Boycott SmartFlix!

[Erik Olson]

Greggl,

The parties you're referring to, with legitimate need for public performances, would only need to purchase a version with license-grant inclusive. Places like FullSail have plenty of money in their budget for materials like this.

e

 

[Greggl]

But places like the three film societies I work with don't. We charge for access
and part of that access includes the library of educational materials. A blanket,
more restrictive, licensing agreement may not be the ultimate answer.

Lets cut to the chase though... the problem here is that the revenue stream
is being impacted by rentals. Frankly, I'm not interested in a $250 dvd if I
can get it cheaper. One need only look at the resale market for said DVDs on
this board to see that I'm not alone. One sale to the filmmaker, multiple viewers.

In the end, what is the greater problem, an accoutble rental service that COULD
be brought into line with an industry standard 'netflix' like rental distribution
revenue agreement, or the looming threat of unregulated peer to peer sharing
with zero accountability.

A DVD rental service for expensive 'how to' titles has been proven viable and
popular. Cat is out of the proverbial bag... One can fully expect Netflix to
follow suit, btw...

 

[Erik Olson]

Greggl,

I think you're way off base. Content creators are certainly a thrifty crowd, but I believe that once they're made aware of the implications of renting through an outfit like SmartFlix, they will resist it or boycott any company conducting business under that model completely.

Look at the reaction here. We weren't aware of it - now we are.

If I had an instructional DVD, I'd gladly grant a license to accredited institutions and guilds. I'd wager that many would be flattered to provide it.

Netflix, account ratcheting aside, is likely above such business practices as this. I'd be very surprised to discover that they'd make a change that might well land them in litigation when they have a hugely profitable, industry-leading business model already deployed.

Again, attaching a EULA to our content doesn't shut the door on NFP and educational use - as long as they're keeping up their end of the bargain.

e

 

[bbalser]

Here's the thing, Music CDs are not covered by the same copyright laws as Movie DVDs. Adding original music to your movie DVD doesn't change that.

Also, as someone who is currently doing this for a living, it takes a lot of time, effort, and monitary expense to produce even a 12-30 minute tutorial video. It's not slapped together over night.

I have to sell X number of each tutorial to simply cover my costs of producing it. If SmartFlix buys 4, that's a drop in the bucket. Since they admit to renting out to people who'd not buy the tutorial in the first place, those renters are NOT going to buy it out right from me. They've seen it for $10, they've copied it for $10, they send it back.

So, SmartFlix rents it 4 times and makes their money back. Every rental after that is pure profit. Let's say I have to sell 20 to make my money back (and that's pretty low balling it). They buy one or two, drop in the bucket. I see NOTHING from their rentals. Every rental is making money for them, not for me. They make profit at my expense.

Does the exposure generate more sales for me? Nope. And I defy SmartFlix to show solid, hard core, documented evidence that the majority of the author's who's videos they sell increase sales enough to justify the rentals. My bet is they can't, and never will be able to.

Another HUGE question I have for SmartFlix, that I've posed to the president of SmartFlix, who's response was, "we don't care", is this. Why not ASK for permission from authors and only carry the DVDs authors allow you to carry?

MORE IMPORTANT IS THIS, why not let the authors share in the rental profits? Why not give them a cut? If it's such a great business, then they should have no physical reason to deny the authors any compensation!

But, the president of SmartFlix says, "we have too many videos and too few staff to get premission from everyone, much less do the accounting for sharing in the rental fees."

Ok, having read that, how do they justify themselves as ethical Christians? Something the president of SmartFlix claims they are.

So, I'd like to see SmartFlix justify the ethics of their business model more than anything! When I asked the president of SmartFlix, he just says, "it's legal, live with it."

Sound ethical or Chirstian to you?

 

[TwistedLincoln]

Another HUGE question I have for SmartFlix, that I've posed to the president of SmartFlix, who's response was, "we don't care", is this. Why not ASK for permission from authors and only carry the DVDs authors allow you to carry?

Most people (certainly yourself, from what you've said), would say no anyway, and they would have no product to rent.

MORE IMPORTANT IS THIS, why not let the authors share in the rental profits? Why not give them a cut? If it's such a great business, then they should have no physical reason to deny the authors any compensation!

