A friend told me that her library has recently started charging to check out the DVDs they have in stock. You pay $1 to rent the movie for 10 days or some such thing.
I was under the impression that purchase-to-rent movies was an entirely different contract agreement than a library’s purchase-to-lend would be. I’m perfectly happy to be wrong, of course, but now I’d like to know:
Anyone have the Straight Dope on the legalities of libraries originally purchasing movies to lend out to patrons, then deciding to rent them out instead?
Thanks!
It may be some particular program; you might even have to sign up for it. Such a thing is not unknown in libraries–some places have ‘bestseller’ programs where you can rent the latest hot title for $1, for example. People who are willing to pay to get the book right away can do so (and thereby fund the program), and more patient types can get on the regular waiting list.
Or, perhaps the library is finding that it’s losing too many DVDs to theft, and can’t afford the loss any more.
It might require some kind of special set-up, I’m not sure, but the idea of renting certain items from a library isn’t unknown.
I hadn’t thought of a “bestseller” or “new releases” type-program. I asked my friend, and she says that it’s on every movie, though, not just certain ones.
The libraries here charge $1 for three-day movie rentals (DVD and VHS) and music rentals (CDs, no vinyl that I’m aware of), but educational programs and documentaries are free.
There is no license required to rent out movies. It is not a copyright issue: you’re not making a copy.
It’s possible that a video distributor can make restrictions to a video rental store on what they can rent (though I doubt it), but that would only apply to the distributor.
If the library bought retail, they wouldn’t be under any restrictions.
It’s be no different if you rented the movie to your friends: perfectly legal if you can get your friends to pay for it. Remember, the actual tape or disk is your property and you can do anything what you want with it – except make a copy.
I’m a little loathe to believe this. As far as I know movies are licensed for private home viewing. Not public exhibition and certainly not for renting. At the public library you will actually find a cite license from a centralized licensor that grants them the right to rent out these movies and exhibit them publicly. My public library has it prominently displayed in its vestibule, though the name eludes me at the moment. I shall search for it.
Viewing and renting are two different things. Any public performance requires a license and a library would have to pay for that. Also, anyone renting the disk is under the same restriction for a public performance. It says so right on the DVD or cassette.
But rentals are different. Since no copy is being made, it’s not a copyright issue. Since it’s not a public performance, it’s not a licensing issue.
Note that DVDs or cassettes don’t have any warning saying you can’t sell or rent them. They say they are licensed for private performance only; they say that copying is illegal, but they are silent on anything else you do with them. If it were illegal to rent out the DVD/cassette without permission, don’t you think they’d mention that, too?
Renting out a movie is no different from lending it out (nor is it any different legally from lending out a book). The actual physical disk or videocassette is the property of whoever bought it. The library can do what they want – rent it, sell it, lend it, burn it, use it for a Frisbee – unless they either make copies or show it in public.
It seems we have some disagreement here.
I always heard that video rental stores have to pay some big money for each copy that they purchase, since they’re special “rental copies” or some such nonsense. As RealityChuck mentions, I only remember seeing restrictions for public performance and copying. Could the video store just buy a regular old DVD and rent that?
My understanding is that when the video is first released, it costs a couple hundred dollars. Video rental places will buy the video at this price, but most consumers won’t. It’s only later, when the price drops down to twenty bucks, when it starts showing up in stores for mass market purchase.
That’s what I’ve been told, anyway.
-FrL-
I forgot: That’s how it used to be with VHS but its not how its handled with DVD anymore. DVDs are available at an affordable price from the very beginning.
-FrL-
Except, information at this link: http://en.wikipedia.org/wiki/Blockbuster_Video#Elimination_of_late_fees seems to indicate that there is some kind of restrction on whether a buyer may rent the video out to others or not. It is mentioned that Blockbuster used to pay sixty five dollars per video for the right to rent it, and later moved to a model where they gave the publisher sixty percent of the rental fee for the right to rent it.
So now I don’t know which dope is of more utmost straightness w.r.t. this.
-FrL-
It’s pretty interesting if you google “first sale doctrine.”
This link explains why it is legal to rent a DVD in the US.
This link explains how Blockbuster’s deal with studios changed in the 90s.
This (PDF!)link tells a little bit about the struggles the studio had to try to charge more to rental retailers and why they settled on delaying the sellthrough versions until the rental market for a title had calmed down.
