Looking At The Redbox Antitrust Fight
from the is-it-an-antitrust-issue-or-not? dept
Law.com has a nice article detailing the legal issues involved in the battles between Redbox and the various movie studios. The main question is whether or not it's an antitrust violation on the part of the studios to block distributors, wholesalers and retailers from selling DVDs to Redbox. The studios want (a) a revenue share from Redbox (b) Redbox not to offer new release DVD movies for rental and (c) Redbox not to sell used DVDs. The reasons are pretty obvious: Redbox is a much more competitive offering. Since it's a lot less labor intensive, it's able to offer the DVDs for much less (both rental and sale), and the movie studios are freaking out, because in their minds, their old revenue streams should never be allowed to decrease.The statements from the studios on the dispute is incredibly disingenuous:
"The real complaint is Fox won't sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation," said Watson, an antitrust expert who has teamed with Yosef Riemer, a litigation partner in Kirkland & Ellis' New York office, in representing Fox, part of News Corp.'s Fox Filmed Entertainment. "There's nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands."Indeed, Watson is correct that no seller needs to offer the product at the price the buyer demands, but that's not what's being disputed here at all. Clearly, prior to Fox and some of the other studios throwing their hissy fit, the distributors had no problem selling DVDs to Redbox at the prices Redbox thought were reasonable. The studios sold the movies to the distributors at the usual price, and the distributors sold them to Redbox at the usual price. Everyone should be happy.
But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade. The studios have every right not to sell videos to whomever they want -- but those distributors and retailers can then sell to whomever they want. The studios should have no say in the downstream sales of the videos once they've been sold to the distributor, wholesaler or retailer. That's where the antitrust issue is. The studios are successfully controlling downstream sales.
The studios are either being disingenuous or are just playing dumb when they claim that there's no antitrust violation because end users can still rent movies from Blockbuster or Netflix. But, that's defining the wrong "user" for the market in question. The market is in being able to buy from the distributor/wholesaler, and the "customer" is a retailer like Redbox. And these studios have stopped that customer from being able to make a perfectly legitimate purchase. That's the antitrust issue, and it's amazing that the studios think anyone will believe their false market definition or this bizarre claim that this about Redbox demanding some special price. It's not. Hopefully the judge recognizes that and doesn't fall for the studios simply making stuff up.
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Filed Under: antitrust, dvds, rental
Companies: 20th century fox, ingram, redbox, universal, video product distribution, warner bros.
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Price...
That pretty much cuts out the studios spin on "special prices" doesn't it?
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Re: Price...
Right, but the article notes that the studios have convinced *retailers* not to sell to Redbox also, which seems to go way over the line. I mean, I guess Redbox employees could walk into Best Buy and buy up the DVDs there, but I'm guessing that just buying at the local retail store doesn't give Redbox enough DVDs to fill its vending machines.
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Nothing, but it has everything to do with my HellaSuperBlockBusterMegaVideo Store that will soon open in IL.
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Mike, I was not knocking you or the article in anyway-I do get the point of how the studios are trying to control the entire chain (kind of like one of my aunts who used to give me pocket money when i was a kid... and then tell me how to spend it - if the studio was my aunt she would be holding my hand and making sure i spent it only on "approved" items at "approved" shops at approved dates), was just asking if Redbox saying so, doesnt it knock the wind out of the sails of the studios special prices argument, who say one of the three issues is RB wants special pricing?
As for buying at the local retail store, i think RB would be very popular if they came up with a campaign of: "Buy at your local store, then sell us the "2nd hand" dvd at full purchase price (or $1 less) - valid for the first 100 people in your area"
Just a thought ;)
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Great idea
1. Consumers open online accounts with Redbox. The account contains a Paypal id for deposits.
2. Redbox publishes how many copies of each DVD that they want.
3. Joe Consumer buys the movie, watches it, and then logs in to the Redbox site and 'pledges' the DVD. Each pledge automatically reduces the amount of a particular DVD that redbox is seeking.
4. Joe consumer mails in the DVD with an associated pledge number. When the DVD is received, the agreed amount is deposited into Joe Consumer's account.
A little slower than buying in bulk, but unstoppable.
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Re: Great idea
Not only that, but you can even offer the customers *more* value than they're paying for the DVD without actually paying anything out simply by offering them free rentals: Buy Redbox a DVD worth $20 and get $30 worth of free rentals.
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Doesn't Redbox or any rental outfit (Blockbuster, etc) require a licensing agreement and royalty payments to the studios?
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(Anybody) Feel free to correct me if i got this wrong.
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They could probably work out a contract like this if it's to their benefit, like early release access and (in the case of Blockbuster) special edits (i.e. more G rated cuts and dubs).
Based on the studios' reactions to RedBox's business model, I'm guessing they are sticking with good ol' First Sale Doctrine (FSD). This means if they buy the disc outright rather than "licensing" it (which is a B.S. concept unless you're licensing reprint/resell rights) they can use it as they please, including renting and selling used discs with impunity.
