Wheels come off DVD royalty-dodging ruse

Cunning Dutch plan hit by hardware crash

By Jan Libbenga • Get more from this author

Posted in Music and Media, 16th June 2004 10:24 GMT

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A Dutch company's cunning plan to deliver DVD movies to customers' TV sets digitally without having to pay additional performance rights has already run into trouble. Dvdstream's partner Homelink - the Danish manufacturer of the Palmbutler 600 set-top box - has gone into receivership and may not be able to deliver the hardware on time.

DVDStream was going to deliver movies through Palmbutler 600, a set-top box that streams digital media to TVs and stereos in the home. The Dutch start-up claimed that by adopting a DVD rental sales model, it wouldn't have to pay for royalties that are imposed on regular streaming video or video-on-demand services.

Customers would purchase a DVD movie digitally and make a copy of it for personal use, which is perfectly legal in the Netherlands. After watching the movie, the customer would sell the movie back to DVDstream. This way, the payments for the movies would have been only temporary deposits, the company claimed, and the service would not have to pay extra royalties.

Although experts found it highly doubtful that the service would remain online for long, it may not now happen after all. DVDStream says it is looking for alternatives, including products from Hauppage or Pinnacle, but none of these have been able to deliver the features the Palmbutler set top-box was able to offer. DVDStream still hopes it can launch in August. ®