So much for exclusivity: Blockbuster vs. Netflix

Blockbuster's exclusives show up at other rental outlets -- including Netflix

You may have missed the news entirely, and given the information reported in the article referenced here: Weinstein titles leak to other rental stores I can sort of see why.

In case you weren't aware (and didn't yet click the linked article), sometime back The Weinstein Company signed an exclusivity deal for rental rights with Blockbuster. The idea being that Blockbuster would be the only place to obtain rentals of titles released from The Weinstein Company for a three year period (not sure if the three year period was a sliding window for each title, or just a three calendar year period that started when the exclusivity deal reportedly started: Jan 1, 2007).

On Blockbuster's side I can sort of understand the deal. They were signing a deal to get exclusive rental rights (or so they thought) for films made by The Weinstein Company. In case you aren't aware of The Weinstein's, they are brothers behind some of the "bigger" independent ("indy") titles in the last several years. They were formerly working for and with one of the bigger studios, but the deal broke down when it was up for renewal with the big studio bowing to too much political pressure, etc., and both sides mutually agreed to go their own ways.

The Weinstein's went off to form their own company and their current list of titles includes some that could be considered popular with some hard-core audiences. The list includes: "Bobby", "The Protector", "School for Scoundrels", and "Shut Up and Sing".

School for Scoundrels is due out on DVD the week of Feb 13, 2007. And reportedly there are plenty of rental companies that will have copies available, including Blockbuster's arch-rival Netflix.

This could be very interesting as the list of companies that are renting these discs (including The Protector and School for Scoundrels apparently) also includes smaller independent rental companies which theoretically weren't supposed to be able to get the copies for rental either. In fact, according to the article linked above, the copies that have been rented were apparently tagged "for sale only."

Can The Weinstein Company live up to the agreement they tried to make or will it be bounced because it's anti-competitive and discriminates against smaller independent rental stores? Can Netflix, and the smaller stores, keep getting rental copies or keep using "for sale only" copies for rental without facing legal repurcussions?

I hope readers have stock in the law firms that will handle the cases that are likely to evolve from this whole exclusive deal. The lawyers are likely going to be the only ones to really make money and come out winners

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Good luck to The Weinsteins in being able to keep this exclusive deal. I suspect it's gonna get tossed out by the courts because it discriminates against smaller rental stores. They might be able to somehow exclude Netflix, but I doubt that would really ever work and probably wouldn't be legal if they tried it either.

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Why not? It is their intellectual property. If Netflix is renting it out, then they are stealing IP, which violates copyright law. You can discriminate against whoever you want, and you can be as exclusive as you want with your IP. At least, that is my understanding of it.

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Because, even though it's Intellectual Property, there are still laws that come into play to ensure fair competition and to prevent abuses because of monopolistic practices or other practices that could be considered discriminatory.

Keeping this agreement could result in Blockbuster or Netflix (either one) being permitted to establish enough exclusives to drive all of the independent rental stores out of business. Again, it would be anti-competitive and could result in the states, if not the federal, attorney generals filing suits over the anti-competitive practices.

Again, that's why I expect to see the whole thing fattening up a bunch of lawyers. Anytime competition is lessened it's a bad thing. Assuming either of these companies swallowed up the other, the Feds would step in and prevent it *unless* they could be showed that there were absolutely no chance at harming consumers, or unless they could be shown that it was absolutely necessary for the businesses to survive. Even on that absolutely necessary for the survival of the business they might ignore that argument and simply let the marketplace fight things out.

If having exclusive agreements like the one that The Weinsteins/Blockbuster tried for resulted in higher rental fees for their customers, you could absolutely be assured that the states/feds would get involved and investigate because of it.

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