[iwar] [fc:A.Cop.in.Every.Computer]

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Date: Fri, 18 Jan 2002 05:58:21 -0800 (PST)
Subject: [iwar] [fc:A.Cop.in.Every.Computer]
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A Cop in Every Computer

The content and technology industries differ over an initiative that would
build infringement-sniffing powers into new computers

Mike Godwin
IP Worldwide 
January 16, 2002 

There's a war looming in cyberspace over copyright. The war will not be
about whether to combat the spread of unauthorized copies of computer
programs, music or movies. On that point, the combatants agree. This will be
a war about tactics and solutions.

The content industry -- especially Hollywood and the record labels -- wants
the solution built into computers and other digital devices, such as Palm
Pilots and MP3 players. The industry also wants it built into software,
operating systems, Web browsers, and routers -- the devices that guide
Internet traffic. It's a solution designed around the assumption that nearly
all computer and Internet users are potential large-scale infringers.

In short: The content industry wants to place a copyright cop in your
computer. It also wants to station one anyplace else on the Internet where
an unauthorized copy might be made.

And if the industry has its way, we all may feel the consequences. Digital
videos you shot in 1999 may be unplayable on your computer in 2009. You may
no longer be able to move music or video files around easily from one
computer to another (from, say, a home desktop to a laptop or to a personal
digital assistant).

The content companies, on the other hand, see something different at stake.
In a speech before Congress in 2000, Michael Eisner, chief executive of The
Walt Disney Co., voiced the worries of the content industry when he said
that "the future of the American entertainment industry [and] the future of
American consumer" is at stake over the issue.

The content companies, with Eisner in the lead, argue that failure to build
copy protection into the very digital environment itself will lead to their
industry's destruction.

In previous battles over copyright, Hollywood and the large record labels
have received the full support of their powerful friends in the software and
computer industry. But this time, many of the high-tech companies are on the
other side. They're satisfied that current law -- rather than future Rube
Goldberg design mandates -- can do the trick. "We think mandating these
protections is an abysmally stupid idea," says Emery Simon, special counsel
to the Business Software Alliance (BSA), an antipiracy trade group whose
members include the Adobe, Microsoft, Intel and IBM corporations.

A recent legislative proposal floated by Fritz Hollings, D-S.C., chairman of
the Senate commerce committee, is the most public manifestation of the
content industry's struggle. The Hollings bill, called the Security System
Standards and Certification Act (SSSCA), makes it a civil offense to make or
sell digital technologies that do not contain what it calls "certified
security technologies," built-in systems that prevent the copying of
content. 

Draft versions of the legislation, which hasn't yet been formally
introduced, also would impose criminal penalties -- up to five years in
prison -- upon anyone who alters existing security technologies or disables
copy protection mechanisms.

There's more than one way to prevent copying of copyrighted content. Various
approaches, sometimes referred to as digital-rights management schemes,
exist. One general method, called encryption, involves scrambling content in
a "digital envelope." Encryption is what protects DVD movie and video game
software from piracy. But the content industry wants to do more than just
protect content. If encryption is broken -- and hackers are often able to
break it -- content is free to be copied. To prevent this, the industry
wants content to be labeled or digitally "watermarked," and it wants
computers and other devices to be redesigned to look for the watermark, and
to limit copying accordingly.

Supporters of the Hollings proposal don't couch the legislation in terms of
protecting embattled copyright interests. They frame it as a measure
designed to promote digital content and the use of broadband, high-speed
Internet services. If Hollywood could be assured that its content would be
protected on the broadband Internet, the argument goes, it would develop
more compelling programs for the Web and spur greater consumer demand for
broadband. 

An aide to the Senate commerce committee says there are likely to be
hearings on the bill as early as February 2002; hearings that had been set
for fall of 2001 were postponed because of the Senate anthrax scare.

