VidAngel Calls Hollywood’s Bet

The Hollywood studios have a fraught history with third-party services that re-edit their films, typically to remove the sort of content that had earned the film an R or even PG-13 rating.

Back in the 1990s, a handful of video rental store operators, mostly in conservative Utah, began manually editing purchased copies of VHS cassettes for their customers as a service, most famously with Titanic, to remove the the naughty bits. Studios and filmmakers grumbled but manual re-editing wasn’t exactly a business designed to scale so Hollywood mostly let it be.

In the 2000s, with the advent of the DVD format, some of those same entrepreneurs figured out ways to partially automate the editing process and tried to turn it into the business. In 2000, the Utah company CleanFlicks started producing cleaned up versions of DVDs created by muting the audio at key points or removing entire sections of the audio track, then offering them for sale and rental.

This time the Motion Picture Association of America, along with Directors Guild, sued CleanFlicks on grounds that distributing the cleaned up versions violated the studios’ copyrights, and in 2006 a federal court agreed and ordered CleanFlicks to shut down.

CleanFlicks was followed by ClearPlay, another Utah-based company, that developed a proprietary DVD player that automatically deleted the objectionable content during playback, thus avoiding the need to alter the DVD itself. The studios sued anyway, again on copyright grounds, but after the dispute attracted a spotlight on Capitol Hill Congress passed the Family Home Movie Act in 2005, which made it legal to develop technology to edit a movie during playback of a DVD or on the fly while streaming, so long as the technology did not alter the movie at its source or create an unlicensed copy.

The new law effectively mooted the studios’ suit against ClearPlay, which remains in business, albeit now using software that integrates with GooglePlay and Amazon to filter streamed movies on the fly. The studios still may not love it, but to date they haven’t dared to challenge it.

In the wake of the Family Movie Act, yet another Utah-based company, VidAngel, came up with a new twist on the formula. It created a system in which customers “purchased” a DVD virtually for $20, which remained with VidAngel. Users would then “play back” their DVDs from VidAngels’ servers, which used proprietary software to edit the movies on the fly. After viewing the movie, users could then “sell” the DVD back to VidAngel for $19, creating what amounted to a $1 pay-per-view rental.

The studios sued again, claiming what VidAngel really amounted to was an unlicensed VOD service notwithstanding the nominal sale and repurchase process, and threw in an access-control circumvention charge under the Digital Millennium Copyright Act for good measure.

In December, the studios won an injunction against the company from a federal district court in California, which put the freeze, at least temporarily, on VidAngel. That injunction is now under appeal to the Ninth Circuit Court of Appeals.

The common theme throughout all of these disputes is that the studios have never legally challenged the substance of the edits made by the services directly (although DGA has). Instead, they have charged the services with one flavor or another of copyright infringement, giving them grounds to shut the services down without having to go on the record opposing the active filtering of their movies.

In oral arguments before the Ninth Circuit in the VidAngel case in fact, the attorney for Disney, former solicitor general Donald Verrilli, insisted the studios are not opposed to filtering per se, merely to filtering by illegal means. He even gave a shout out to ClearPlay, noting “There’s technology out there … that applies filtering to a licensed stream,” he said. “It connects up with Amazon or Google … who have actually done what they should’ve done and gotten a license for public performance rights.”

This week, VidAngel called Verrilli’s bet. The company announced the launch of a new service for viewing cleaned-up streamed movies and TV shows that it claims avoids the legal infirmities of its original system and should therefore not be subject to the court’s injunction.

Instead of the virtual sale and re-purchase of DVDs the new system is a cloud-based service that integrates with licensed streaming services and filters the content on the fly based on options set by the user. VidAngel relies on crowd-sourcing to tag movies and TV shows according to its filtering paradigm.

Rather than integrating directly with a streaming service, as ClearPlay does, VidAngel asks users to provide their passwords for whatever service they already subscribe to. When the user requests a movie or TV show from VidAngel’s menu of tagged titles VidAngel’s servers then log on to the appropriate service using the user’s credentials and applies the filters as the movie streams.

