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Wal-Mart's not-so-super downloads

Walmart_logo For a snapshot of where the major entertainment companies would like to take consumers, check out the new movie downloading service from Wal-Mart. The king of discount retailers is offering the DVD version of "Superman Returns" with three optional add-ons: a downloadable copy of the movie formatted for Microsoft-compatible portable players (about $2), a higher-quality download for a computer ($3) or both ($4).

Think about this for a minute. If you buy a CD, you can (and frequently do) make copies of the songs to store on portable devices and computers. You assume that when you buy an album, you've bought the right to put the music on every device you own. For most people, DVDs represent the other extreme. Restricted by electronic locks, these discs can't be ripped with iTunes or copied with the burning software that ships with a Dell, an HP or a Mac. (Yes, I know, you can find plenty of tools online to do both of these things, but most people don't.) The studios and their allies have been quick to sue companies that try to unlock DVDs even for what seem like legitimate purposes -- e.g., Kaleidescape and Load 'N Go. And the U.S. Copyright Office has refused to permit people to circumvent such electronic locks for personal use, such as making back-up DVDs or loading movies onto portable players.

So from the perspective of the studios and federal officials, consumers have to pay for the privilege of doing the sorts of things with DVDs that they're accustomed to doing with CDs (and LPs and cassettes). That's where Wal-Mart's offer comes in. Unlike download stores such as Movielink, Wal-Mart isn't positioning downloads as a substitute for DVDs, at least not yet. That's a realistic stance, given that downloadable movies don't yet match the picture quality or even the limited flexibility of packaged discs. Instead, Wal-Mart is treating downloads as a complement to the disc -- the copy you would have made for your PC or portable, had you been allowed to. And it's pricing them accordingly.

The savvy folks at TechDirt seem to like this approach, which is similar to what Larry Kenswil of Universal Music Group's eLabs has been advocating for years. I'm intrigued by the idea of letting people pay for just the rights they want, rather than charging everyone for the whole bundle. Yet this makes sense to me only if we trust copyright holders not to use technology to eliminate some of what Gary Shapiro of the Consumer Electronics Assn. likes to call consumers' "reasonable and customary practices and expectations." Unfortunately, that's what they've done again and again -- witness the DVDs with promotional material that can't be skipped, or the "copy-managed" CDs whose songs can't be transferred to an iPod. And while market forces can certainly tame the worst behavior, the monopoly nature of copyrights means that consumers who don't like the way Company X protects a particular title, they have only two alternatives: buying a different title with fewer restrictions, if such a thing exists, or not buying anything.

The entertainment industry can blame some of the problems on immature technologies that weren't sophisticated enough to allow legitimate uses but not illegitimate ones. That's a tough distinction to make, and the next generation of DVDs -- HD DVDs and Blu-ray discs -- are a step forward in that regard. For starters, they can enable consumers to make a limited number of copies for home video jukeboxes and portable players. The question is whether the studios will enable those features, and if so, what they might charge for them. Will they expect a premium for high-def pictures, then another premium for the personal copies? Should they?

Addendum on 11/30 -- For the perspective of someone who really understands copyright law, instead of just pretending to, see this post by Fred von Lohmann of the EFF.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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