Which is still Netflix’s own contract, not a matter of law or ethics. Netflix doesn’t do that because it makes them feel better, they do it because they get something in return like:
True. But until evidence is presented as to what the “standard, non-revenue sharing” model looks like (I’d be interested to look at any evidence you can dig up on this), I’m going under the assumption that Blockbuster cannot just go down to Wallmart and buy $20 copies of their latest new-release, and then rent them out. For the same reason that buying a $20 DVD then playing in in a stadium of 10,000 people is illegal.
I thought this article is pretty informative on video rental copyright law.
Specifically, the motion picture industries claim protection under the *Computer Software Rental Amendments Act * of 1990 to retain sole rental rights to their DVDs.
So if you want to open up a rental store, I’m betting you either have to pay a large licensing fee to the studios, have to buy your DVDs from specific authorized wholesalers (at inflated prices), enter into a revenue sharing agreement, or otherwise do whatever the copyright holder asks you to. Otherwise you’re going to get sued.
I’ve rewritten this about four times to be as polite as possible but you’re really making this hard:
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You’re the one making the claim that video stores function that way. Find evidence of that first. And, BTW, you might want to read your own link since it is a ten year old article from the first days of DVD with a lawyer speculating that studios may try to control DVD’s using legal means through a law the author notes that might not stand up when challenged. Since that didn’t happen it’s irrelevant.
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That is precisely how video rental works, though most video stores find it cheaper to get movies through a distributor rather than going to Wal-Mart.
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The different between renting and having a public viewing? Perhaps you should read that screen the FBI puts in front of every movie.
Ok, after reading the Wiki article on First Sale Doctrine, I’m withdrawing my argument.
I am not sure if ethics really enter into it. As long as you are not breaking a contract agreement or messing with the market (e.g. buying up all of a product to create an artificial shortage). The Wii secondary market may have been ethically questionable.
That said, there may be a utility to forgoing a secondary market. If the product takes a large amount of up front work to produce, has a preset amount of utility per user and is easy to transfer without loss of utility, then a secondary market may make it impossible for producers to make a profit. If the potential market is 10,000 users, and development costs are 500,000, than the price should set above 50+unit production cost. If each unit is passed to 5 users, then the price will need to be above 250+unit cost. The higher the initial price, the more pressure to buy used. You can’t set the price high enough to make a profit on just one sale.
Jonathan
Except, as shown by the profits made on numerous hot video game titles, the companies are doing just fine. Halo 3 sales, for instance, reached 8.1 million by the start of 2008. At 60 a disc, new. 60 dollars times 8,100,000. That’s a very, very big number. Used copies were selling on Ebay since the game came out, but obviously the secondary market didn’t do any serious damage to the primary.
I did not say it would be impossible to make a profit. As long as the number of people who are willing to pay for new is high enough they can. Using those numbers, if all 8.1 million games were resold 5 times for 40.5 million than the price per unit could theoretically be (roughly) 5 times lower for them to make the same profit. This was a big discussion back in the early days of software. To make money the price must be >development costs/#units sold+unit cost. Resaling, pirating, or giving away the product after use reduces the #units sold and raises the price. Nowadays, with big games like Halo 3, there a still enough sold to make a huge profit. But never doubt that new product buyers are subsidizing the resalers, pirates, and sharers. Does this make it unethical? I don’t think so. But it may make it impossible to make products with smaller markets.
True story form the late 80s. There was a game on the Atari ST computer called MidiMaze. To the best of my knowledge, it was the first multiplayer, 3d, first person shooter. But since to play multiplayer you had to make a midi-ring with the ST’s built in midi-ports, the only people who played it did so in groups at least some of whom were fairly computer savvy. I played for at least 2 years and only saw one copy that was legal and it was second hand. By my estimation, for every 16 players, only one copy was purchases. Since the user base of the ST was fairly small to begin with, they would have needed to charge several hundred dollars per copy to stay afloat. They didn’t. Eventually the game was ported to the original GameBoy as FaceBall2000, but I don’t know if the original developers every saw a dime. I know this case was more about piracy, but my point is the fewer consumers buy from the producer, the higher a price he will have to charge to make a profit.
Jonathan
There is often a premium on being first to use/buy/play something, which is why people line up to buy things the day they come out. If you make copies of a game and let lots of people play it immediately, they are getting a price break and getting the benefit of being early, and that is unethical (and illegal). Giving or selling a copy after you are done with it means you are dealing with those who don’t want to wait. Often the resale market is competing with discounted prices for new product, not the original prices, so the delta isn’t as big as it might seem.
Also, games that you finish might not have enough value to justify buying new, unless you can get back some of the value by reselling it. It’s the same with books - read once books might not be bought at all unless you can get some value back at the used book store. When authors/game developers create works people want to keep, there is no problem.
Oh. You didn’t know about First Sale? Geez. I’m sorry. I should have started from scratch.
What was that lawsuit in the 70s about the right to modify your own car?