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RealNetworks Settles Case on DVD Software Copying
Rob Glaser has only been out of RealNetworks' chief executive seat for a few weeks, and big changes have taken place at the firm he founded (and in which he remains a major shareholder). Today, RealNetworks settled the lawsuit brought against the firm by a number of studios and related parties over its RealDVD disc-copying software. This should allow RealNetworks to work more comfortably with studios upon which the firm relies for content licensing.
The RealDVD package, announced in September 2008, could copy a protected video DVD to a computer hard drive in such a way that only the RealDVD software could play back content. The software, which cost $50 retail, could be licensed for up to five users to access the same locked content.
RealDVD even had a license from the DVD Copy Control Association (DCCA), and used a legitimate method—in RealNetworks' opinion—to decrypt files, copy them, and re-encrypt them. RealNetworks argued that this copying process was fine because only the licensed owner could replay content. They also argued that media purchasers are entitled by law to make backup copies.
Other, similar packages removed the encryption and ripped the content into unlocked file formats, violating the letter of the Digital Millennium Copyright Act (DMCA) against reverse engineering encryption systems designed to protect content.
The trouble is that RealDVD doesn't establish ownership, so any borrowed, purchased, or rented DVD could be copied and stored by the software. This put the onus of legal use on the person who bought the software, and the music and movie industries prefer to have technology prevent consumers from having both legitimate and illegitimate access to media.
The industries have the delusion that by preventing legal software, like RealDVD, that came with heavy restrictions, they'll be able to prevent consumers from using technically illegal software. Nor, they believe, will consumers obtain unencrypted, pirated copies of the works they want to get them as digital files that are portable among computers and handheld devices they own.
Almost immediately after the product went on sale, RealNetworks preemptively sued major movie studios and the DCCA to get a ruling that RealDVD didn't violate its DCCA contract. The MPAA then, in turn, sued RealNetworks. A temporary restraining order was put into place almost immediately, halting sales; ultimately, fewer than 3,000 copies were sold and delivered.
In August 2009, a judge put a preliminary injunction in place, pending a trial in which a permanent injunction could have been imposed. RealNetworks challenged that two months later.
The final move came today, with RealNetworks, six studios, Viacom, and the DCCA settling the various lawsuits. RealNetworks will pay $4.5 million to the other parties to cover costs, disable some metadata (covers and movie info) features for RealDVD users, and reimburse purchasers. This will put a permanent injunction in place.
This latest move is part of a series of steps that new CEO Bob Kimball has taken since assuming that role. Glaser, as founder, may have been reluctant to back off from fights and lines of business he started. Kimball, being more hard nosed, said in a statement that with this issue resolved, RealNetworks can work more productively with studios. And how.
Kimball spun off Rhapsody , the initially promising music subscription service RealNetworks launched with Viacom. (Awkward meetings after RealDVD was announced, I'm sure.) Kimball is also looking to dump lines of business that aren't related to RealNetworks' core, including gaming.
RealNetworks will be left with a ring tone/ringback tone division and its declining RealPlayer software and platform. It's hard to see how the former, a low-margin business, and the latter, which seems like a vestige of the late 1990s, can move the company forward.
RealPlayer, which I haven't had installed on any computer for years, grew from an early way to stream music and video better than Apple or Microsoft into a bloated adware villain, cursed at because of how it tried to take over playback of all media files and install unrelated third-party software .
Financial publication Barron's noted yesterday that RealNetworks has $400 million in the bank, thanks largely to a 2005 settlement in the company's long-running lawsuit against Microsoft, and the company traded below its cash balance for several months last year, a relatively uncommon event. The stock has nearly doubled since then.
Rob Glaser tweets at irregular intervals; he linked to the New York Times account of today's settlement with the vaguely poetic note, "As the Bard of Avon noted about 400 years ago, sometimes the better part of valor is, unfortunately, discretion."
