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I agree there's a lot of problems with the DMCA, but regionalization of media sales predates the DMCA and even the Internet by quite a bit.

To give a little background, when rights are sold by the property's  (movies, songs, performances, etc) creator they are sold for a given geographically area, a specific embodiment into a given media format and for a given time period. So, for example, movie rights could be sold to a manufacturer to sell DVDs for 5 years in France (or the European market) without affecting on-demand or other market sales here in the States. It's a way of slicing up the different markets, encapsulating the terms for each, and allowing for individualized revenue streams which tend to maximize total receipts for the writers, directors, actors, artists and the companies that produce them; sometimes fairly distributed, sometimes not. And yes, we usually subsidize the world this way, meaning that a DVD that sells for $20 here will usually sell for 40% less in another region.

Without the region codes on the players, people would just buy the cheapest region's DVDs, resulting in a substantial loss of revenue for movie makers and thus making movies much less investable. That's the real reason for these region codes, to sell to the demand present here and maximize total sales revenue. I would imagine that if we allowed manufacturers to not put list prices on media and to sell them for whatever the market will bear, you wouldn't need that type of regionalization in the players. A better solution would be to have a specific price for the education market, like everything else does, and have that as a separate region code - or maybe allow schools, colleges, and other educational institutions to buy region-free players at a discount since these are essentially markets that are not really counted in overall sales individually and the students really are a captured audience that shouldn't be charged full price.

I'm not sure of a perfect or even a good solution, but that's the reasoning behind those provisions in the present solution we have in place now.

-John






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