IIRC, Autodesk fought an eBay seller who was using FSD to resell boxes of their software that he found in garage sales, and they lost because FSD legally trumped their EULA. FSD is even more clear-cut when applied to retail media.
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You forgot about the other "special feature" on Blockbuster discs -- extra unskipable trailers and ads.
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You dirty conspiracy theorist!
:)
No seriously, thats a pretty good take/angle that i had not thought of... and that makes sense. Make me a tinfoil hat if you decide to get one, because I'm with you on this.
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Redbox is a subsidiary of Coinstar and their headquarters i located in Oakbrook Terrace, Illinois. Sorry, can't help you on the price of commercial real estate.
:)
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Redbox in my area!
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Redbox
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Re: Redbox
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Re: Redbox
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Re: Redbox
People predicted that Blockbuster would kick Netflix' butt when they got into online rentals. That, uh, didn't exactly happen, did it? The fact is, Redbox has brand recognition, happy customers, extremely competitive prices, and an already-established network. It would be very difficult for anyone, even the studios themselves, to take on Redbox, and with the studios' anti-customer philosophies, they don't stand a chance.
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Netflix and Redbox *thumbs up*
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Restraint of trade?
Would this constitute restraint of trade?
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Re: Restraint of trade?
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Re: Restraint of trade?
Restraint of trade would be if a person or company (like Redbox) purchased a Disney DVD outright, and Disney tried to tell them they could not resell it.
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Re: Re: Restraint of trade?
Restraint of trade can exist along with contracts. You can't "write your own law" using contracts.
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is any one suprised by this??
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Collusion is the Name of the Game
I believe most of the comments are right in on believing that there is some serious collusion going on here between the studios, traditional rental outlets like "Blockbuster", and other industry groups like VBG.
If you take a look at some recent posts on Inside Redbox, you will see exactly what is going on. In a recent post I called out VBG for astroturfing on my site in some very underhanded ways. (see this post) And that is only the tip of the iceberg.
The movie studios clearly didn't learn the lesson of the music industry, and so are doomed to repeat their failure to adapt. Does it really cost them less money to have to deal with lawsuits and loss of public trust than to just learn to adjust their business to changing technology?
I think a lot of heads are going to continue to roll at the studios until someone figures this out. There are already some who DO get it, like Dreamworks Animation (see what Jeffrey Katzenberg had to say).
It's time to stop fighting the future, studios.
Michael
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Collusion is the Name of the Game
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insideredbox is a sham site
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Re: insideredbox is a sham site
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Fox lawyer not being disingenuous
But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade.
Indeed it is, but Redbox has not alleged that Fox has engaged in such activity. The Law.com article says as much. Hence, there is nothing disingenuous about what Fox's attorney said. You need to get better at RTFA.
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Re: Fox lawyer not being disingenuous
Indeed it is, but Redbox has not alleged that Fox has engaged in such activity. The Law.com article says as much.
Help me out here, because this is the section of the article in question:
"When Redbox refused the offer, VPD and Ingram, under direction from Universal, refused to fill Redbox's orders for Universal DVDs on Dec. 1, according to court papers. Redbox claims that Universal then expanded its campaign into a "group boycott" that now includes other wholesalers and retailers, such as Best Buy Co. Inc. and Wal-Mart. Some of these companies have canceled orders or limited the number of DVD copies they provide to Redbox.
"Defendants' true purpose in seeking to impose the Revenue Sharing Agreement is to eliminate choice," Redbox argues in its court papers.
Redbox makes similar claims in subsequent suits against Fox and Warner Home Video.
Redbox sued Fox on Aug. 11 after the studio ordered Ingram and VPD to stop sending Redbox newly released DVDs. Redbox had rejected a blackout period of 30 days."
That looks like Recbox alleged exactly what I said. Which part of TFA did I R incorrectly?
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Re: Re: Fox lawyer not being disingenuous
This part:
"In their motions to dismiss, Fox and Warner Home Video attempt to distinguish between their actions and Redbox's complaint against Universal. Unlike Universal, Redbox did not accuse them of organizing a "group boycott" that involves retailers such as Best Buy and Wal-Mart. That means, Watson said, that Redbox could have a more difficult time arguing that no alternative means exist of obtaining newly released DVDs."
Redbox's complaints against Fox and Warner are not the same as its complaint against Universal. If you had read the entire article, you probably would have figured that out. It's possible that Fox has engaged in the same group boycott behavior, but if that were the case, then I'd be very curious as to why Redbox has not alleged such conduct in its complaint against Fox.
Perhaps you did not misread TFA so much as you did not RTFA in its entirety. Either way, this should be a teaching moment for you. Your economic analysis of the group boycott is spot on, but you raced to bad-mouth the lawyer without understanding all of the facts. Color me disappointed.
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these lawsuits are a joke
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More lies from Inside Redbox money man
What a leech.
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