[Fwd: Coming Soon: Hollywood Versus the Internet (fwd)]

From: Sandy Harris <sandy _-at-_ storm.ca>
To: canada-dmca-opponents (at) flora.org
Date: Wed, 19 Dec 2001 05:21:26 -0500

Seen on another list:

-------- Original Message --------
Coming Soon: Hollywood Versus the Internet
Mike Goodwin - mneumonic@well.com

If you have a fast computer and a fast connection to the Internet, you
make Hollywood nervous. And Tinseltown is nervous not because of what
you're doing now, but because of what you *might* do -- grab digital
Hollywood content with your computer and broadcast it over the Internet. 

Which is why Hollywood, along with other content companies, from book
publishers to the music industry, has begun a campaign to stop you from
ever being able to do such a thing -- even though you may have no
intention of becoming a copyright "pirate." That campaign has pitted
corporate giants like Disney and Fox against corporate giants like
Microsoft and IBM, but the resulting war over the shape of future digital
technology may end up with us computer users suffering the "collateral
damage." 

As music-software designer and entrepreneur Selene Makarios puts it, this
campaign represents "little less than an attempt to outlaw general-purpose
computers." 

Let's get one thing straight -- when I say there's war looming in
cyberspace over copyright, I'm not talking about the struggle between
copyright holders and copyright "pirates" who distribute unlicensed copies
of creative works for free over the Internet. Maybe you loved Napster or
maybe you hated it, but the right to start a Napster, or to infringe
copyright and get away with it, is not what's at issue here. And in a
sense it's a distraction from what the real war is. 

What I'm talking about instead is the war between the content industries
(call them "the Content Faction") and the information-technology
industries -- call the latter "the Tech Faction." That faction includes
not only computer makers, software makers, and related digital-device
manufacturers (think CD burners and MP3 players and Cisco routers). Allied
with the Content Faction are the consumer-electronics makers -- the folks
who build your VCRs and DVD players and boomboxes. The Tech Faction, which
makes smarter, more programmabale devices and technologies than the
consumer-electronics guys do, may count among their allies many cable
companies and even telephone companies. 

But what's the "collateral damage," exactly? Perhaps the most likely
scenario is this: at some near-future date - perhaps as early as 2010 -
individuals may no longer be able to do the kinds of things they routinely
do with their digital tools in 2001. They may no longer be able, for
example, to move music or video files around easily from one of their
computers to another (even if the other is just a few feet away in the
same house), or to personal digital assistants.  Their music collections,
reduced to MP3s, may be moveable to a limited extent unless their digital
hardware doesn't allow it. The digital videos they shot in 1999 may be
unplayable on their desktop and laptop computers -- or even on other
devices -- in 2009. 

And if they're programmers, trying to come up with the next great version
of the Linux operating system, for example, they may find their
development efforts put them at risk of criminal and civil penalties if
the tools they develop are inadequately protective of copyright interests.
Indeed, their sons and daughters in grade-school computer classes may face
similar risks, if the broadest of the changes now being proposed becomes
law. 

Digital television is the thin entering wedge for the Content Faction's
agenda. Here's why: unlike DVD movies, which are encrypted on the disc and
decrypted every time they're played, digital broadcast television needs to
be unencrypted, for a couple of reasons. First, the Federal Communications
Commission requires that broadcast television be sent "in the clear" -- in
unencrypted form -- as a matter of public policy. The argument here is
that broadcasters are custodians of a public resource -- the part of the
broadcasting spectrum used for television, and need to make whatever they
pump into that spectrum available to everyone. Second, digital broadcast
TV has to reach the existing (albeit relatively small) installed base of
digital television sets, which wouldn't be able to decode encrypted
broadcasts. 

But digital broadcast television also poses a special problem -- it's just
too darned high-quality. And if a home viewer can find a way to copy the
content of a digital broadcast, he or she can reproduce it digitally over
the Internet (or elsewhere), and everybody can get that high-quality
digital content for free.  This would have a particularly harsh effect on
the movie and TV studios, which currently repackage old television shows
for resale to individuals as DVDs or videotapes, and which also syndicate
the rights (resell broadcast rights) to cable networks and to individual
broadcasting stations. If everybody's trading high-quality digital copies
of "Buffy the Vampire Slayer" or "Law & Order" over the Internet, who's
going to view the reruns on, respectively, Fox's FX network or the Arts &
Entertainment channel? What advertisers are going to pay to air those
shows when their complete runs are available online to viewers,
commercial-free, through some successor to Napster or Gnutella
peer-to-peer file-sharing? 

