That last story about Netflix is why the internet is going to help save the movie industry.

Rental outlets operate using the First Sale Doctrine. Meaning if they buy a dvd, they have the legal right to rent it, sell it, or lend it out however they like for whatever price they choose. They don't have to pay any royalties or licensing fees. All they have to do is buy the dvd. All the profits after buying it, they get to keep. But it only applies to the physical disc.

Distributing films digitally through the internet isn't covered by the first sale doctrine.

So as dvds go the way of the dinosaurs, studios will be in full control of what price people can rent their films for. The whole Redbox controversy won't matter a bit. Right now studios are pissed that Redbox is putting such a low price on their films ($1 a day). They think it's driving their worth down too low. But the only reason Redbox can do this is because of the first sale doctrine. They own the disc, they can do what they want with it.

When everything goes digital, the first sale doctrine goes out the window. And the studios will regain full control of their films and the prices that they want for them.

I guarantee that when the big digital push happens, they'll see way more profit than they ever did with dvd. They'll have way more leverage than they ever did before to set the price for their digital downloads, as well as digital rentals and digital streaming. No more having to deal with Walmart, Redbox and all the others driving their prices down. They probably won't even have to deal with any retailers at all. They can set it all up through their own studio website distribution systems. You want to rent the latest action movie from Warner Brothers, you rent it directly from the WB website.

This could also benefit writers as well, because writers don't get any royalties when someone rents their movie at Blockbuster. They only get royalties from when Blockbuster buys the actual disc. Then Blockbuster rents out that one disc to a hundred people. This way, the writers can get a piece of every single rental. (So long as they don't get shafted in their contract)

Sweat deal. Internet saves the day! Hooray!