Guard Copyrights, Don't Jail Innovation

Senator Hollings' call for hardware-embedded anticopying measures is the last thing consumers and the entertainment industry need

By Alex Salkever

U.S. Senator Fritz Hollings (D-S.C.) has earned a reputation over the years as a fearless contrarian, speaking the truth as he sees it. So it was a bit of a surprise to hear his folksy doublespeak on Mar. 21, when the senator solemnly introduced the Consumer Broadband & Digital Television Promotion Act.

The legislation would mandate that copyright-protection mechanisms be embedded in PCs, handheld computers, CD players, and anything else that can play, record, or otherwise manipulate digital information. The law's stated goal is to stop rampant digital piracy.

Hollings said the measure was a necessity. "The reality is that a lack of security has enabled significant copyright piracy which drains America's content industries to the tune of billions of dollars every year," he stated in introducing the bill on the Senate floor. Hollings' fears of pirating have some merit. File-swapping of copyrighted materials over the Net continues unabated, even after the taming of Napster.


  In this case, however, the proposed cure is far worse than the disease. Introducing copyright-protection mechanisms into almost all digital hardware clearly flouts the interests of consumers. And it's more evidence that, when it comes to delivering content in the 21st century, the entertainment industry is hell-bent on stifling technology, rather than using it in ways that eventually could become highly profitable. Hollings' proposal hands control over the innovative forces that drive tech development to some of the most change-resistant companies in the world.

This isn't the first such proposal. Similar bills have come up in the past few years. But unlike those efforts, this one may actually pass. It has the gung-ho backing of the movie industry, especially Disney, and the record labels, two of the most influential lobbying bodies in D.C. Meanwhile, the high-tech industry that fought so hard to fend off past attempts at mandatory copyright protection is distracted by its own woes and is hardly in a position to take a stand on anything, let alone a touchy issue such as piracy.

Still, the bill is a major mistake, and here's why. Let's start with the interests of consumers. These are the people who actually pay for music and movies. In the old days, when you bought an album, you could play it on your turntable or take it to a friend's party and play it there. You could tape it on cassette. Once you bought a piece of music, it was pretty much yours.


  Under the Hollings proposal, these activities could become criminal or, at the very least, punishable by a fine. Yes, the law does have a provision for Fair Use, the legal precedent that awards consumers some rights to replicate copyrighted materials, either for academic reasons or for personal use. But Fair Use protections in the bill remain vague. At the very least, they would have to be toughened.

The music and movie industries, however, are playing for keeps. Their current tactic of selling CDs in Europe that won't play on PCs ­- the de facto stereo of many young people -­ shows their true intentions (see BW Online, 3/19/02, "Dear Music Biz: Unchain My Melodies!").

Worse, the mere idea of building a hardware copyright-protection system into devices from PCs to CD players invites technological chaos. It's hard enough to get a single version of copy-protected Windows XP to run legally on two computers that you own. Imagine the hassles in getting thousands of songs to run smoothly on the multiple digital-playback devices many Americans own these days.

The truth is, pirates of copyrighted material haven't suffered much of a setback from the entertainment industry's efforts at copyright protection so far. The only people inconvenienced have been regular customers -- the very group the industry should be trying to please and the same folks who would likely pay for a decent music-subscription service.


  America was built on the freedom of information and the spirited atmosphere of innovation. The technologies that have transformed society and the world have revolved around the flow of information, from the printing press and radio broadcasts to videocassette players and e-mail. Not coincidentally, most of these breakthrough technologies presented new threats to copyright when they first came out. But these fears were vanquished when enterprising industries learned to use the new technologies to deliver a better product.

It's easy to understand the concerns of the movie and music businesses. They see a radical and difficult transformation coming, one where they might have to cede some of the control ensured by old distribution models. They also see millions of people ripping off products and siphoning their revenue streams.

Legislating a cure won't do the trick, though. New copyright mechanisms will begin to take hold as soon as the labels and studios realize that their old business models, with cushy margins and cozy relationships, are gone forever. Already, the big record companies have offered limited music-download subscription services, though many people find the offerings skimpy and the prices too high. And movie studios and cable networks have teamed up for video-on-demand systems that could lead to enhanced movie-download systems.


  If companies would bite the bullet and, say, offer unlimited music downloads for flat service fees, they might see an initial drop in revenues. But that would be followed by rapid growth that would also preclude most piracy.

Senator Hollings should know better: This is the equivalent of trying to jam a technological genie back in a bottle. Even if this bill passes, a gray market for devices that don't have copyright mechanisms would pop up instantly. Consider the prospect of copyright cops raiding millions of teenagers' homes to confiscate illicit PCs and CD burners. Or the idea of Hollywood and the record labels empowered to stifle the innovation of Silicon Valley. This is not an optimistic vision of the future.

Salkever is BusinessWeek Online Technology editor

Edited by Douglas Harbrecht

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