Why would they want to share the profits if they could keep them all...? Certainly they would likely be more successful and have more titles to rent if they did this, but it's not inherently evil to want to keep your profits to yourself.

Every rental is making money for them, not for me. They make profit at my expense.

True, but I don't see why this is any different than any other kind of rental system. Imagine you manufactured mattresses. A company buys five of them from you and opens up a small hotel. They "rent" out these mattresses to everyone who stays in their rooms, and make money off of them.

Should the manufacturer of a mattress really be entitled to be paid every time someone sleeps in a hotel bed? That would be ridiculous. So what's the difference?

Now I understand that someone could just rent your video and copy it to avoid buying one from you. But the real villian there is the person doing the copying, not the people renting the discs.

Anyway, it seems to me that anyone offering instructional videos aught to try renting them out yourself. Seems like there's certainly money in it. I'm going to give that a shot myself in the coming months.

 

[vidled]

Should the manufacturer of a mattress really be entitled to be paid every time someone sleeps in a hotel bed? That would be ridiculous. So what's the difference?

For rhetorical purposes a nice example, but it's like comparing apples and windshield wiper blades really.
The most benefit to the consumer of the instructional video is the FIRST (and second) time it is watched; after which the product becomes somewhat less useful. A mattress continues its usefulness in an undiminished capacity for many futher "utilizations".
It is exactly THIS reason why Smartflix will probably not get a single person enquiring about the source of the DVD for possible purchase (something they claim they'd provide). Once the instructional videos are watched a few times, their benefit to the viewer is [almost] exhausted. One has learned from the instruction, and gained from its intended purpose. It is a transfer of knowledge, if you will, and that takes place almost instantaneous during the act of watching it; it's the whole intended purpose after all.
This is why it is so upsetting to the makers of these videos I can imagine.

Completely different to a movie of Hollywood origin for instance. A movie that one watched in the cinema, might still entice one to buy the DVD a few months later. Futher enjoyment can be gained from it.
Yes of course, the same could be said of instructional videos: they can be watched a few times later on to refresh one's memory; however, I believe this is the reason why Smartflix is [will be] somewhat successful, as this type of content lends itself for one-time-viewing.

 

[Erik Olson]

Okay, back in the world of intellectual property management, we're being swiftly relegated to the place where artists who paint or take photos find themselves. The only time you're compensated is when you sell the original work - any subsequent exhibition or loan of the material shows without royalties to the author.

We need to get out of that realm and into a model based on a license, plain and simple. Used to be that video stores would pay a premium for movies that would rent, consumers a different price for single-license versions of the same film.

Obviously, times are changing. There are ways to build agreements in at the point-of-purchase and the material itself that will limit the user in the way(s) they can use your material.

With the current system, you have a chicken-s*** company that has either found a legitimate loophole or one that simply will flaunt the law until they're shut down through the court system (think: Napster V1.0).

I'll tell you what you won't see - these d*****bags trying this game with any of the studios - and you know exactly why. That's why I suggested we get some guilds and associations behind the concept of a EULA campaign. It would be easy enough to have a gateway EULA checkbox on or prior to the root menu page for your DVD - some code guru could likely figure that out in three minutes. Although it wouldn't interface with or record to a record-keeping server, the gateway itself might be enough to shut down an organization like SmartFlix.

They [the studios and guilds] have deeper pockets than we do separately and will go on the offensive if they have a dog in the fight or if there is a perception that this model could threaten them in the future.

e

 

[bewillia]

True, but I don't see why this is any different than any other kind of rental system. Imagine you manufactured mattresses. A company buys five of them from you and opens up a small hotel. They "rent" out these mattresses to everyone who stays in their rooms, and make money off of them.

Should the manufacturer of a mattress really be entitled to be paid every time someone sleeps in a hotel bed? That would be ridiculous. So what's the difference?

The above logic applied to a different scenario: A cinema purchases five prints of a film from a studio and charges people to view it in their theater. The cinema owner doesn't share any of the profits from ticket sales with the studio that created the film. We all know this is actually the opposite of how the motion picture industry works, and that the industry would be much different if it did in fact work that way.

With educational/training videos, the video format acts as a conduit through which educated professional people provide personal private instruction. I would liken the SmartFlix business model to a college student renting recordings of his professor's lectures to people who don't want to (or can't) pay for college. Although it would likely be a lucrative endeavor for the student, it would also be wrong.