The Content Faction has a plan to prevent that world from coming about --
a plan they hope will work for music and every other kind of content. One
guide to a different future is the "watermarking"  solution proposed for
digital broadast television. 

Essentially, there are two parts to the scheme. The first part is this:
the digital broadcast TV signal will include a digital "watermark"
containing information that tells a TV watcher's home-entertainment system
whether to allow copying at all, or to allow limited copying, or to allow
unlimited copying. The so-called digital watermark is not like a normal
watermark in stationery -- instead, it's "steganographic." That is, it's
contained in the content itself but the normal viewer isn't be able to see
it without special tools. Not all of the bits in a digital bitstream have
to be used to communicate images or sound -- the remaining bits can be
structured in a way that adds up to a "watermark." 

But the first part of the fix -- adding a watermark -- doesn't work
without the second part, which is that the components of the home
entertainment system have to be designed to receive those watermarks and
flags and limit copying accordingly. 

If the digital TV guys put together a working watermarking scheme for
television, then at least in theory they've come up with a solution that
will apply to all other digital media. After all, bits is bits. 

There are some problems with this scheme -- perhaps intractable ones.  If
Princeton computer scientist Edward Felten is right, when you design your
watermarking system so that it is invisible to normal viewers or listeners
yet easily detectable by machines, it's probably going to be relatively
easy to strip it out. To put it simply, if you can't see it, you won't
miss it when it's gone. 

Which is why, when you think through how the watermarking system will
work, you realize the components of new home entertainment systems will
also likely have to be designed not to play unwatermarked content -
otherwise, all you've done is develop an incentive for both inquisitive
hackers and copyright "pirates" to learn how to strip out the watermarks. 
So much for your legacy digital videos. So much for your MP3 collection. 

What will the components of a new home-entertainment system be, exactly?
Mostly standard consumer electronics: a VCR, a DVD player, maybe, a CD
player, speakers, a TV receiver. Yet what tech-industry pundits call
"convergence" means that one other component is increasingly likely to be
part of home-entertainment setups -- the personal computer. Says Business
Software Alliance special counsel Emery Simon: "That's the multipurpose
device that has them terrified, that will result in leaking [copyrighted
content] all over the world." 

This is precisely what Disney CEO Michael Eisner, in a speech to Congress
in summer of 2000, was referring to when he warned of "the perilous irony
of the digital age." Eisner's statement of the problem is shared by
virtually everybody in the movie industry: "Just as computers make it
possible to create remarkably pristine images, they also make it possible
to make remarkably pristine copies." 

Because computers are potentially very efficient and capable copying
machines, and because the Internet is potentially a very efficient and
capable distribution mechanism, even in the hands of ordinary individuals,
the Content Faction has set out to restructure the entire digital world we
have today. They want to rearchitect not just the Internet, but every
computer and digital tool on or off the Net that might be used to make
unauthorized copies. 

Ask them about their goals, though, and they'll tell you they don't quite
want to turn back the clock. If you use your VCR to record a favorite
program so you can watch it later, why, then, the Content Faction says,
we'll let you do something similar in the future -- but we're also going
to make sure, with our watermarking scheme or something similar, that it
won't be possible to do more than that. 

The Content Faction is proceeding on many fronts: legislative, of course,
but also in standards groups, in industrial consortia, and in global
business policy forums. A recent legislative proposal floated (but not
formally introduced) by Sen. Fritz Hollings, D-SC, which would require
that all new digital-transmission technologies have built-in copyright
protection -- built-in watermark-scheme compliance, in other words --
generated a significant public backlash after being leaked to the press.
But that proposal caused a backlash because it was itself public -- in
reality, it's only one small part of a mostly unpublicized global effort
to include digital-rights-management in every digital technology. "Digital
rights management," also known to both factions as "DRM," is the generic
term used to characterize any technology -- software, hardware, or both --
that prevents unauthorized copying of, or that controls access to,
copyrighted materials. 

At stake in this war, says Eisner, who's the acknowledged leader of the
Content Faction, is "the future of the American entertainment industry,
the future of American consumers, the future of America's balance of
international trade."  The lobbyists at News Corporation and Vivendi
Universal S.A. -- and pretty much any other company whose chief product is
content -- agree with Disney's Eisner about the magnitude of the issue
(although the foreign-based ones, like Bertelsmann AG, are understandably
less concerned about the U.S.  balance of trade). All of them tend to talk
about the problems posed by computers, digital technology, and the
Internet, in apocalyptic terms. 