Back in 1998, Hollywood, record labels and software and technology companies
came together to support the Digital Millennium Copyright Act. That act --
now law -- prohibited the creation, dissemination, and use of tools that
circumvent digital-rights management technologies.

There won't be a similar broad-based coalition behind anything like the
Hollings bill. Software and technology companies simply aren't ready for a
state-ordered restructuring of their entire industrial sector. In remarks
made in December at a business technology conference in Washington, D.C.,
Intel Corp. chief executive Craig Barrett spoke out against legislation like
the Hollings bill. Let the private sector work out its own systems for
protecting copyright, Barrett said.

A few companies are so big and so diverse that they don't fall easily into
the content or technology camp. AOL Time Warner, for example, is conflicted.
The movie companies and other content producers under the AOL Time Warner
umbrella tend to favor efforts that lock down cyberspace, but AOL itself and
some of the company's cable subsidiaries oppose compulsory designs. "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 of copyright violations."

Broad as it is, the Hollings proposal is only one small part of a global
effort to make the digital world safe for copyrighted materials. Standards
groups, industry gatherings and global business policy forums are all
working to create industrywide standards that don't require the approval of
lawmakers. 

A group called 4C Entity is promoting a standard for building digital rights
management into digital storage devices, such as hard drives and possibly
writable CD-ROM drives (the devices that copy CD-ROMs). The 5C Consortium is
developing a copy protection standard for digital television, and
interindustry forums like the Content Protection Technology Working Group
are also working on digital TV.

But the content industry complains that the standard-setting process is
proceeding at a tortoise's pace. The Hollings bill is meant to speed up the
process, acting as a lever to compel the technology companies to negotiate
more and faster. 

The movie and TV studios are trying to ward off a possible Napster-like
scenario. Though the free music-sharing service is now gone, other
file-sharing systems, more decentralized and less easy to sue, remain. And
Napster's legacy still casts a shadow over the music industry -- and on the
content owners as a whole. A technology expert at News Corporation says that
Napster signals the music industry's downfall. Music fans are now accustomed
to copying CDs with CD burners, and downloading music from the Internet as
MP3 files. "Within five years," the expert says, "music will be a cottage
industry." 

Rubbish, responds Matthew Gerson, the vice president for public policy at
Vivendi Universal S.A., which produces and sells both music (Universal Music
Group) and movies (Universal Studios Inc.). "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," Gerson says. "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 -- with the record label serving as the conduit
between creation and consumption -- depends both on large streams of revenue
and on control of copyrighted works. The Internet and digital technology
could cut off the revenue stream by moving music consumers to a world in
which trading music online for free is the norm.

The record labels and the movie and TV studios see watermarks --
undetectable yet traceable digital imprints -- as their way to prevent a
future world of widespread trading in free music, movies, and other types of
content. 

How would those watermarks work? For an example, let's use digital
television, a nascent technology that transmits high-quality television
broadcasts using a digital, rather than an analog, signal. A digital
broadcast would include a watermark that identifies the content as
copyrighted and might contain certain instructions. Devices and software
designed according to the content-industry's mandate would look for the
watermark. Those devices, in turn, would have strict limitations built in as
to whether, and how often, a copy of that broadcast could be made.

The reverse might also be true: Those components might be designed not to
play un-watermarked content. Otherwise, it would only encourage pirates to
learn how to strip out the watermarks. In a world in which all consumer
digital technology looks for watermarks, our legacy digital videos and MP3
collections might no longer be playable.

Digital television is the most pressing worry. Unlike DVD movies, which are
encrypted on disc and decrypted every time they're played, digital broadcast
television must be delivered unscrambled. The Federal Communications
Commission requires that broadcast television be sent in the clear as a
matter of public policy.

The prospect of high-quality, unencrypted content, delivered digitally,
scares Hollywood. Without watermarking, consumers could simply record their
favorite shows, trade them with friends, or -- worst of all -- make them
available on the Internet, à la Napster.

