Posted on 04/21/2002 5:14:30 PM PDT by bvw
Disney's Michael Eisner and others say Hollywood will defend its intellectual property at all costs. Silicon Valley eminences like Andy Grove say those are fightin' words -- if it means trampling consumers' rights and squashing innovation.
Over the course of four decades in the semiconductor business, Leslie Vadasz has had a hand in creating the 256K chip, the first dynamic RAM, and Intel (INTC), where he's currently in charge of acquisitions and strategic investments. Beyond the ranks of his colleagues and professional peers, however, Vadasz had kept a fairly low profile until Feb. 28, when his duties took him to Washington for a Senate hearing on what Disney (DIS) chairman and CEO Michael Eisner, the lead witness, called the "unimaginable threat" of digital-age piracy.
Next up was Peter Chernin, CEO of News Corp. (NWSA), the parent of 20th Century Fox. Like Eisner, he made an impassioned plea for a bill sponsored by their host, Fritz Hollings of South Carolina, chairman of the Senate commerce, science, and transportation committee. The bill would force a piracy-detection system to be installed in every device suitable for transmitting or playing digital video or audio.
Then it was Vadasz's turn. As the lone representative of the computer industry, he might have been expected to say something accommodating. He didn't. In a quiet voice tinged with the accent of his native Hungary, Vadasz warned that if Hollings's bill became law, "innovation would come to a screeching halt. Investment would suffer. It would create irreparable damage to a vital industry." The time had come to focus less on the rights of media giants, he said, and more on the rights of media consumers.
Chairman Hollings was only slightly less infuriated than the two CEOs. "Where did you get all this nonsense about ... 'irreparable damage'?" he wanted to know. Eisner chimed in that Vadasz's comments were just a sample of the runaround his industry had been getting from tech companies. (Later, Eisner named names -- among them Apple (AAPL), Compaq (CPQ), Dell (DELL), Intel (INTC), and Microsoft (MSFT).) Maybe, Eisner suggested, they were making too much money from piracy to be serious about fighting it.
That scene -- and the media broadsides issued in the following days by Eisner, Apple CEO, Steve Jobs, and Intel chairman Andy Grove -- marked the public eruption of a long-simmering quarrel between Hollywood and Silicon Valley. During the past decade, the entertainment industry has scrambled to defend its copyrights against a series of new technologies. Small companies have been hauled into court. Some, like Napster and MP3.com, have already been put out of business. Others, like SonicBlue and StreamCast (creator of Napster's most popular successor, Morpheus), may be soon. With larger and more established companies, though, Hollywood has been less confrontational, and the two sides have worked together on several technical agreements and two sweeping acts of Congress. Eisner's suspicions notwithstanding, many tech leaders feel that they've gone out of their way to address Hollywood's concerns. "What's most frustrating," Grove says, "is that we've worked with the entertainment industry for six years trying to forge a consensus on copyright technologies, and we've failed to change their ideas."
Congress is not in any imminent danger of passing Hollings's loftily titled Consumer Broadband and Digital Television Promotion Act. But Fox and Disney have engineers working on their anti-piracy system, which is, in any case, part of a broad copyright control agenda that isn't going away. The entertainment industry commands widespread sympathy not just on Capitol Hill (as Vadasz discovered) but also in the courts, where the power of copyright has been expanding for years. The technology industry understands that more anti-piracy measures are inevitable. Where it needs to take a stand is on how far the protections go and who has a say in them.
The tone of the current fracas recalls earlier struggles pitting musicians against radio in the 1930s and Hollywood against the VCR 25 years ago. (See "Technophobia Over the Years.") But the stakes are higher now. This fight goes beyond any single device -- beyond entertainment, for that matter. Pleading self-defense, the movie studios and their allies are trying to construct an instrument of control out of the very technology they decry. Citing an unprecedented peril, they have embarked on a quest for unprecedented power -- over what we can do with today's technology and which devices will be allowed to exist tomorrow. What's at stake, in short, is the whole phenomenon known as the "information revolution."
If you want to know what has Eisner and other showbiz people so riled up, check out an Internet relay chat site called ShareReactor, where, as this magazine went to press, A Beautiful Mind, Black Hawk Down, and The Lord of the Rings: The Fellowship of the Ring were just a few of the current commercial films available for free download. Along with that last offering was a posting that read, "A big thanks to DozerN, urgy and pzyx for making this file available!"