From what I have read in these links, the studios spent a lot of time trying to come up with a way to charge rental retailers more, but it was always back and forth because of the shades of gray in copyright laws and discrimination in pricing laws. They eventually settled on delaying the sell-through release because it is a legal way to charge more to a rental store that can afford it and needs the release before its competitors. They gave up on it because of the increase in direct sales to individuals that made it more profitable to release the lower priced version immediately to maximize sales while the movie was still hot. Blockbuster doesn’t pay them a percentage of rental revenue because of copyright, it’s a mutually beneficial supplier contract. Even if Blockbuster doesn’t have a legal obligation to pay royalties, they have to give something back to guarantee their credit and return terms, pre-shipment and pricing guarantees, etc. It is probably just the best agreement they could negotiate with the studios to get what they need from them as distributors. Distributors still have some leverage since the retailer is dependent on them in so many ways. Blockbuster has to have their movies when and in the quantities they expect at a price they can agree to, so the studios can ask something in return. I don’t know if it would be better for Blockbuster if they just bought DVDs at a discount and took their chances keeping 100% of the rental revenue, but if they want their distributor to sign a contract guaranteeing things like new release pre-ships or price guarantees, they have to negotiate that, so the studios have some leverage on those grounds even if they have no legal right to prohibit someone from renting.
I should say “I think.”
From all these links, it says over and over that studios can’t win if they just try to block someone from renting their product, so I am assuming that Blockbuster pays a percentage of rental revenue either because they make more money that way, or because it is just what they have to do if they want to order directly from studios and have the studios contractually obligated to ship the movies exactly on the terms Blockbuster needs. That’s nothing to sneeze at in such a time sensitive and competitive market.
Pokey is generally right. What’s confusing people is the studio’s pricing policy.
Originally, tapes were expensive. The studio charged a very high price to the rental stores, since that was their only market. It only costs a studio a very small amount of money to make a tape (blank tapes are around $2 around here), so they were, in effect, “paid” for the multiple uses.
Then studios decided to sell the tapes to the general public, who wouldn’t pay $80. However, a cut in price would cost the studios money in sales to rental places. Tapes were divided into “priced to rent” and “priced to sell.” Some tapes were priced to sell at the start. Others were priced to rent to begin with, then, after the rental market dried up, they would be priced to sell. Some, more obscure or independent films, were solely priced for rental.
The difference does not involve any restriction on renting. It was solely done as a gauge of the audience: if the studios thought the tape would sell well, they’d sell it cheaply and make up for the loss from sales to rental stores from the extra sales to the general public (Top Gun showed that this strategy could be wildly successful). If they didn’t expect a lot of sales, they’d sell to rental places and then, after those sales went away (rental places tend to buy movies as soon as they come out, and rarely reorder later), would sell to the general public. If the film was obscure or a flop, there wasn’t any point in going to the trouble to sell them cheaply.
When DVDs started, the studios were planning to use the same system, but one executive convinced them to make everything priced to sell. It worked superbly. But rental places can’t be charged more for DVDs, since they could just preorder them at Wal-Mart.
So, to recap:
- The person who purchases a DVD or other media can do anything they want with it.*
- Rental stores pay the manufacturer a one-time payment for the physical disk/cassette. As long as there are no copies made or there’s a public performance, the manufacturer has no legal say in what the stores do with them once the check clears.
- As far as the law is concerned, there is no difference between a rental store buying a tape and an individual (or a library) buying a tape. Anything the rental store can do, the individual or library can do.
- There was at one point two-tiered pricing, one for rental, the other for sales. However, the higher price involved no restrictions on use; it succeeded because the rental store needed the tape now, not six months from now when the price came down.
- At no time was any tape ever offered for sale at both levels simultaneously: the video stores would then just pre-order the cheaper ones from the nearest Wal-Mart.
- Two-tiered pricing was eliminated soon after DVDs took over.
- Note that when you buy a DVD/tape, you are not asked to sign any agreement not to rent it, sell it, or anything else. Furthermore, note that there is no warning against renting, etc., anywhere on the CD. You have no restrictionson any tape you buy from Wal-Mart. Thus, if the library buys the tape from Wal-Mart, they don’t have any restrictions either.
- Studios would love to have some sort of restrictions on this, but haven’t been able to convince anyone to change the law.
If you’re asserting otherwise, state what law it might be violating if you rent tapes. Degree of difficulty: it’s not copyright law.
*Except for copyright restrictions on copying it or using it for a public performance.