Is RealNetworks' Facet a boon for digital media or piracy? Or both?

While Hollywood has been busy figuring out whether and how the future of movie distribution will arrive via digital downloads and streaming, a big legal case is presaging a different approach: ripped DVDs.

In the music industry, of course, consumers were ripping CDs onto their computers for years until labels started offering affordable and accessible downloads via iTunes. The fact that it was so easy to get tracks off a CD and then onto an MP3 player (or share it on the Web with friends or the world) was one of the main arguments used to spur the music industry into selling downloads and, finally this year, abandoning restrictive DRM software.

Though there's a decent amount of movies available to download or stream, it's nowhere near as wide a selection as music and the DRM is still very restrictive. One of the obvious reasons is that it's still the best alternative to piracy. Because DVDs come with copy protection, consumers can't easily copy movies onto their computers they way they have always been able to with CDs. And because movies take up numerous gigabytes on a hard drive, most people can't store anywhere close to their entire film collection on a single computer, they way they can their music collection.

But the ongoing case of the motion picture studios against RealNetworks, initially about a piece of not particularly useful piece of software, has turned out to be about that very possibility. Ostensibly it's about the RealDVD software, which lets users copy a DVD onto their hard drive. Given that it limits playback to five machines, while plenty of free programs on the Web do the same thing for free with no such limitations, it was never going to be a major factor in the industry. Especially since, for the storage reasons I noted above, transferring DVDs onto a PC isn't too useful a proposition.

But in court yesterday, RealNetworks CEO Rob Glaser unveiled the real heart of the matter: Facet (that's a none-too-sexy prototype on the left), a new piece of hardware the company wants to sell that uses the RealDVD software, has a (presumably) huge hard drive to store hundreds or thousands of copied DVDs, and plugs directly into a television with its own simple interface for watching films.

It's essentially a cheap version of the well regarded by super expensive ($10,000) Kaleidascape.

"Kaleidescapes are like Porsches. They're very expensive. We thought we could develop Chevys, a $300 product that could replace a person's DVD player," Glaser said in court according to CNET News.

Theoretically, Hollywood should have no problem with the Facet's capabilities, as described by CNET:

During Glaser's demonstration of Facet, he showed how the box made the process of scanning, selecting, and pulling up digital DVD copies as simple as managing an iTunes music library.

In addition, the box could instantly provide a synopsis about a film or the movie's cover art, as well as enable a user who interrupts the playback for whatever reason to instantly return to the spot where the movie left off. Glaser used a copy of a box set from the show "The Sopranos" to demonstrate how a Facet owner could begin playing any episode within the set almost instantly.

One little problem, though. As Glaser has admitted, there's no way to ensure that a DVD has only been copied once. There's nothing to stop consumers from renting a copy from Netflix of Blockbuster and then copying it onto the Facet so that they own it for the price of renting. Or, even more alluringly, buy one copy and then share it with an infinite number of friends, all of whom can make a digital copy and then pass it onto the next Facet owner.

CNET summarized Glaser as saying the MPAA's case is nothing more than a "thinly cloaked attempt to quash competition." And it is, without a doubt, an attempt to maintain the current business model through which consumers have to pay more -- sometimes a few bucks along with a DVD, sometimes $10 -- to get a digital copy of a movie they might already own.

On the other hand, it's foolhardy and naive -- in that all-too-typical Silicon Valley way -- to suggest that Facet doesn't enable and encourage mass stealing of movies in the way I described above. If the Facet became popular, studios would have to respond with some draconian new DRM measure on DVDs or by eliminating the low cost rentals that serve consumers so well.

The only fair solution, it seems, is to find a way to build the Facet so that it can only copy any single DVD once. It's easier for me to suggest than an engineer to do. But it's the only way to address very real piracy concerns and keep Real's potentially very useful product on the market so that it really is a matter of legitimate new business model versus legitimate old one.