Many of the rental merchants who gathered at the Video Software Dealer's Association trade show, the biggest industry conference of the year, criticised a new scheme known as revenue-sharing, which was adopted about nine months ago.

The plan -- designed to boost rentals by putting more copies of hit movies on retail shelves -- has helped spur higher sales for Blockbuster Video, the industry's leader, and increase the Viacom Inc unit's market share.The independent store owners are concerned that Blockbuster's market share gains are coming at their expense.

Retailers such as Bob Webb, who owns six Illinois stores and heads the Independent Video Retailers Group, said revenue-sharing has allowed Blockbuster to cut sweetheart deals with Hollywood studios to obtainmore copies of movies -- sometimes as many as 200 -- at a lower cost per unit than the independents.

``We have no exclusive deals; we have no favoured-nation status,'' Webb said to rounds of applause at the packed meeting.

Webb and his group plan to file an anti-trust lawsuit later this summer against Blockbuster and the major Hollywood studios seeking to block revenue-sharing.

Blockbuster official Jim Notarnicola said he could only vouch for agreements his company was able to reach for its tapes. And in recent interviews with Reuters, several studio executives said they have worked to bring revenue-sharing programmes to all retailers on like terms.

Under revenue-sharing, a studio will effectively rent video taped movies to retailers for an upfront fee of about $10 per tape. Then, the studio and retailer split the rental revenues on a pre-determined basis, such as 60 per cent retailer, 40 per cent studio.

The traditional rental model -- which enjoyed over 15 years of success until about 1995-- had retailers buying tapes at about $70 a copy, then renting them as often as they were able.

Proponents of revenue-sharing say the plan puts more copies of hit movies on retail shelves. As a result, customers don't walk out of stores empty-handed. The scheme also leads to more rentals of non-hit and older movies because customers rarely go to the video store to rent just one movie.It is too early to say whether revenue-sharing and other such ``copy-depth'' programmes could drive independents out of business because such plans are relatively new.

Even so, Blockbuster and some other industry members are giving credit to the plans for a turnaround after two years of decline. ``Certainly we have built some top-line momentum starting with the fourth quarter last year,'' Blockbuster's chief executive, John Antioco told Reuters in a recent interview.

In the first quarter of 1998, Blockbuster's sales in stores opened at least a year jumped 10 per cent, and Antioco said the positive sales trend continued inthe second quarter, which ended recently.

For the entire industry, video-rental spending dropped 4.2 per cent in 1997 to $7.4 billion. So far in 1998, rental spending has risen 5.7 per cent from the previous year, president of the Video Software Dealer's Association, Jeffrey Eves told Reuters.

Proponents of the plans also claim the schemes drive studios to put more promotional dollars behind their video rental programmes because they have more of their profits at stake at the retail level.