Webware

A class action lawsuit filed earlier this week targets Facebook and eight of the participants in Beacon, its ill-fated advertising product that shared information about third-party site activity with the social network. The set of 20 plaintiffs, mostly residents of Texas, filed the suit in the U.S. District Court for the Northern District of California on Tuesday. Named as defendants are Facebook, as well as current or former Beacon participants Blockbuster, Fandango (owned by Comcast), Overstock.com, STA Travel, Zappos, Hotwire (owned by IAC/InterActiveCorp), and GameFly.

A Facebook representative told CNET News on Thursday that the company had not yet actually been served with the lawsuit, and that its legal team consequently did not have a formal statement at the time. STA Travel, Gamefly, and Overstock all declined to comment; none of the other defendants could be immediately reached.

"Until we're served, we're not being sued, so we don't have any comment," Overstock general counsel Mark Griffin told CNET News.

Beacon gained almost immediate notoriety when Facebook unveiled it as part of its Facebook Ads announcement last fall. Privacy advocates, most notably liberal activist group MoveOn.org, lambasted the program for not allowing users to disable it easily. Facebook has since modified the program and the controversy has wound down. But in the lawsuit, the plaintiffs point to the window of time before Facebook instituted the new controls--between November 7 and December 5 of last year--and claims that the social network still has access to a large amount of user data that was gathered in that period.

"If the user was not a member (of Facebook), Facebook still obtained the notification from the Facebook Beacon Activated Affiliate," the filing for Lane et al v. Facebook, Inc. read. "Information regarding user activities was sent in real time to a third party Web site--one which was not open or active in the user's browser, and one which, in many cases, the user may never even have visited or heard of."

There's one odd law that may make the plaintiffs' case stronger: the Video Privacy Protection Act of 1988. The law was passed amid the fracas surrounding Robert Bork's controversial nomination to the U.S. Supreme Court, when a journalist obtained Bork's movie rental record from a local video store and published it.

That's why there's already been a suit involving Beacon that specifically targeted Blockbuster for participating in such a program: a Texas woman filed suit against Blockbuster in April, claiming that the VPPA bars it from Beacon. Facebook was not named as a defendant in that suit, and though the plaintiff sought class action status for her case, she does not appear to have any involvement in this week's suit.

The defendants named in the suit don't encompass all of Facebook's original Beacon partners, but several of them could tie into VPPA protections: GameFly rents video games, Fandango sells movie tickets, Hotwire and STA deal with travel bookings, and Zappos and Overstock are both online retailers with a large scope (Overstock sells DVDs, for example). The suit also names the California Computer Crime Law and the Electronic Communications Privacy Act as grounds for the suit.

One of the plaintiffs, Sean Lane of Waltham, Mass., was immortalized in a Washington Post story about Beacon: He's the guy who bought his wife a diamond ring on Overstock.com, only to have her spot the purchase in a Facebook news feed, spoiling the surprise.

Guess he's still irritated.

Blockbuster announced Tuesday it's teaming up with PayPal to offer users another payment method for purchases off its Web site.

Under the arrangement, consumers can use their PayPal account to pay for their online movie rental subscriptions. And later this summer, Blockbuster expects to launch its downloading service for movie rentals and purchases.

Eventually, Blockbuster expects to make PayPal available for use to purchase other things off the Web site, from gift cards to new and used DVDs.

Blockbuster is offering users a $10 cash back to their PayPal account, if they sign up for a new online Blockbuster rental subscription.

As if troubled movie rental company Blockbuster didn't have enough to deal with already: an angry Facebook user has taken issue with its participation in the social network's controversial Beacon advertising program, and is pursuing legal action.

Cathryn Elaine Harris, a Texas resident, filed a complaint in the U.S. District Court for eastern Texas on April 9, claiming that it's a violation of a federal statute for Blockbuster to participate in Beacon, which shares rental history on Facebook members' "news feeds" unless they manually opt out. She is seeking class-action status, hoping to eventually net $2,500 for each infringement.

Don't want anyone to know you rented this cinematic gem? One lawsuit in Texas says it feels your pain.

(Credit: New Line Cinema)

Facebook is not included in the lawsuit.

In the suit, Harris claims that Blockbuster's sharing of her movie rental history through Beacon is in direct conflict with the Videotape Privacy Protection Act. The law was passed during the viciously contested nomination of judge Robert Bork to the U.S. Supreme Court in 1987, in the midst of which writer Michael Dolan went to a video store that Bork frequented and obtained a list of 146 videotapes his family had checked out.

Then Dolan reported on the not particularly scandalous list--no Debbie Does Dallas to be found--in an article in the Washington, D.C.-area City Paper. An analog-age privacy debate ensued, and the VPPA was passed in 1988.