Anyway, it seems to me that anyone offering instructional videos aught to try renting them out yourself. Seems like there's certainly money in it. I'm going to give that a shot myself in the coming months.

Good idea. One day, hopefully in the not-too-distant future, online delivery will be something of a standard. Then content creators will have a lot more control over distribution schemes.

 

[TwistedLincoln]

For rhetorical purposes a nice example, but it's like comparing apples and windshield wiper blades really.
The most benefit to the consumer of the instructional video is the FIRST (and second) time it is watched; after which the product becomes somewhat less useful. A mattress continues its usefulness in an undiminished capacity for many futher "utilizations".

A very good point, actually. But usefulness shouldn't be a factor in determining one's rights to use a product.

Good idea. One day, hopefully in the not-too-distant future, online delivery will be something of a standard. Then content creators will have a lot more control over distribution schemes.

Not what I meant. Online delivery is only useful if those doing the delivery stop using DRM. Otherwise, it creates a much worse situation where nobody ends up owning anything anymore.

The above logic applied to a different scenario: A cinema purchases five prints of a film from a studio and charges people to view it in their theater. The cinema owner doesn't share any of the profits from ticket sales with the studio that created the film. We all know this is actually the opposite of how the motion picture industry works, and that the industry would be much different if it did in fact work that way..

I don't think the logic falls apart there either. The studios could simply charge very large sums of money for those film prints, or rents them out at a high daily rate. The theaters could then use them to make money, and keep all the profits for themselves.

Okay, back in the world of intellectual property management, we're being swiftly relegated to the place where artists who paint or take photos find themselves. The only time you're compensated is when you sell the original work - any subsequent exhibition or loan of the material shows without royalties to the author.

We need to get out of that realm and into a model based on a license, plain and simple.

While I respect your opinion, I completely disagree. We need to move away from using laws and licenses to control the use of products. If I create something and sell it to you, why should I be entitled to any more compensation after the sale? I havne't continued to give you anything more, so why do I deserve anything more?

That's the issue that no one seems to address. Sure, it's nice to be on the receiving end of a limitless supply of funds without having to do any more work. But why would anyone be entitled to it? It's one thing to legally prohibit the further distribution of a product that can effortlessly be reproduced digitally. But to use technology like DRM to restrict it, or to demand fees for continued use (subscriptions) or rentals, or public performance, etc. is simply an attempt to milk more money out of a customer that already paid.

It's a shame we're quickly living in a world where I can't legally have a Super Bowl party and charge my guests a few bucks to cover the drinks and snacks. Even though I pay for my satellite service. And the TV, etc. It doesn't cost anyone anything more in resources or time if I have ten friends over to watch the game or if I watch it myself. And yet somehow people seem to think that I "owe" copyright holders something for making my party possible. What more have they done for me than the mattress maker who enabled me to have beds in my hotel?

 

[Erik Olson]

So, Tony, you want to work in TV? Because you're in the wrong business if intellectual property rights, licenses and royalties are confounding principles.

Look, I create a show or end-product. Some of the work provides backend, some does not. Different markets pay in different ways because of the underlying systems by which they function. If you want to license my show for network, then we write a deal for that - and they're all different. If the same show goes to the home video rental market, then you pay me a higher fee once as a mass license or smaller royalties on a transactional basis. Consumer at home? One fee for your private use (e.g., no public shows where you make a profit).

It is possible to structure anything, but when you simply sidestep the negotiating process, you're literally stealing what is due the originating author / copyright holder.

There are myriad fine points to this issue. If I subscribe to Better Homes and Gardens magazine, then sell the whole collection of 48 issues on eBay a few years later in one transaction, I don't see it as a violation of the copyright holder's interest. If I were to open a clearinghouse that does the same - purchasing something on the open market and then turning it into an ancillary product without negotiating with the author, that's where you get into grey and seamy areas of ownership and right to conduct commerce.

If I read you right, you're saying that my television shows should be in the public domain once they're first aired? Meaning, you, the viewer can Tivo the series and make money through redistributing it? I'd like some clarification of how you would manage intellectual property if there was nothing on the books yet.

