How Hollywood Studios Promote File Trading: Delete Movies Off Digital Shelves

It's gotten so easy to rent movies on the ?tv that my wife had actually rented one, 27 Dresses, three times. Yes, the money we've spent to rent this particular movie has added up to more than the cost of owning the video. No, I'm not bitter about it or anything. Earlier this week, I was helping her put some movies on the ole' iPod so she could have some in-flight entertainment for a work trip. Of course, she wanted to have 27 Dresses again, so I said, "Can we please buy this movie once and for all?!"

Unfortunately, when I went to the iTunes Store, the movie was no where to be found--for rent or purchase. I wondered if anyone else had experienced this. I swore we rented it from iTunes, and verified it in my purchase history. The closest I could get to the movie was its soundtrack, it didn't appear to be available on the other movie download services either. Little did I know, I had unwittingly stumbled upon a new Hollywood business model (unlike those that some Hollywood advocates call a new business model).

Now I find it's been reported by Macworld and Cnet that indeed movies are being removed from the digital shelves. Why? The purported reason for the movies' disappearance is so that Hollywood can extract revenue from an exclusive broadcast television distribution window. To be clear, the articles say "broadcast television," but I presume they're really talking about cable / satellite television exclusively license distribution, not over the air broadcasts.

Like the CNet writer, I question the logic here. Yes, I do understand the meaning of "exclusive," but one product a consumer can only watch at a certain time with commercials, and the other product can be watched at any time without commercials. They both may be the same content, but the product is indeed different. The studios don't take down the videos from the Blockbuster shelves for these kinds of exclusives because they can't--those copies of videos are generally sold to the Blockbusters of the world, not licensed or rented. Here, the Hollywood studios retain control of the digital distributions through licensing, and with this control can fashion seemingly ridiculous business models like this one.

The CNet article ends with:

Hollywood will only be persuaded to give better terms to Internet stores when large number of consumers show them that they prefer this to traditional TV viewing.

I will be the first to admit that the studios are making forward steps to distribute their digital content online (as evidenced by the first line of this post). And yet, with this move to take movies off the digital shelf, Hollywood is taking two steps back by making it difficult for consumers to trust online distribution. When videos are here one day but gone tomorrow, studios make it difficult for consumers to have the chance to prefer online to TV viewing. Why make consumers choose if studios are deriving revenue from both products?

Yes, more and more episodes of TV shows are available via sites like Hulu, but not without drawbacks: usually just the most recent five shows. Shows are available for rental, but you better make sure to have the newest, more restrictive hardware (a mistake I almost made this weekend). HD video downloads are becoming available, but don't even think about watching them on your not-that-old current TV. And don't forget that Hollywood is asking the FCC to legally and technologically enable these crazy business models into FCC regs with the SoC petition so already frustrated consumers have even less choice.

All of these intentional limitations set by Hollywood and agreed-to by online services and hardware manufacturers trip up the paying customers. Increasingly, these people are not the early adopters who may be willing to tolerate glitches. No, Hollywood, these are average people with their digital download queues and their credit cards ready to be charged for the privilege of viewing your content right now, and you're yanking movies out of their playlists. You're refusing their money.

So, studios, if you see an increase of these movies traded online, you know where to look for someone to blame.

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