Peerflix is not the first company to try and capitalize on second-hand media. In 2000, WebSwap created a barter site
in which consumers listed all kinds of disposables and desirables along with a means to make up the difference in cash.
While it failed, the standard bar code numbers and descriptions for such media as CDs, DVDs and video games inspired
Half.com, which eBay eventually snapped up. eBay?s flagship site also offers used DVDs, as does Amazon Marketplace.
However, by the time one factors in the profit motive and shipping, used DVDs aren?t a great online deal with most
starting at about $8 and going up from there.
Peerflix will face many of the same issues in reaching critical mass that its predecessors did. The great thing about
network effects is that their momentum allows them to grow quickly; the hard part is getting them started. That said,
Peerflix debuts at a time when more consumers are used to transacting online and DVD movies are at the height of their
popularity. According to Rentrak, over a billion DVDs were rented in the first half of this year.
Fleeting consumption makes DVDs an excellent content source with which to start. The Peerflix terms of service
discourages swapping pirated DVDs, noting plainly that ?users may not illegally copy DVDs? and that ?as a User, you
acknowledge and agree that you have valid title and ownership rights to any DVDs that you make available.?
But avast ye maties, Peerflix can?t prevent DVD copiers from keeping their pirated version and selling the original.
Besides, once you?ve ?traded? a DVD, you gain title to the one you receive, and making a copy technically falls under
fair use. Peerflix may be trafficking in legal physical product, but the fluidity of media it could create raises new
questions around what is ownership.
The legal shenanigans will really kick into the gear if the Peerflix model proves successful enough to expand into
CDs. That could be described as a ?poor-man?s KaZaa? except Peerflix would cost more, so perhaps it would just be the
At that point, Peerflix could slow the pirate ships further by implementing a ?cooling down? period for purchased
media. You wouldn?t be able to sell a CD you purchased on the service for, say, a month. That would punish those who
were simply disappointed by the CD, but is an example of the kinds of roadblocks companies are being forced to consider
in the post-Grokster era.
Ross Rubin is director of industry analysis at NPD Techworld, a division
of market research and analysis provider The NPD Group. Views expressed in Switched On, however, are his own. Feedback
is welcome at firstname.lastname@example.org.