As you're reinventing the wheel, remember that whatever you come up with must sustain itself fiscally.

e

 

[GenJerDan]

That's the issue that no one seems to address. Sure, it's nice to be on the receiving end of a limitless supply of funds without having to do any more work. But why would anyone be entitled to it?

That's where it falls apart, though.

You spend $20,000 doing an instructional video. Some yahoo buys a copy for $199, then rents it out to all the people who should be buying it from you.

So you lose $19,801, and someone who did NOTHING but buy a copy makes...however much they make.

Would ever you make another video?

 

[Greggl]

Errr.. they are confounding principles that are directly facing the industry
today... TIVO, online rebroadcast rights, DVD box sets of old shows, 'youtube',
peer to peer trading... There are two issues here.

1. Smartflix is either violating the usage laws for the titles they have
purchased and then rented, or they are working a loophole. This is for
the courts to decide.

2. The service they provide is a benefit to the consumer... the consumer
doesn't see much difference between netflix or smartflix... their experience
is identical from all practical povs. Netflix doesnt rent tech video or porn...
but there are services that do.

Its up to the creators to police their property and to build in the protections
for their products.. but maybe the day of the $250 video series is at an end...
espeically if someone out there is renting or streaming similar content at
a better price point. Ive now moved to the streaming gnomon content, so
I haven't used smartflix in the past three months... hehe and frankly, their
shake series kinda sucked.. would have been REALLY bad at a couple hundred
dollars.

Personally, Im pretty excited with the capabilites and exposure options of
streaming itunes like services... but its once again a break from the $250/pop
business model.

 

[Erik Olson]

1. Agreed. It is also up to us (the content owners) to close loopholes in the existing system.

2. The long view is that they don't benefit the consumer. If their model persists, there will be no originators willing to produce tutorials for the open market.

You're still missing the point about intellectual property rights. Even if $250 for a training series is much higher than the market will bear, it doesn't mean that piracy or gross distortion of the system is the answer either.

e

 

[Barry_Green]

So you lose $19,801, and someone who did NOTHING but buy a copy makes...however much they make.

Would ever you make another video?

EXACTLY. Thanks for spelling it out, Dan.

Each of these videos I do costs thousands or tens of thousands when you factor in all the labor etc. And then someone comes along and vacuums up some (or, theoretically, all?) of my potential business because they can "legally" rent it out, thus totally cutting me out of the deal.

I don't care whether it's legal or not, it's evil. It's rude. It's parasitical.

So I get an order for 5 copies from some individual in massachusetts, and I think "cool, here we go, starting to pay back the red ink" and then -- that's it? That's all? Because this parasite has undercut my whole ability to market to the end customer? Without my permission, without my consent, he just took something away from me. And if I ask him kindly to please remove me from the catalog, he says "NO." So if I call it like it is and say "hey, do you mind not screwing me over and putting me out of business" he laughs and says "hahaha, screw you, I'm a parasitic leech who's living in the shadowy cracks of the law and there's nothing you can do about it"...

I don't care how you slice it, that just isn't right. If they'd ask permission and comply with that permission, that'd be one thing. If they established a mutually beneficial relationship, that'd be something else to consider. But to just take the product of your labor and your cash and use it to undercut you? That's slimy.

 

[Greggl]

You're still missing the point about intellectual property rights. Even if $250 for a training series is much higher than the market will bear, it doesn't mean that piracy or gross distortion of the system is the answer either.

I get it perfectly. Do you remember the rental vs sales pricing from the glory
days of VHS rental? This remains the ongoing model of the technical video
world... its pretty much carried on for 15 years past the point at which it
went away for theatricals.

I'm not advocating a system distortion, just a new model that embraces
current delivery models and access to media.. 'on demand' also includes
DVD in envelopes these days.

 

[Christopher Barry]

So what formula are the big studios/distributors charging your authorised local video store to acquire and allow the rental of a feature length movie DVD, etc? Is it usually a premium cost for the DVD, or a cost for the DVD plus % of rentals or other?

I know a deal is a deal, curious if there is some industry standard that people refer to in this game?

 

[TwistedLincoln]

So, Tony, you want to work in TV? Because you're in the wrong business if intellectual property rights, licenses and royalties are confounding principles.

Actually, I don't want to work in TV I use my HVX(s) for instructional videos, my personal projects, and some event filming.