VidAngel CEO Neal Harmon said the new platform will initially support Netflix, Amazon and HBO Now, with Hulu, iTunes and Vudu to follow.

The company is now asking the court to rule on whether the injunction applies to the new platform.

If the court rules the new service falls outside of its infringement-based injunction it could blow the studios’ cover, and force to declare just what it is about VidAngel’s business they really object to. Is it the filtering, or merely the infringement?

One tell will be whether the studios try to pressure Netflix and Amazon to block VidAngel from access those services. Neither has said anything yet about the new platform, but they could conceivably block VidAngel on grounds that its users are violating their terms of service by sharing their passwords, or by making up some other grounds.

Given Netflix’s history of lax enforcement of password-sharing, however, it’s hard to imagine that would be something it would initiate itself. If Netflix suddenly cracked down on sharing passwords with VidAngel it would be a fair bet it wasn’t their idea.

Your move, Hollyood: Raise, call, or fold.

 

 

 

4 Comments

  1. It’s going to be Netflix, Amazon, etc that deny VidAngel’s next attempt. If this runs afoul of their user agreements OF COURSE they’re going to tell VidAngel to cut it out.

    ClearPlay has implemented filtering legally. VidAngel previously operated a shady business practice (if you have to use quotes so often to refer to “buying” and “selling” movies, then it’s kinda obvious that’s not actually what is going on). VidAngel is now going to man in the middle traffic from various services that for very obvious reasons do not want to be man in the middled (talk to a Netflix engineer and understand their architecture. They want content distributed as close to their customers as possible. I can go into greater detail if desired).

    VidAngel – very good idea. Take a page from those who have done it legally before you and do it right. Don’t complain when you operate illegally and get told to stop.

  2. Hi Jesse — Maybe, but whatever Netflix decides the decision won’t be made on the basis of their delivery architecture. There have been lots of things over the years they could have stopped but made a business decision not to, like VPN use. When circumstances changes — i.e. their global expansion — the business incentives for Netflix changed, and it cracked down on VPN use. That’s not a judgment on Netflix, just an observation that businesses make business decisions.

    In any case, I don’t think there’s any disputing that VIdAngel’s original design infringed the studios’ copyrights, and that their alleged sale and repurchase of DVDs was simply a fig leaf to try to cover that infringement. Thus the scare quotes. What they’ve done now, though, assuming the court permits it, creates a much tougher problem for the studios. A man-in-the-middle attach is not copyright infringement. It may be something else, but it’s doubtful the studios would have standing to sue on those other grounds. Netflix, Amazon and others might. We’ll see.

  3. Paul,

    My main reasoning for assuming Netflix will have complaints based on architecture is how they distribute their content. I’ve actually talked with the engineer who primarily designed their media cache that is pushed out to local ISPs – they want their load very distributed, and available as close to the customer as possible. My reason for thinking this is a potential issue for Netflix is that VidAngel likely does not have the ability to step in between the client and the local media cache, meaning the video traffic will have to make many extra hops and the extra load will be focused directly on fewer caches.

    This could be totally wrong, just conjecture based on my knowledge of Netflix’ architecture.

    I’m pretty sure the main issue is going to be user agreement based anyway. And I agree; I’m doubtful the studios will care about this method. ClearPlay already does it w/ Google Play.

  4. Two other problems the studios could face:

    1) The creative community in Hollywood hates the idea of filtering, the the studios will be under tremendous pressure back home to *do something* about VidAngel, even if they have no copyright grounds to sue. Witness the little drama this week when Sony Pictures announced it would begin releasing its own “clean” versions of its movies via Blu-ray and VOD, only to have to reverse course within hours in the face of fierce blowback from prominent directors.

    2) The Family Home Movie Act. VidAngel is clearing trying to set itself up to claim the same exemption as ClearPlay. If that works, the studios would be hard pressed to defend why they were going after VidAngel while letting ClearPlay stand. Either that, or go after ClearPlay, too, which I’m sure they would like to avoid.

Post a Comment

Your email address will not be published. Required fields are marked *