New service redefines movie sharing

For students tired of long walks to Hollywood Video or long waits for queued movies on Netflix, there’s a new movie rental service in town. Flix on Campus, which will debut this quarter at UCLA, comes as further evidence of the growing gravitational trend toward Internet-based movie rental.

The new service was cocreated by childhood friends Sepehr Vakil, a UCLA graduate student, 2006 alumnus and former Daily Bruin Viewpoint columnist, and Temitope Sonuyi, an MIT graduate. The idea for the new business came from a conversation with a friend’s sister, a UCLA undergraduate.

“She was just kind of voicing her frustrations about not having any easy ways to rent movies on campus. … The idea was that she couldn’t get movies, and she was wondering if there could be some sort of main repository where everyone can go and like digitally get movies,” Vakil said. “Me and (Sonuyi) just started with that feed … and with that beginning the idea just started evolving and evolving.”

Flix on Campus, as a handful of Facebook advertisements already state, is essentially a service that allows UCLA students with a UCLA e-mail address to rent DVDs to and from each other for profit. A rental begins with a person who is looking to rent a movie logging on to the central Flix on Campus Web site and searching for a movie, either by title, genre or by the movie’s physical dorm building location. Once the movie has been located and the renter clicks on “rent it,” an automated e-mail and text message is sent to the owner of the movie. Then, the owner can decide to accept or decline the rental request. If the owner accepts, the renter and owner proceed to set up a time and place to meet up and exchange payment for the movie. At the end of the rental period, an automated e-mail is sent to the renter reminding them to return the movie to the owner. Then, much like eBay, users can give online feedback and ratings on the practices of renters and owners.

One of the most unique things about Flix on Campus is that the owners themselves set their own rates and rental durations, with the idea presumably being that competition will drive down prices.

In addition, if any DVDs are scratched or stolen in transit, Flix on Campus will fully compensate for the DVD.

With all these perks for the user, where does revenue for the company fit in?

“In the first deployment we’re not going to make any money because we’re not going to have advertising on it, but eventually the idea is advertising and affiliate purchasing will be our two main forms of revenue. In the beginning we were considering having a commission-based system, … but we decided against it,” said Sonuyi.

With the owners and the creators profiting, albeit from different sources, it would seem that the company is profiting from copyrighted material. However, the legal status of Vakil and Sonuyi’s business is apparently not in doubt thanks to a small clause in U.S. copyright law called the First Purchasers Doctrine.

“In the First Purchasers (Doctrine) they state that once you purchase a good and you own it, that you are allowed to make money off of it, like you sell your DVD, you can rent out your DVD. What you’re not allowed to do is have like a large screening or showings of the material, that’s what’s illegal, because then like movies have to pay that royalty kind of stuff,” Sonuyi said.

Despite the many services that Flix on Campus offers, some people are not convinced by Flix on Campus’ business model, which requires active participation by both owner and renter. “Is this really appealing enough? If I want to see a movie, do I want start bothering finding out who has it on my campus and then hooking up with her or him to get it and have to return it to her or him, and so on. It sounds primitive,” said film professor Richard Walter.

But the reason for both Vakil and Sonuyi’s business idea and for Walter’s complaints seems to be the same: that consumers are moving increasingly away from physically going somewhere to rent a movie.

This idea is reflected in the comparison of quarterly earnings for both Blockbuster and Netflix. In the second quarter of 2007, Netflix had a net income of $26 million, while Blockbuster reported a $38.1 million net loss. Even though these are just quarterly returns, Blockbuster’s losses are supposedly attributable to higher spending in online marketing, while Netflix’s gains are supposedly partially attributable to a settlement Blockbuster paid to Netflix for patent infringement where Blockbuster Online was accused of infringing on Netflix’s rental mechanisms.

Translation? Blockbuster is losing money playing catch-up to the Netflix’s business model. Both companies, though, seem to recognize the importance of an online service.

Online rental services like Netflix have already been embraced by a number of UCLA students, which may have an impact on the success of Flix on Campus. “I think that the only way I would use that over Netflix is if the prices are like a lot cheaper because Netflix is so easy for lazy people ““ you don’t have to make any effort,” said Molly Foltyn, a second-year English student and Netflix subscriber.

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