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September 7, 2009

Video Rentals Good, DVD Rentals Bad [5:49 pm]

First sale doctrine and rentals: Movie Studios See a Threat in Growth of Redbox (pdf)

In 1982, just as the VHS tape was taking off, a “Star Wars” buff named Mitch Lowe had a radical idea. What about building a vending machine that could rent movies? He called his invention Video Droid.

It failed. [...]

But Mr. Lowe did not give up, and his moment seems to have finally come.

Mr. Lowe, 56, is now the president of Redbox, a fast-growing company in Illinois that rents movies for $1 a day via kiosks. [...]

Redbox’s growth — it started with 12 kiosks in 2004 and now processes about 80 transactions a second on Friday nights — has Hollywood’s blood boiling. Furious about a potential cannibalization of DVD sales and a broader price devaluation of their product, three studios (20th Century Fox, Warner Brothers and Universal) are refusing to sell DVDs to Redbox until at least 28 days after they arrive in stores.

Redbox is suing them on antitrust grounds. [...]

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Technological Mediation, Theft and Ownership [5:45 pm]

When one buys a device for access, who really owns what? Anger at Makers When Gadgets Go Missing (pdf)

[M]any tech companies will not disclose information about the new owners of missing devices unless a police officer calls with a search warrant. Even a request to simply shut down service — which would deter thieves by rendering their pilfered gadget useless — is typically refused.

The problem, which nobody had to deal with before smartphones and satellite radios, has reached new heights with the Kindle reader from Amazon, with its ability to download books wirelessly and store hundreds of titles on a single device.

[...] Amazon’s policy is that it will help locate a missing Kindle only if the company is contacted by a police officer bearing a subpoena. Mr. Borgese, who lives in Manhattan, questions whether hunting down a $300 e-book reader would rank as a priority for the New York Police Department.

He began to see ulterior motives when he twice sent e-mail messages to Amazon seeking an address to send a police report and got no reply.

“I finally concluded,” Mr. Borgese said, “that Amazon knew the device was being used and preferred to sell content to anyone who possessed the device, rather than assist in returning it to its rightful owner.”

[...] The complaints have left Amazon with a new public relations dilemma. In July, when Amazon remotely deleted titles from Kindles, citing copyright reasons, it was accused of heavy-handedness. If the company were to shut down a Kindle that had been erroneously reported as stolen, it might be accused of playing cop, judge and jury. Then again, it is also possible that Amazon is simply avoiding the financial burden of adjudicating claims.

Whatever the reasoning, Amazon’s policy is hardly unique.

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