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Movie-Streaming Sites Claim Legal Cover With DVD-Ownership Models

Startups MovieSwap, VidAngel offering members online access to video content ripped from discs

Hollywood studios, which have long patrolled the Internet to stamp out copyright-infringing activity, are grappling with a new gambit to sidestep their usage restrictions: websites claiming that users who own DVDs can stream those movies any which way they want.

The latest trying this approach is French startup MovieSwap, which says it has compiled a library of more than 200,000 DVDs. Subscribers will be able to choose to either send in their physical DVD collections and then be able to stream them online; “swap” them with other users; or pay to receive DVDs that are added to their digital collections. “This process ensures that users are always swapping one DVD for another, thus making the process legal,” the company said in announcing the service.

MovieSwap on Tuesday launched a Kickstarter campaign and by Wednesday afternoon had raised $24,456 out of its $38,464 goal from 870 backers, who are promised free access for life after the service first launches in beta this summer.

Another service, Utah-based VidAngel, takes a different tack. Members can effectively rent HD streaming access to new releases for $2, after they purchase a DVD of the title for $20. They can then “sell back” the DVD to VidAngel and receive an $18 credit toward their next movie purchase.

Are either of these services kosher? No way, says one exec at a large studio: Such sites “are not in any way authorized to either rip or stream our content,” said the source, who requested anonymity.

The MPAA, the trade group that represents major studios, declined to comment. It’s not clear if the industry is contemplating legal action against MovieSwap or VidAngel.

The two companies defend their services as falling within legal bounds. MovieSwap, which is promoting itself with the hashtag “#FreeTheMovies,” says the service functionally is identical to the way a consumer can legally lend DVDs to friends or trade them — only on “a much larger scale thanks to its remote playback technology.”

“Our goal is to give the power back to the people by enabling them to digitally watch the films they already own,” MovieSwap CEO Cyril Barthet said in a statement. “We don’t want the $200 billion invested by the American people on their DVDs to go up in smoke because the technology is now obsolete.”

VidAngel CEO Neal Harmon, in an interview, said that his company is positioned as a family-friendly alternative to traditional streaming services. Founded in 2013, VidAngel lets customers watch DVDs streamed over the Internet using community-created filters for individual titles to eliminate sex, violence, profanity or other objectionable material.

“You can watch ‘Game of Thrones’ without the rape scenes,” he explained. “If you buy a toy, you can write your name on the toy. We’re saying, if you buy a movie, you can choose to skip content in that movie.”

VidAngel says it’s protected by the 2005 Family Entertainment and Copyright Act, which allows the use of technology to censor portions of DVDs. “If somebody wants to watch a movie without filters, we refer them to another site,” Harmon said. “Or, after they’ve already purchased the DVD, we ship them the actual disc if they request it.”

The VidAngel service represents a private performance, according to Harmon: “If our users are the owners (of a DVD), they have a right to a private performance.” That’s different from services courts have deemed engage in copyright infringement because they deliver a public performance, such as broadcast-TV streamer Aereo or DVD rental startup Zediva, he said.

Copyright holders have fought businesses that have tried similar approaches — and won. In 2000, major music labels sued MP3.com over its service that let users stream songs over the Internet after registering their CDs. MP3.com lost the copyright battle and eventually settled with the record companies.

Ultimately, how aggressively the movie biz tries to challenge VidAngel or MovieSwap may come down to scale. If either one starts to attract a significant number of users, expect the studios to swing their legal teams into action.

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