The companies whose bailiwick *just is* computers, digital technology, and
the Internet -- whose focus is more technology than content -- take a
different view. These members of the Tech Faction, which include
Microsoft, IBM, Hewlett-Packard, Cisco Systems, and Adobe, also value
copyright. (Adobe, for example, just this year instigated the prosecution
of a Russian computer programmer who cracked the company's
encryption-based e-book security scheme.) And many of them -- particularly
those who have been developing their own digital-rights-management
technologies -- want to see a world in which copyrighted works are
reasonably well-protected.  Yet if you ask an Tech Faction member what it
thinks of the Content Faction's agenda for the digital world, you
invariably get something similar to the Emery Simon's judgment of the
scheme: "We are strongly antipiracy, but we think mandating these
protections is an abysmally stupid idea." (BSA is an anti-piracy trade
group whose members include the major players of the Tech Faction, from
Adobe to Microsoft to Intel to IBM.) 

You can't overestimate the extent to which the two factions are both
pro-copyright -- their shared view of the importance of protecting
copyrighted works online makes them awfully uncomfortable to be on
opposite sides now. One thing the Tech Faction and the Content Faction
have in common is that they both supported the passage of the Digital
Millennium Copyright Act in 1998 -- both sides like the DMCA pretty much
as it is. That act, which was framed as the implementation legislation for
the World Intellectual Property Organization's Internet treaties,
prohibited the creation, dissemination, and use of tools that circumvent
digital-rights-management technologies. 

Where the two sides differ is on the issue of whether the DMCA is enough.
BSA's Simon views the DMCA as a well-crafted piece of legislation, but
thinks that efforts that would build DRM into every digital device are
overreaching, at best.  And in taped remarks presented at a Dec. 4
business-technology conference in Washington, DC, Intel CEO Craig Barrett
spoke out against legislation like the Hollings bill, which would have the
government mandating a copyright-protection standard to adopted by the
entire IT industry.  Yet the Content Faction, as represented by their
lawyers and lobbyists in Washington, as well as by their West Coast
technologists, say that failure to standardize on a universally built-in
digital-rights-management technology will, in effect, lead to the
destruction of the digital-content industries. 

A few companies are so big and so diverse that they don't fall easily into
either the IT or the Content faction. Take AOL Time Warner, for example.
The movie companies and other content producers under the AOL Time Warner
umbrella tend to favor efforts that lock down cyberspace, but AOL itself,
as well as some of the company's cable subsidiaries, opposes any effort to
mandate DRM in all digital technologies. "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," Lesser says. AOL's reluctance to embrace the
Hollings bill explains why the Motion Picture Association of America, of
whom 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 broadcast television
standards -- may be a good idea, since industry progress towards 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. 

The specter that's haunting the Content Faction is Napster. Although the
free version of Napster has been essentially wiped out by the
music-company litigation against it (a new version of the file-sharing
system is being developed by Bertelsmann AG), the Napster phenomenon still
casts a long shadow. One technologist for News Corporation who's working
on a watermark-based DRM scheme told me he thinks Napster already signals
the end of the music industry.  Since most record companies have most of
their catalogues available on unprotected CDs, which can be "ripped" and
duplicated with CD burners or distributed over the Internet as MP3 files,
music lovers have already 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," the technologist says, "the music industry will be a
cottage industry." 

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.), is quick to dispute the prediction that
the music companies face cottage-industry status. "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.  My hunch isthat 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 -- the model of the big music company that
plays an important filtering role for music 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 a norm. At the same time, a technical/legal scheme that
perfects control of content in the digital 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 to us in unprotected forms. 

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 fall of 2001, the Hollings
bill, titled the Security Systems Standards and Certification Act, would
create a civil offense for anyone who developed (for example) a new
computer that did not include a federally approved security standard
preventing the unlicensed copying of copyrighted works.  The SSSCA also
would set up a scheme under which private industry met and approved the
security standard.  It would require that the standard be adopted within
18 months of passage; if that deadline passed without a agreement on a
standard, the government would step in and impose one itself. In at least
one version, the law would also felonize the act of removing the watermark
or flag from copyrighted content, as well as the act of attaching a
computer to the Internet that removes or sidesteps the copy-protection
technology. 