Where do the pirates get recent mainstream releases? Some may have been ripped from DVDs, using decryption and compression programs that are also available on the Net. Others are made from master prints, with the complicity of studio insiders. Surprisingly passable copies can be obtained simply by aiming a digital camcorder at a cinema screen -- especially if the pirate has access to the projection booth, with a head-free view and a direct link to the sound system. No one knows exactly how widespread the thievery is, but Boston-based Internet research firm Viant puts the daily worldwide number of unauthorized movie downloads at 350,000.
While many tech people express sympathy, many in Hollywood wonder about their sincerity. The two sides have been hammering out copyright protection arrangements for a decade now, lately through a body known as the Copyright Protection Technical Working Group. But the hammering is too slow for Hollywood. Entertainment execs complain that Silicon Valley participants prefer to take up issues one by one, in drawn-out negotiations that seem guaranteed to leave the movie industry always one step behind the pirates. The advent of the MP3 player and the CD burner only fueled Hollywood's sense of betrayal, which was hardly eased by Apple's advertising slogan for the new iPod: "Rip. Mix. Burn." At a broadband symposium late last year, Preston Padden, Disney's chief worldwide lobbyist, claims to have heard a participant ("not from a content company, I'll tell you that," Padden says) utter the memorable phrase "Piracy is the killer app."
The entertainment industry's front-line defense against these depredations is copyright law. Though you'd never know it from the chronic alarmism of Eisner or Jack Valenti, the long-running chairman of the Motion Picture Association of America, the law's reach has been broadening for years. The original idea, articulated in Article I, Section 8, of the Constitution, was to provide a measured reward to creativity while guaranteeing the ready flow of new ideas into the public domain. With the rise of media companies (and their lawyers), however, Congress and the courts were increasingly persuaded to give copyrights more of the solidity associated with physical property rights.
Today, only a relative handful of academics and librarians seem to see the value in (or even remember) the limited right of the past. With help from all three branches of government, copyright law has become a sort of artistic Homestead Act: Whoever occupies a piece of territory first -- or first in the eyes of the law -- gets an all but perpetual right to develop and alter it, and keep trespassers off. (And sell action figures too.) Since 1960 the term of copyright -- originally 28 years -- has been extended 11 times, most recently from 75 to 95 years, and applied retroactively. It is ironic -- and deeply pertinent -- that when motion pictures themselves were fairly new, Hollywood dipped liberally into the public treasury it has since done so much to reduce. Many of Disney's classic children's movies were based on stories, like Pinocchio, on which any copyright claims had lapsed. Had the current law been in effect in 1939, David O. Selznick would have required permission from Emily Bronte's heirs to make his film of Wuthering Heights, a book written in 1847
Since the 1960s, copyright holders have gone to court again and again to defend against ever newer and cheaper copying devices and transmission technologies. The Hollywood studios' unanimous belief that they had the right to stop people from taping a TV broadcast and watching it at a more convenient time was itself a measure of how far the law had come. And though the Supreme Court ruled against them in 1984 -- by a single vote -- the current suit against SonicBlue, maker of ReplayTV, which is essentially an improved VCR, shows how narrowly Hollywood interprets that defeat. (See "Erasing ReplayTV.") The movie industry, like the recording industry, continues to insist that it can send works into the home and then restrict what people do with them, even for their own personal use.
When they aren't suing over perceived violations of existing laws, copyright owners protect themselves by writing new ones. Partly thanks to limits prescribed in the Audio Home Recording Act of 1992, the digital audiotape format died a quick death -- one not greatly mourned by the recording industry. Media companies had a big say, too, in the Digital Millennium Copyright Act of 1998. In addition to banning the sale of VCRs that failed to respect a copy-protection technology called Macrovision, that statute made it a crime to circumvent any anti-piracy technology, even for a noncommercial aim such as playing a lawfully purchased DVD on a computer running Linux. "Hollywood got the law it wanted," says Pamela Samuelson, an intellectual-property specialist and law professor at the University of California at Berkeley.
One of the keys to the movie industry's legislative victories has been its formula of working things out with computer and consumer electronics companies in low-profile negotiations, and having Congress bless the results. For all of Hollywood's annoyance with the pace of progress at the Copyright Protection Technical Working Group, it has gotten much of what it has asked for. DVDs, digital audio recorders, and satellite and cable TV transmissions, for example, all come with built-in limits on usage. And because those limits are engineered into the machines or media themselves, they are effectively beyond the reach of legal appeal or congressional reconsideration.