Content owners are also worried about the computer as it becomes not just a
stand-alone device but also a component within the overall home
entertainment system.

Says the BSA's Simon: "That's the multipurpose device that has them
terrified." The fear is that computers will leak copyrighted content all
over the world, he says.

And that, says Simon, is why the Hollings legislation is so broadly drafted.
It's designed to close up all the leaks that digital technology might pose.
In the drafts made available in the fall of 2001, the Hollings bill would
make it a civil offense to develop a new computer or related technology that
does not include a federally approved security standard preventing the
unlicensed copying of copyrighted works. In at least one version, the law
would make it a felony to remove a watermark or flag from copyrighted
content. It would also outlaw logging onto the Internet with any computer
that removes or sidesteps the copy protection technology.

Before the draft legislation was circulated, "we didn't know how broad this
was," says one lawyer for cable company interests. Many cable companies are
worried that the measure will interfere with their customers' viewing
experience. 

Although the Hollings legislation is controversial, its supporters are
working to garner support. Preston Padden, the executive vice president for
government relations for Disney, traces the origins of the bill to the
Global Business Dialog on e-Commerce, a public policy group whose members
come from a wide range of businesses. The group's IP subcommittee is chaired
by Eisner, who, after much give and take with software and computer
companies, shepherded through language favoring government "facilitation" of
copyright protection standards.

With the group's recommendations in hand, Eisner could go to Congress and
say there was a general business consensus favoring the passage of new laws
to protect content on the Internet.

But there is a big difference between what that group generally recommended
and what the Hollings bill specifically proposes.

The devil will be in the details. IBM, Microsoft and other technology
companies are all developing their own ways of protecting copyright. Their
digital rights management schemes are generally based on encryption, not
watermarks. These companies don't want design mandates, which would
effectively kill a market they are poised to exploit.

Moreover, technology companies have a "philosophical problem" with being
told how to build their technologies, says Disney's Padden. With the
exception of export controls on encryption, the computer and software
industry does not have much experience with government mandates.

Not surprisingly, Rick Lane, News Corp.'s vice president for governmental
affairs, and the other content industry lawyers think that the computer
companies need to get over it. After all, mandates have been a fact of life
for the consumer electronics industry -- particularly radio and television
equipment -- for decades. Forty years ago, for example, the government told
television makers to build UHF-reception capability into all new TVs.

The real problem runs deeper than mere resistance to government control.
There's a philosophical difference that separates the content industry from
the technology companies. You can see that difference in the way each
industry refers to its customers. The content companies refer to
"consumers," while the tech industry refers to "users." If you see a world
of "consumers," your major concern is setting prices at the right level, so
that buyers will purchase your products -- while you still make money. You
control access to your merchandise, and do everything you can to prevent
theft. For the same reason that supermarkets have cameras by the door and
bookstores have electronic theft detectors, content companies want copy
protection to prevent theft of their wares. Allowing people to take stuff
for free is inconsistent with their business model.

But if you see a world of "users," you want to give that market more
features and powers for less money. The impulse to empower users was at the
heart of the microcomputer revolution. Steve Jobs and Steve Wozniak, for
example, founded Apple Computer Inc. partly because they wanted to put
computing power into ordinary people's hands.

Redesigning the world of digital tools so that every device, application and
operating system is on the lookout for copyrighted works is at odds with
that view. 

What gets lost in the debate is the voice of consumers -- whatever they are
called. Maybe they are willing to trade away open, robust, relatively simple
digital tools for a more constrained digital world in which they have more
content choices. But maybe they aren't. The Hollings bill is unlikely to
attract them to the debate, pitched as a "security standard" rather than as
a new copyright law.

Like the larger philosophical war that is raging around the world in the
aftermath of the terrorist attacks, the looming war between these two sides
has the potential to be a long, difficult fight without a foreseeable
conclusion. And if and when peace talks begin between the two sides, there's
no guarantee that the rest of us will have a seat at the table.         

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