(Disclosure: It's tricky whenever I write about RealNetworks or movie studios. A company I helped incubate in the mid-1990s, Film.com, was acquired by RealNetworks in the late 1990s, and I received restriction stock as compensation, all of which I finished disposing of several years ago. I hold no RealNetworks shares, nor have any financial position relating to its stock or the industry.)
The RealDVD package, announced in September 2008, could copy a protected video DVD to a computer hard drive in such a way that only the RealDVD software could play back content. The software, which cost $50 retail, could be licensed for up to five users to access the same locked content.
RealDVD even had a license from the DVD Copy Control Association (DCCA), and used a legitimate method—in RealNetworks' opinion—to decrypt files, copy them, and re-encrypt them. RealNetworks argued that this copying process was fine because only the licensed owner could replay content. They also argued that media purchasers are entitled by law to make backup copies.
Other, similar packages removed the encryption and ripped the content into unlocked file formats, violating the letter of the Digital Millennium Copyright Act (DMCA) against reverse engineering encryption systems designed to protect content.
The trouble is that RealDVD doesn't establish ownership, so any borrowed, purchased, or rented DVD could be copied and stored by the software. This put the onus of legal use on the person who bought the software, and the music and movie industries prefer to have technology prevent consumers from having both legitimate and illegitimate access to media.
The industries have the delusion that by preventing legal software, like RealDVD, that came with heavy restrictions, they'll be able to prevent consumers from using technically illegal software. Nor, they believe, will consumers obtain unencrypted, pirated copies of the works they want to get them as digital files that are portable among computers and handheld devices they own.
Almost immediately after the product went on sale, RealNetworks preemptively sued major movie studios and the DCCA to get a ruling that RealDVD didn't violate its DCCA contract. The MPAA then, in turn, sued RealNetworks. A temporary restraining order was put into place almost immediately, halting sales; ultimately, fewer than 3,000 copies were sold and delivered.
In August 2009, a judge put a preliminary injunction in place, pending a trial in which a permanent injunction could have been imposed. RealNetworks challenged that two months later.
The final move came today, with RealNetworks, six studios, Viacom, and the DCCA settling the various lawsuits. RealNetworks will pay $4.5 million to the other parties to cover costs, disable some metadata (covers and movie info) features for RealDVD users, and reimburse purchasers. This will put a permanent injunction in place.
This latest move is part of a series of steps that new CEO Bob Kimball has taken since assuming that role. Glaser, as founder, may have been reluctant to back off from fights and lines of business he started. Kimball, being more hard nosed, said in a statement that with this issue resolved, RealNetworks can work more productively with studios. And how.
Kimball spun off Rhapsody , the initially promising music subscription service RealNetworks launched with Viacom. (Awkward meetings after RealDVD was announced, I'm sure.) Kimball is also looking to dump lines of business that aren't related to RealNetworks' core, including gaming.
RealNetworks will be left with a ring tone/ringback tone division and its declining RealPlayer software and platform. It's hard to see how the former, a low-margin business, and the latter, which seems like a vestige of the late 1990s, can move the company forward.
RealPlayer, which I haven't had installed on any computer for years, grew from an early way to stream music and video better than Apple or Microsoft into a bloated adware villain, cursed at because of how it tried to take over playback of all media files and install unrelated third-party software .
Financial publication Barron's noted yesterday that RealNetworks has $400 million in the bank, thanks largely to a 2005 settlement in the company's long-running lawsuit against Microsoft, and the company traded below its cash balance for several months last year, a relatively uncommon event. The stock has nearly doubled since then.
Rob Glaser tweets at irregular intervals; he linked to the New York Times account of today's settlement with the vaguely poetic note, "As the Bard of Avon noted about 400 years ago, sometimes the better part of valor is, unfortunately, discretion."
(Disclosure: It's tricky whenever I write about RealNetworks or movie studios. A company I helped incubate in the mid-1990s, Film.com, was acquired by RealNetworks in the late 1990s, and I received restriction stock as compensation, all of which I finished disposing of several years ago. I hold no RealNetworks shares, nor have any financial position relating to its stock or the industry.)
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