Movie studios disagree with new streaming service’s business model

Zediva, a new movie streaming service based in the US, has chosen a strategy that places it opposite the studios whose movies it provides viewers access to.

People streaming a movie with Zediva in fact watch the feed from a DVD from afar. Every viewer watches the stream of one DVD operated from Zediva’s premises.

This allows Zediva to offer streaming access to movies as soon as they are released on DVD. That way, they found a ‘loophole’ to bypass the later release dates for streaming service. Services like Netflix, iTunes and Amazon all have to negotiate the rights to creating a digital copy of movies for making them available for online viewing. Normally, the studios reserve a period of about one month after movies appear on DVD to stimulate the sale of movies on discs.

By operating the way they do, Zediva claims, their service should be seen as a DVD rental store.

The MPAA, representing the large movie studios, disagrees. In fact, their displeasure has led them to request the district court of Los Angeles to order that Zediva immediately cease their practices.

How the suit will play out is anyone’s guess. James Grimmelmann, associate professor specialised at online legal issues at the New York Law School is of the opinion that Zediva does not stand a chance. “Zediva’s supposed ‘loophole’ in copyright law doesn’t exist. Zediva is about to get pounded by the movie studios, and hard.”

In an article by Wired, Berkeley law professor Jason Schulz argues that Zediva has some strong points in its defence of being the virtual equivalent of a DVD rental store: “If the company is buying legitimate copies they could rent out in a physical world, why not let them rent it out digitally with each rental tied to a physical copy with only one person using it at a given time? The economics are quite similar.”

Source: Wired and Ars Technica