Where the two factions differ is on the issue of whether the DMCA is enough. The BSA's Simon views the DMCA as a well-crafted piece of legislation but thinks efforts to build DRM into every digital device are overreaching. And in taped remarks at a December business technology conference in Washington, D.C., Intel CEO Craig Barrett spoke out against a bill proposed (but not yet formally introduced) by Sen. Ernest "Fritz" Hollings (D-S.C.) that would mandate a national copyright protection standard. The Content Faction says it needs such a standard to survive.
A few companies are so big and diverse that they don't fall easily into either faction. Take AOL Time Warner. The movie studios and other content producers under its umbrella tend to favor efforts that lock down cyberspace, but AOL itself, along with some of the company's cable subsidiaries, tends to resist any effort to mandate universal DRM. "We like the DMCA," says Jill Lesser, AOL Time Warner's senior vice president for domestic public policy. "There isn't from our perspective a need for additional remedies." AOL's reluctance to embrace the Hollings legislation explains why the Motion Picture Association of America, of which AOL Time Warner is a prominent member, remains officially neutral on the bill.
But Lesser needs only to take a breath before she adds that something like the Hollings bill, at least with regard to digital TV, may be a good idea. Industry progress toward an agreement for copyright protection in digital television hasn't proceeded as quickly as the content companies would like. "Maybe a mandate is the way to get there more quickly," she says.
Napster is the specter that's haunting the Content Faction. Although the free version of Napster has been essentially wiped out by music-company litigation (a new version of the file sharing system is being developed by Bertelsmann A.G.), the Napster phenomenon still casts a long shadow. One technologist for News Corporation who is working on a watermark-based DRM scheme says he thinks Napster signals the end of the music industry. He argues that since record companies generally have most of their catalogs available on unprotected CDs, which can be "ripped" and duplicated with CD burners or distributed over the Internet as MP3 files, music lovers already have gotten out of the habit of paying for records, which means an end to big profits and thus an end to big record companies. "Within five years," he says, "the music industry will be a cottage industry."
Matthew Gerson, vice president for public policy at Vivendi Universal, which produces and sells both music (Universal Music Group) and movies (Universal Studios), is quick to dispute such predictions. "We know that if we build a safe, consumer-friendly site that has all the bells and whistles and features that music fans want, it will flourish," he says. "My hunch is that fans will have no trouble paying for the music that they love and compensating the artists who bring it to them -- established stars as well as the new voices the labels introduce year after year."
But maintaining that model, in which big music companies play an important filtering role for audiences, depends both on large streams of revenue and on control of copyrighted works. The Internet and digital technology could change all that, cutting off the revenue stream by moving music consumers to a world in which trading music online for free is the norm. (Some recording artists, including Don Henley and Courtney Love, might welcome the change. They question whether the music companies truly serve artists' interests as well as they serve their own corporate interests.) At the same time, a technical/legal scheme that perfects control of digital content creates new revenue opportunities: The music companies, for example, could "rent" or "license" music to us in a protected format rather than sell copies outright.
The Hollings legislation, dubbed the Security Systems Standards and Certification Act, is designed to help content companies turn the potential peril of digital technology into profits. In the drafts available last fall, the bill would make it a civil offense for anyone to develop a new computer or operating system (or any other digital tool that makes copies) that does not incorporate a federally approved security standard preventing unlicensed copying. The bill would set up a scheme under which private companies met and approved the security standard. It would require that the standard be adopted within 18 months; if that deadline passed without agreement on a standard, the government would step in and impose one. In at least one version, the bill would also make it a felony to remove the watermark from copyrighted content or to connect a computer that sidesteps DRM technology to the Internet.
The Hollings bill applies to any digital technology, not just TV. It's clear why the bill's supporters want its scope to be so broad: If the watermark scheme works for digital TV, creating a system for labeling copyrighted works and for designing consumer electronics to prevent unlicensed copying, it should be possible to make it work for the rest of the digital world, including the Internet.
According to Capitol Hill sources, the Hollings bill was inspired by Eisner's 2000 speech to Congress. The people who had a hand in drawing up the legislation do not describe it in terms of protecting embattled copyright interests. Instead, they say it's a proactive measure designed to promote both digital content and increased use of high-speed Internet services. They note that consumer adoption of broadband services (such as cable modems and DSL) has been slower than predicted. Consequently, the cable and phone companies have too small a consumer base to justify building out their broadband capacity very quickly or very far. But if Hollywood could be assured that its content would be protected on the broadband Internet, the theory goes, it would offer more compelling online content, which would inspire greater consumer demand for high-speed service.
This theory, which assumes that what people really want from the Internet is more TV and movies, is questionable, but it has a lot of currency in Washington. And as the debate over broadband deregulation shows, Congress wants to find a way to take credit for a quicker rollout of faster Internet service.
It was the Hollings bill that brought the war between the Content Faction and the Tech Faction out into the open. And in the near term it's the Hollings bill that is likely to be the flash point for the debate about copyright protection standards. A congressional hearing on Hollings' proposal was held in late February, but no bill has been formally introduced.
One way to understand the conflict between the Content Faction and the Tech Faction is to look at how they describe their customers. For the content industries, they're "consumers." By contrast, the information technology companies talk about "users."
If you see people as consumers, you control access to what you offer, and you do everything you can to prevent theft, for the same reason supermarkets have cameras by the door and bookstores have electronic theft detectors. Allowing people to take stuff for free is inconsistent with your business model.
But if you see people as users, you want to give them more features and power at cheaper prices. The impulse to empower users was at the heart of the microcomputer revolution: Steve Jobs and Steve Wozniak wanted to put computing power into ordinary people's hands, and that's why they founded Apple Computer. If this is your approach -- enabling people to do new things -- it's hard to adjust to the idea of building in limitations.
In a basic sense, moving bits around from hard drives to RAM to screen and back again, with 100 percent accuracy in copying, is simply what computers do. To the Tech Faction, building DRM into computers, limiting how they perform their basic functions, means turning them into special-purpose appliances, something like a toaster. This approach is anathema to the user empowerment philosophy that drove the PC revolution.
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