Big Media’s Unending IP Battle May Have A Silver Lining
2020 is shaping up to be an annus mirabilis for streaming services. With consumers stuck at home and entertainment budgets shifting spending accordingly, many have spent the time to explore all the media missed, or chose not spend $40 on in the preceding years. Despite select layoffs and production halts, Big Media has morphed into a tech sector, with stockholders reaping all the benefits along the way.
In the infancy of Netflix, copyright infringement was of little consequence; the company initially operated as an automated blockbuster. But as the online platform gained traction without the need for physical possession of media, entertainment giants decided to build out their own models; Disney released Disney Plus and HBO, a component of WarnerMedia, rolled out HBO Max. Netflix and Amazon Prime Video naturally realised that of the two components, streaming infrastructure and original content, the latter was what brought value and harder to replicate. The result is an industry in which the platform is uniform; the media itself is what gives a company its differentiation. Protecting what little foothold they have on one another, that of intellectual property, is paramount.
Then along came VidAngel; a filtering service which allowed values-conscious parents to edit films and tv in the comfort of their own homes, running auxiliary to consumers’ existing Netflix, Disney Plus, HBO Max and Prime accounts. The service works thusly: consumers sign into VidAngel with their streaming username and password; they select a film and purchase it for $20; the film is then watched with any number of filters applied, either by muting or entirely cropping out scenes, dependant on the consumer’s selection, filtering for profanity, nudity or gore for example; the film is then sold back to VidAngel for a generous $19, allowing the consumer to pay in effect a $1 fee for the editing of their current streaming library.
VidAngel purchases retail copies of films, creates copies of the film manually and streams them directly to the consumer. This is allowed under the Family Entertainment and Copyright Act of 2005, which mandates that an authorised copy is used, consumed in the home, and that there is no permanent copy of the altered media. VidAngel was sued by a coalition of media companies, led by Disney in 2019 and was initially slapped with damages of $62 million by a California Circuit Court; much of these damages were the result of breaches relating to films being available on VidAngel before being released on Disney Plus. The contention of this coalition was that if consumers wanted their own tailored copy of a film, they can buy it themselves at a price set by the licence holder. After filing for bankruptcy in Utah, VidAngel and Disney reached a settlement of $9.9 million, allowing the streaming platform to fight another day, on the condition that they do not decrypt, stream, copy or distribute any of Disney’s content. Netflix, Amazon Prime and HBO Max remain fair game.
What is important however is that despite losing the case, VidAngel’s model remains intact; the streaming services never consented to edited versions of their media being monetised, the price of which they had no control over. The issue here is that consumers never purchased their own copy of said media; they were granted access to a generic copy through their existing subscription, yet only paid $1 to temporarily own an edited product. The question is whether the streamed copy, which was never owned, is an adequate stand-in for the copy purchased by VidAngel. This, of course, does not hurt the creator’s bottom line, as VidAngel requires a valid subscription to another service, yet increasingly it is the content itself that streaming services are trying to market; Netflix and Amazon Prime have been pouring cash into their own original productions, and existing media is being pulled from these platforms as the copyright holders, namely studios, are enforcing their intellectual property rights on their own streaming services.
This may seem like a matter of little consequence – an odd company started by a family of Mormons, catering to the whims of those who deem the prevailing culture as toxic and diluting the creative products of other-yet it may be the model of entertainment going forward. Filtering could be an avenue through which companies are able to market their content overseas and avoid backlash at home; instead of rewriting a script as propaganda, services can allow governments to censor, or ‘filter’ their films, staving off accusations of cosying up to totalitarian regimes. If the United States’ own citizens have the right to alter media to suit their tastes, why not foreign clients? And if streaming services have so little control of their content, should consumers be incensed that they bend over backwards to accommodate consumers whose values are so different from our own? Regardless, it is the opinion of the author that Saving Private Ryan is best enjoyed in its full horror.
Sam Triantafillopoulos is a Research Analyst with UNIT – University of Melbourne, writing predominantly on matters of monetary policy and fixed income markets.
Disclaimer: The views expressed in this article are solely that of the author’s, and do not necessarily reflect the position of UNIT nor the University of Melbourne. The advice given is general in nature and does not consider an individual’s personal financial circumstance. Transacting off this information is done so at one’s own risk, and individuals are encouraged to consult a finance professional before making investment decisions based off of this article.