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Zediva’s Movie Streaming Copyright Workaround Isn’t a Loophole … Technically

March 21, 2011

From the brilliantly-risky-business-model department: Zediva, a new movie streaming service, launched last week to widespread head scratching.  See, you can stream just-released movies at Zediva … movies you can’t stream anywhere else.  How do they do it?  Well, they buy a dvd, and rent it to you with a player you operate remotely.  Cool, huh?   Is it legal?  Arguably, per the First Sale Doctrine, it’s essentially like teleporting to Blockbuster.  And thus far, teleporting is legal.  Here’s CNET’s take:  Crazy Zediva streams movies only out on DVD | Rafe’s Radar – CNET News.

So will they get sued?  Hey, creative use of copyright law invites creative counter-attack.  No doubt studio lawyers are brainstorming how to gain enough legal leverage to cajole a royalty agreement or something out of Zediva.  Of course an extended and super-expensive lawsuit is a standard jumping off point for negotiation leverage.   But I’m guessing the studios have a pretty good inkling that this is an issue that’s best resolved quickly, as it won’t be the first time it comes up – at least in some similar context.

But what really caught my attention was the AP article, in which AP calls Zediva’s model tapping into a “loophole”.   No, it’s not actually a loophole, which is generally an ambiguity that allows an unanticipated result when applied to a unique situation… or something like that.  Nope, this is just the unique use of established law through technology the law couldn’t have anticipated.   Sophistry? Perhaps.  Maybe it’s just that “loophole” has negative connotations I don’t hear in “clever workaround.”

In any event, the case law will catch up soon enough, and if wrong, the legislature may catch up in your lifetime.

Meanwhile, given the infrastructure required to run this operation (a dvd and player per viewer), maybe the issue will play out here sooner than through law.  Zediva closed the site to new users within hours of launch.  Initial interest rush to be sure, but can they afford to expand to handle the viewership at $2 a rental.   And more importantly, when will my Roku box add Zediva as a channel so I can support the cause (er, rent new streaming movies cheap).

Update: James Grimmelmann @ Laboratorium.net shares some actual (and supported) legal analysis on why Zediva’s model likely will not survive a copyright infringement action.

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