The recording industry has already alienated many of its core customers with measures of this sort. In the name of fighting piracy, certain CDs can't be played on PCs or transferred to MP3 players. Music downloaded from major-label services like Pressplay and MusicNet expires when the purchaser stops paying a subscription fee. Many home digital recorders allow only one backup copy -- whether a work is copyrighted or not. "Think about it," says Vijay Vaidyanathan, co-founder and chief technology officer of Yaga, an Austin-based startup that has developed a payment system for online content distribution. "A friend of mine has a band, and I was making a mix for him, and the original got destroyed. He said, 'No problem, I've got a backup.' Well, the backup is useless, because you can't copy it."
The movie companies seem to be headed in the same direction. If the two studio-run online services follow through on their reported plans, downloaded films will stop playing in 24 to 48 hours. One of those services, Movielink, may not let its users play a movie on any device but a PC. On some DVDs, it's effectively impossible to skip past the coming attractions.
The high-tech world has accepted these restrictions without much complaint. In fact, some tech leaders have been eager to assuage Hollywood's concerns, on the theory that, in doing so, they have been helping to build the critical mass of commercial video fare that is widely seen as key to the spread of broadband. And broadband is about the only thing on the horizon that could invigorate the languid demand for PCs.
Then came the master plan embodied in the Hollings bill. Conceived by Disney and Fox, and now backed by MGM, Paramount, and Universal, the idea is to embed an image or pattern of images into every copyrighted work -- a kind of digital watermark visible only to a detector that will be built into the entire spectrum of digital devices, from PCs to MP3 players to memory sticks. But if the proponents imagined that Silicon Valley would respond as politely as it had to the more piecemeal proposals that had come before, they know better now.
Most tech executives say the quest for a universal fix is quixotic in the first place. Intel chairman Craig Barrett compares it to trying to catch last year's rain by building a dam today. The doubters also include two of the major studios, Warner Bros. (AOL) and Sony Pictures (SNE). (Others in Hollywood question those two studios' loyalties, however, pointing to their half-tech, half-media corporate parentage. Warner Bros. is part of AOL Time Warner, which also owns Business 2.0.) Feasibility aside, many in the tech world say Hollywood is trying to make them bear its piracy-fighting burden. "The only way a newly released film gets on the Internet is that it's stolen in their backyard," says Gary Klein, vice president and head lobbyist of the Consumer Electronics Assn. "If you leave your house open and somebody walks in and takes something, that's your problem. You can't go complain to the company that manufactured your locks."
It is also dawning on hardware makers that products designed to frustrate pirates may not give legitimate customers much pleasure either. "Suppose I use my personal computer now to create a playlist and burn music onto a CD," Grove posits. "Suppose in three years, the only PCs on the market won't allow me to do that? What is my incentive to buy a new computer?" Would such a device even be a computer? Many users see the ability to send content, or to recombine or customize it, as one of the basic reasons to have a PC in the first place. From Hollywood's perspective, some tech people wryly observe, the ideal PC would be a souped-up TV set, with ads and programs doled out by the same handful of media giants that control TV today, and the interactivity limited to buying things from them.
Others in Silicon Valley wonder about the future of innovation if copyright holders get the powers they're after. While entertainment people dismiss these worries, Hollywood clearly prefers innovation on its own terms. It is hard to forget that the industry now asking for universal copyright control is the same one that tried to outlaw the VCR and the MP3 format. "You simply cannot let the information revolution be hijacked by people from a previous regime," says W. Brian Arthur, an economist and economic historian at the Santa Fe Institute. "That's an economic disaster."
The entertainment industry is clearly at an inflection point in its history. Yet its situation hardly compares to that of the coach makers of a century ago. Even the recording companies, stunned by the one-two punch of MP3s and Napster, are beginning to adapt. (Bertelsmann, owner of EMI, hopes to turn Napster itself into a paying business.) And things should be much easier for the movie industry. Since most people watch a movie just once, the market may turn out to favor streamed content, which is easier to protect. In any case, the need for a seriously high-speed connection will greatly limit the pool of possible culprits for the next few years, giving Hollywood a luxury that the record labels were denied -- time to react.