I participate in these forums because I'm interested in the technology, and because there are so many nice and helpful people here. This debate is a great example -- in any other forum, this would have degraded into a flame war with personal attacks. Instead, we can disagree and get along at the end of the day.

It is possible to structure anything, but when you simply sidestep the negotiating process, you're literally stealing what is due the originating author / copyright holder.

I agree. I just think that it is up to the content holders to make the terms of the sale known at the time of the sale. If you want to sell your DVDs such that they are for private use only, I have no problem with that. But if you don't make any restrictions known when you sell it, the end-user should be able to assume that they can use the product they bought as they please, since you didn't tell them otherwise.

If I read you right, you're saying that my television shows should be in the public domain once they're first aired? Meaning, you, the viewer can Tivo the series and make money through redistributing it? I'd like some clarification of how you would manage intellectual property if there was nothing on the books yet.

As I said, I do believe that copyright law itself should continue to cover distribution. So recording your TV show and selling copies should continue to be a criminal + civil offense. But copyright law should end at distribution -- any use restrictions should simply be part of the terms of sale (contract law).


In the end, "cutting you out of the deal" and making it unprofitable to make more videos is simply competition. If SmartFlix is able to rent out your DVD 30,000 times and make a fortune, but you can only manage to rent it out 7 times, that certainly seems unfair on its face. But it's just the free market working to their advantage, because they're doing a better job than you are. Again, if you want to tip the scales in your favor, make rentals prohibited as part of the terms of sale. Then if they rent out your films, you can sue them for breach of contract.

Anyway, I've made my points, so I'm going to drop out of this thread for a while unless someone quotes me directly. Don't want to make this political.

Thanks again to everyone for keeping this civil and making this forum a great place to come.

 

[Erik Olson]

This laissez-faire attitude about our right to make money from our work and protect it from piracy and illicit use is unsettling.

Not meant to be a personal attack at all, but my guess is that those who are nonchalant about the situation aren't working professionals or don't have material in the marketplace that is supposed to be earning them a return?

On the development side, we spend between $10k and $200k on getting material in front of sponsors, the network or cable distribut or for consideration. During this time, anyone associated with the project is under a NDA. We don't even discuss projects with potential talent until they and their representation have signed one. It isn't a handshake deal either.

As a creative person, it sucks to be so litigious because it strains the collaborative environment. I have had some significant intellectual property losses, so I guess I'm just more pragmatic about creators and their right to earn for as long as they can.

At the end of the day, these guys at SmartFlix know they're on the wrong moral side of the argument - even if they have a legal leg up us for now.

e

 

[Sad Max]

This really ought to go before a court of law.

Then we'll see.

Not meant to be a personal attack at all, but my guess is that those who are nonchalant about the situation aren't working professionals or don't have material in the marketplace that is supposed to be earning them a return?

That's usually the way of things. It's easy to have a "hey, everyone's entitled to a taste of your blood" attitude, when the person with that attitude isn't the one whose blood is being drained, and doesn't have direct experience of what it is, to be the drainee.

The lawyerization of this society - concern over only what is legal, as opposed to what is ethical - is immensely destructive. This is just one of the most minor symptoms out there.

I hardly ever think this, but on this score the opinions of anyone who isn't involved in the production of media for profit, are basically worthless. I mean, what the hell would such a person know about any of it - except maybe that they want to score something for free, for which they ought to be paying?

 

[David Jimerson]

When we discovered what they were doing with the HVX BootCamp DVD, I wrote them a long message to which they never responded. I knew what they were doing was most likely legal, but I explained that we did not want to do business with a company which conducts its business with such deceptive and unapologetic zeal. I made it clear that if they had approached us openly, we'd have been happy to come to an agreement which would have been a win-win for us all.

I assume that not having a defense against the charge of being dishonest jerks -- as opposed to their apparent delight when they can fend off someone making a boisterous legal calim -- they didn't care to respond.

They will never, though, as long as I can help it, get their hands on another new copy of anything we produce.

I do believe in the concept of karma -- there's a reason it's a bedrock principle of every major religion (you reap what you sow, what goes around, comes around, etc..). Going through life dishonestly and making enemies with all manner of apparent glee may one day be lavishly rewarded, but not quite with what you expect.