As the old saying goes, hard times are in fashion. That couldn’t be truer for embattled content filtering service VidAngel, which, after losing its battle with major Hollywood studios over copyright infringement, returned to court to face the financial music – to the tune of a paltry $62.4 million in damages, as awarded by a jury.
The studios in question – Walt Disney, Lucasfilm, Twentieth Century Fox, and Warner Bros. – pushed for the maximum penalty of $125 million. (Interestingly, all but Warner are now part of the larger Disney corporation.) VidAngel argued that it erred in ignorance, truly believing that the service was not illegal, and that they should receive leniency, hoping for the minimum fine of $600,000. So, the plaintiffs will be awarded half of what they sought while VidAngel will fork out over 100 times what it had hoped. According to Variety, VidAngel only has approximately $2.2 million in the bank and will likely have to liquidate assets if it is unable to appeal the penalty.
“It feels like the jury split the baby,” VidAngel CEO Neal Harmon said in an interview with Variety. “It just so happens that halfway in between is not a good situation for us.” According to Variety, the company is already exploring options in bankruptcy court.
The lawsuit pertains to VidAngel’s previous business model of “selling” movies to a customer to allow the customer to filter sex, violence, and language, as he or she saw fit, and then the customer “selling” the film back to VidAngel, resulting in what was functionally a rental of $1 or $2, depending on quality. (Indeed, one could even “rent” an unfiltered version of a movie from VidAngel for less money than a typical rental would cost with Apple, Google, Amazon, et al – and we wonder why studios took issue with it.) VidAngel argued that it owned individual SKUs per stream, so the studios were not losing any money to piracy.
VidAngel no longer employs this streaming model and now basically bootstraps Netflix and Amazon Prime into its service. Neither company has pursued legal action against VidAngel even though it appears to be violating the terms of service of each by effectively hacking their code.
Either way, a company with enough chutzpah to hold a media event on par with a mid-2010s Apple keynote might deserve to be knocked down a few pegs for such hubris.
Reactions have been mixed. Industry publications and pop culture sites appear to side primarily with the studios while religious and conservative outlets argue this is just Big Hollywood beating up on someone standing up for family values. The Federalist even ran a headline saying, “Hollywood Punishes VidAngel For Cleaning Up Their Smut,” completely ignoring the fact that such smut is protected under copyright law even if it is, indeed, smut.
Let’s give VidAngel credit for this: its leaders are indefatigable. While one could argue they would have been wiser to spend their money on better lawyers instead of original comedy specials of dubious quality, most companies would have folded by now, but VidAngel keeps finding ways to press on. VidAngel wasn’t the first and it likely won’t be the last.