While many in Hollywood point with alarm to the growing numbers of downloads, others see the trend as a measure of the appetite for products otherwise unavailable online. "You have to wonder," Grove says, "how the movie industry weighs the value of maintaining the status quo for a few more years against the value of being the first to exploit a technology that gives them frictionless transmission of their product with near-perfect fidelity." All the major studios have Internet distribution plans; several have already licensed films to Intertainer, a broadband video-on-demand operation that is up and running. Surely, Hollywood will find an online business model that works.
And it won't have to be pirate-proof. Copyright, after all, has always been a leaky vessel. Publishers have managed to tolerate the sharing, swapping, reselling, and lending of books. The software industry figures it loses $12 billion a year to piracy, but it hasn't called for anything like the sweeping controls Hollywood seeks. The recording industry, on the other hand, tried to develop an elaborate technological security regime; it proved unenforceable. "We lost two years," says Eric Alben, chief lobbyist for RealNetworks, which supplies streaming software to the recording industry. "And in the interim, pirated music proliferated." When the major record labels finally launched their own online services, MusicNet and Pressplay, they imposed so many restrictions that few customers have signed up.
If Hollywood wants a crystal-ball view of the digital future, perhaps it should look back at its own experience with the VCR. Companies that were once unable to collect a dime without luring masses of people into theaters have now built up a huge in-home business, courtesy of an appliance they tried to outlaw. The PC and the Internet may be more of a challenge, but the possibilities are greater too, and they only begin with the allure of a low-cost, high-quality movie-viewing experience at home. A history student could put together a video report on Abe Lincoln, combining scenes from movies with Henry Fonda, Raymond Massey, and Walter Huston in the role. A disgruntled viewer could (as Mike J. Nichols of Santa Clarita, Calif., actually did, to some acclaim) excise the character of Jar Jar Binks from Star Wars Episode 1: The Phantom Menace. People could put themselves into Hollywood movies -- or extract scenery and special effects to use in works of their own. The movie industry, as Leslie Vadasz says, should look at the Internet "not just as a download mechanism, but as an interactive environment. There are a zillion opportunities."
Never forget, we were once FREE MEN!
What nonsense -- these films don't exist on DVD yet. Framing the question in this way is like suggesting that Mommy ought to give equal weight to her four-year-old's story (the cookies were stolen by space aliens) and her own suspicions (the four-year-old ate them). The studios need to clean their own houses.
"Think about it," says Vijay Vaidyanathan, co-founder and chief technology officer of Yaga, an Austin-based startup that has developed a payment system for online content distribution. "A friend of mine has a band, and I was making a mix for him, and the original got destroyed. He said, 'No problem, I've got a backup.' Well, the backup is useless, because you can't copy it."
IMO, this is an example of Hollyweird's real agenda -- to hobble the technologies for media recording and manipulation in order to maintain artificially high barriers to entry, thus cutting off independent competition.
That makes no sense. Film is 24 fps, video is 29.97 fps. Unless put through a telecine process, the recording would be real annoying to watch.
Excersize 1:
"Think about it," says Vijay Vaidyanathan, co-founder and chief technology officer of Yaga, an Austin-based startup that has developed a payment system for online content distribution. "A friend of mine has a band, and I was making a mix for him, and the original got destroyed. He said, 'No problem, I've got a backup.' Well, the backup is useless, because you can't copy it."
Try it. Send them a scratched music CD and ask for a new one. You won't get jack.
Just because a tool can be used for illegal purposes does not mean it should be banned, as Hollywood is demanding.
I know. Note the "should" in my above post. I hear firearms can be used to commit crimes too...
There are two type of conservatives on these boards. (OK, more like hundreds, but for the purpose of this argument, lets limit it to two relevant types ;-) Economic and social conservatives.
At a guess, I'd put you in the latter group. Both a strong respect for current law, and even more emphasis on the social values (anti-theft) lead me to that suspicion. ThinkDifferent, on the other hand, I'd put in the former group - I fall in that group myself, by the way. A free market is indispensible to freedom, and while laws are required in order to have a free market work, technological progress can render some laws anachronistic, thus they must be reconsidered from time to time.
For myself, I'm not about to try to trash copywrite laws or anything like that. On the other hand, the retroactive copywrite extensions, and overreaching laws like DMCA, do get my ire up. I'd even go so far as to say DMCA is so bad that it should be disobeyed, until it collapses under its own weight.
Drew Garrett
With a recept and in less the a week or two. What if it gets scratched a year down the road? You're SOL.
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