Imagine renting "Coming to America" and seeing an ad for a local barbecue palace. Or renting "Baby Boom" and finding that the movie is preceded by a commercial for a neighborhood diaper service.
Actually, it's happening in several states, including Texas, Kansas, Ohio and Tennessee. Companies there are placing local commercials on rental cassettes of major films.
The video companies that distribute the cassettes are outraged, claiming copyright infringement, among other violations. Paramount already has filed suit and other companies are threatening to do the same.
Firms such as Wichita, Kan.-based Video Broadcasting Systems Inc. and Midland, Tex.-based Video Air Time pay video retailers for the right to add commercials to the cassettes they rent. Video Broadcasting Systems and Video Air Time then sell the cassette time to advertisers.
Video Broadcasting Systems says it has added commercials to 70,000 tapes in Kansas during the past two years, charging sponsors $2 per tape for a run of three to nine months.
The video manufacturers get nothing.
But it's not the lost revenues that concern the video manufacturers. George Krieger, president of CBS-Fox, protested at the recent Video Software Dealers Assn. convention in Las Vegas that such unauthorized additions were tampering with their product. For one thing, he noted, these local ads undermine the major video companies' ultra-cautious approach to adding ads to cassettes, increasing the possibility that renters will be turned off by the commercialization of home video.
Earlier this month, Paramount filed suit in U.S. District Court in Kansas seeking more than $1 million in damages from Video Broadcasting Systems and several retail outlets and advertisers in Kansas for copyright infringement, trademark infringement and unfair competition involving such Paramount films as "The Untouchables" and "Raiders of the Lost Ark."
Paramount claims the ads overlap and obliterate prerecorded material, such as coming attractions and the FBI copyright warnings. In some cases, the studio says, the local ads appear next to or overlap authorized prerecorded commercials added by Paramount. In the case of "Crocodile Dundee II," Paramount charges that a local ad not only interrupts a Diet Pepsi ad but also mentions the competition--Coca Cola products.
The addition of these local ads, Paramount maintains, violates previous authorized commercial arrangements. Its deal with Pespi, for example, forbids any other advertising on those cassettes.
Tim Mead, president of Video Broadcasting Systems, said Monday that his company disputes the copyright issue. He contended that once a video distributor sells its cassette to a retailer, the retailer owns it and can do with it what he wants. The retailer isn't bound by the distributor's agreements with national advertisers, Mead maintained.
Video Broadcasting Systems had planned to expand its operations nationwide soon but now will be delayed because of the Paramount lawsuit, Mead said.
Allen Frasier, president of Video Air Time, said his company doesn't tape ads onto the blank tape preceding the movie, as Video Broadcasting Systems does. The local ads sold by his company are on additional tape that's spliced in at the beginning of the cassette.
Nevertheless, he agreed with Mead's argument: "I don't see what these companies are complaining about. Once they sell the cassette to the retailers, it doesn't belong to them anymore. It belongs to the retailers. Those are the people we're doing business with."
Frasier said that in the past nine months, Video Air Time has added commercials to about 3,000 to 4,000 tapes in Midland and Lubbock, Tex.--covering about 100 titles. His advertising rates vary but are in the neighborhood of $20 per tape.
While Paramount is the only company to file suit so far, JVC issued a threatening statement and Orion announced plans for possible legal action and a plan to foil the local advertisers.
Orion's way of discouraging local ads: by obliterating all blank tape. As of Aug. 9, spokesman Paul Wagner said, all the previously blank tape on its cassettes will bear the Orion logo. Dubbing something over that logo would be an invitation to a copyright infringement suit.