Now, the Bork-era law has taken on a digital dimension: Harris vs. Blockbuster, addressing Facebook's "social advertising" program. The social network unveiled the Beacon ads in November, drawing criticism from activist groups like MoveOn.org for privacy violations until it modified the interface to allow for more user control.

A Blockbuster representative told MediaPost that adequate privacy protections are in place and that Blockbuster's legal team will "vigorously defend the company in this litigation."

Correction, Sept. 23, 2009: Michael Dolan has clarified that while he obtained and reported on Robert Bork's household's video rental history, he did not actually publish the list.

Update: Representatives from Netflix have let us know these lower-priced plans are part of a test for selected Netflix subscribers, and the current prices that were lowered last month remain for new and existing customers.

Netflix is cutting the price of two of its most popular plans by $1 today, less than a month after its last cut in July. The pricing hasn't been changed on Netflix's rates page, but the company has been sending out rounds of e-mails to its customers about the change since last night, and made an announcement about it earlier this morning. The change covers the two- and three-out-at-a-time plans, the latter of which is the most popular and competitively priced.

The move is the latest in a series of aggressive cuts to compete with Blockbuster's popular Total Access service, which exploits Blockbusters brick-and-mortar stores to provide on-the-spot rental exchanges for about the same price as Netflix's offerings. Netflix has since fought back with its video-on-demand Watch Now service, which competes with Amazon's Unbox, and Movielink, which Blockbuster snapped up last week for just under $7 million. Interestingly enough, with this morning's change, Netflix is also slicing an hour of Watch Now usage off each of the plans, cutting them down to 13 and 16 respectively.

The three-at-a-time plan is Netflix's most popular, and started out at a flat $19.99 in late 1999. Both Netflix and Blockbuster have since been fierce competitors, lowering prices and adding new features to their services, despite the increasing costs in gasoline and postage.

In the face of the juggernaut that is Netflix, lagging movie rental giant Blockbuster has tried many an incentive to convince viewers that it's no dinosaur. Since entering the online DVD rental business in 2004, Blockbuster has instituted "Total Access," a system of online-and-offline rentals geared toward Netflix users who may be disgruntled by the fact that they can't just hop in their cars and pick out movies on the fly.

This week, Blockbuster is taking a sharper jab at Netflix. With the President's Day long weekend underway, the rental company is attempting to capitalize on the fact that when there's a holiday, post offices are closed and Netflix shipping times are inevitably slowed down. So, Blockbuster is extending a "Presidents' Day Pardon" to Netflix members: Turn in the tear-off flap from a Netflix rental (you know, the one with your mailing address on it), take it to a Blockbuster store, and you get a free rental. Apparently, you can get an additional free rental for every address flap you turn in.

The catch: You'll need to sign up for a Blockbuster store membership. It's free, but it's still a membership, and plenty of people think those are just a tad icky. But if it doesn't bother you, you have through Feb. 21st to take advantage of this offer.

Just remember, late fees do apply.

Netflix has fleshed out some details of its newly announced movie download service. The Watch Now instant viewing service is scheduled to become available to all Netflix subscribers by June. It will launch with just 1,000 titles (movies and TV shows), but the selection will expand thereafter--slowly but surely--to encompass as many of the 70,000-plus titles in the Netflix database as possible. The online viewing feature will be a free addition to existing accounts, with subscribers getting a monthly allotment of online viewing time based on their subscription level. For instance, an $18-per-month plan (three DVDs out at once) garners 18 hours of online viewing time per month.

Movies are delivered directly to a Web browser using a customized plug-in. Further, they're streamed in near real time, not played back after downloading, so the experience should be as close to instant gratification as possible (your broadband bandwidth permitting, of course). For now, the service appears to be limited to Internet Explorer running on a Windows PC (according to an article in the New York Times). Speaking on CNBC's Squawk Box this morning, CEO Reed Hastings described the online viewing feature as being "as easy as YouTube" and "as good-looking as a DVD." The latter half of that statement will be the hard part to pull off: the service's advertised 3-megabit-per-second limitation, while impressive, is less than a third of that offered by DVD--though better compression algorithms and codecs could help negate that. No word on whether audio will be limited to stereo playback or if a DVD-like surround track will be available.

Of course, even (or especially) if the picture is pristine, a lot of folks will prefer to watch the movie on their big-screen TV instead of a PC monitor. Work-arounds exist (many PCs offer a TV output), but it appears Netflix is working on viewing solutions that don't require a PC: "Over the coming years we'll expand our selection of films, and we'll work to get to every Internet-connected screen, from cell phones to PCs to plasma screens. The PC screen is the best Internet-connected screen today, so we are starting there," Hastings says in the press release.

One thing's for sure: given the host of IPTV announcements at last week's CES (as well as Apple TV at Macworld), it appears that 2007 could finally be the breakthrough year for digitally delivered media.

Note: The video walk-through of the Netflix Watch Now service is courtesy of HackingNetflix.com.