DVD streamers deploy royalty-dodging ruse

Cunning Dutch plan

By Jan Libbenga • Get more from this author

Posted in Music and Media, 19th May 2004 15:53 GMT

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Dutch company Dvdstream claims it can deliver movies to customer's TV sets digitally without having to pay additional performance rights.

The company charges €12.42 a month for an unlimited supply of movies in a 768 x 576 resolution format. Movies are delivered through Palmbutler, a set-top box that streams digital media to TVs and stereos in the home. The company has currently 500 movies from all the major studios, but will eventually offer more than 2000 titles.

Dvdstream claims that by adopting a rental sales model it won't have to pay for royalties that are imposed on regular streaming video or traditional video-on-demand services.

Here is how it works: Dvdstream sells a digital copy of a movie to the customer. The Dutch copyright law does allow making a copy for personal use. That copy is delivered to the customers through the settop box. The customer then returns the movie to Dvdstream, just as with a regular DVD rental plan. Legally this is known as a "fictional sale", the company claims.

Dutch industry associations say that although the construction itself could be legal, Dvdstream may have overlooked one important issue. By offering movies to customers over the Internet, the company needs permission from the copyright holders, including the major film studios. Music rights agencies may also impose additional fees.

Dvdstream says that this is still a matter of debate. "At present the issue of the legitimacy is irrelevant to our user base," a spokesperson told The Register. Many experts believe it is just a matter of time before the company will be sued out of existence. ®