to spot pirated copies when  
reading data from Bluray discs, and imposing DRM on resulting copies).  
If those technology companies can build things like RealDVD and  
Kaleidescape under the terms of the existing contract, then the  
prospect of more negotiations and concessions for Managed Copy  
suddenly seems much less appealing.
     * Digital Copy: Hollywood has begun selling DVDs that come with a  
second disc that permits the making of a copy on a PC. The catch? You  
have to pay extra for the right to make this personal use copy -- in  
other words, Hollywood is stealing your fair use rights and selling  
them back to you piecemeal.
     * Internet Download Services: you already bought it on DVD, but  
now Hollywood wants you to buy it a second time from iTunes, Amazon,  
or MovieLink if you want to watch the same movie on a PC or iPod.

So that's the real story here. It's not about piracy. It's about Real  
defecting from the DRM licensing cartel, building what consumers want  
now instead of negotiating endlessly for a spot in Hollywood's next  
Five Year Plan for the DVD format.