The trade group representing the six major Hollywood film studios filed a copyright suit in federal court against online video distributor Zediva today.
The suit has started the process that almost certainly will end with Zediva's demise.
"Zediva illegally streams movies to its customers without obtaining required licenses from the movie studios," the Motion Picture Association of America (MPAA) said in a statement today. "Zediva claims it is like a brick-and-mortar DVD 'rental' store and therefore not obligated to pay licensing fees to copyright holders. But the DVD 'rental' label is a sham. In reality, Zediva is a video-on-demand service that transmits movies over the Internet using streaming technologies in violation of the studios' copyrights."
Zediva didn't immediately respond to an interview request.
Who didn't see this coming? Lots of better loophole-business models have come along that appeared to have a better claim on legality than this operation.
Most of those were sued into oblivion.
The MPAA filed suit in U.S. District Court for the Central District of California against WTV Systems, parent company of Zediva, and CEO Venkatesh Srinivasan. The studios have asked for $150,000 for each infringed work. They also want the service shut down.
See, everybody wants free content, but all the wishful thinking in the world or half-baked arguments aren't going to make that happen.
Some companies manage to use the Internet to create revolutionary, lucrative, and consumer-friendly business models. YouTube is still chugging away. Viacom is challenging the Google-owned company in court but YouTube has penned content deals with scores of entertainment companies. Netflix may not be the most popular company in Hollywood but the rental service operates within the law.
Some of these would-be challengers that try to shoe-horn their business strategies into a very broad reading of the law are begging to be litigated out of existence.
Last month, I asked Zediva managers why their company would fare better in court than, say, ivi.TV. That's the Web-video company that came along before Zediva. It too saw some success at stirring excitement before finally losing in court. A month ago, a federal judge in Manhattan ordered ivi.TV to stop retransmitting broadcast TV programming over the Web.
This is what Zediva said: "Zediva is a DVD rental service. It lets a person rent a real DVD and a real DVD player, and control that DVD player over the Internet. It's just like a DVD player with a really long cable attached to it."
Ivi.tv streamed live TV to users over the Internet, arguing that the service was protected by licenses that copyright laws grant to cable systems.
"Zediva isn't a cable system and doesn't rely on those special licenses that Ivi was trying to take advantage of," Zediva said. "Zediva is operating on the same principle that video rental stores have operated on for decades: once you buy a lawfully made DVD, you're allowed to rent it out to your customers."
So, I never see or touch this DVD player or the disc? I didn't buy either. Zediva acquired them for me and will use this little thing called the Internet to connect me to the hardware--but this isn't Internet distribution?
I'm not a lawyer but I'm predicting this one is headed to a permanent injunction and forced shutdown, just like in ivi.TV's case.