It doesn't take a close look at the provisions of the SSSCA to see that
its scope extends far beyond digital television. And you can see why the
crafters of the proposal want it to reach so far: If the watermark scheme
works for digital TV, and results in an established standard both for
labeling copyrighted works and for designing consumer electronics not to
allow unlicensed copying of those watermarked works, it ought to be
adaptable to the rest of the digital world - especially that most
troubling sphere of the digital world, the Internet. This explains why the
draft of the SSSCA, under its own terms applies to any digital technology,
and not just television - the big music companies like the SSSCA too
because they have been laboring for years through a group called the 4C
consortium to agree on a digital-music watermarking standard. 

The many fronts of the DRM-standards push include DRM-proponent groups
like 4C Entity (promoting a standard for building DRM into mass-storage
devices, such as hard drives), the 5C Consortium (developing a
copy-protection standard for digital television), interindustry forms like
the Content Protection Technology Working Group (CPTWG) and a growing
number of conventional standards-setting groups. And as we've seen, they
also include legislation like the Hollings bill, whose genesis, according
to sources on the Hill close to the legislative process, was Eisner's
speech to Congress in the summer of 2000. 

Those close to the process that drafted the Hollings proposal don't couch
the legislation in terms of protecting embattled copyright interests -
instead they frame it as a proactive measure designed to *promote* both
digital content and increased use of broadband, high-speed Internet
services. The theory here is this: consumer adoption of broadband services
(like cable modems and DSL) has been slower than predicted. This means the
cable companies and the phone companies have too small a consumer base to
justify building out their broadband capacity very quickly or very far.
But (the theory goes) if Hollywood could be assured that its content would
be protected on the broadband Internet, they'd develop more compelling
content and make it available on the Internet, which would spur greater
consumer demand for broadband. 

There are problems with this theory - it assumes that what people really
want from the Internet is more TV and movies -- but it's the theory with
the most currency in Washington policymaker circles. And as the debate
over the Tauzin-Dingell broadband deregulation bill shows, Congress wants
to find a way to take credit for a quicker rollout of faster Internet
service. 

It's the Hollings legislation, the SSSCA, that has brought the existence
of the war between the Content Faction and the Tech Faction out into the
open. Before the draft legislation was circulated, "we didn't know how
broad this was," says one lawyer for cable-company interests. (Some cable
companies have aligned themselves with the Tech Faction partly because
they see themselves as technology companies too, and partly because they
see DRM, which might define the conditions under which subscribers could
use and copy content, as interfering with their own ability to package
content for their subscriber base. Other cable companies, however, are
owned by Content Faction players - officially, they favor measures like
the Hollings bill.) And in the near term it's the Hollings legislation
that is likely to be the flash point for the debate about widespread
copyright-protection standards in the near future. Sources involved in the
drafting process say 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 while the government cleared Senate offices of anthrax spores. 

Although the Hollings legislation is controversial, some folks in the
Content Faction remain bullish on its passage. Preston Padden, the
executive vice president for government relations for The Walt Disney
Company, traces the impulse behind the Hollings bill to recommendations
from the Global Business Dialog on e-Commerce, a CEO-led public policy
group that tries to shape global business policy. Since the GBDeC includes
members of both the Tech Faction and the Content Faction, the argument is
that there is, at some very high level, a global business consensus on the
need to protect content. 

Padden says the group approached the issue of content protection with an
attitude of " let's get together and identify the daunting, unprecendented
global issues that are represented by the Internet and see if we can come
to a common view as to how these issues should be resolved." The group's
intellectual property subcommittee is chaired by Michael Eisner, who
shepherded through language favoring government "facilitation" of
standards for copyright protection, after much give and take with Tech
Faction members. 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 although companies like IBM and Disney officially agree on the need to
protect content on the Internet (and it's really the Internet that is the
focus of DRM efforts, not digital broadcasting), the devil is in the
details. IBM, Microsoft, and other Tech Faction members each want their
own DRM technologies to be adopted, they don't want design mandates, and
they want technology-based copyright protection to be the special case
rather than the rule. 

Both Padden and News Corporation vice president for governmental affairs
Rick Lane say the reason for the IT companies' recalcitrance represents a
"philosophical problem" those companies have with design mandates.  Lane
says the IT companies oppose technological mandates because "they've never
been subject to them before, except for export controls [on encryption]." 
Lane and the other Content Faction lawyers think the computer companies
need to grow up and get over it.  After all, they say, technology mandates
have been a fact of life for the consumer-electronics industry --
particularly radio and television equipment -- for many, many decades.
(The consumer-electronics companies generally don't like government
regulation either, but they sometimes see value in it. As Schoen points
out, the Content Faction often can get the major consumer-electronics
companies to adopt new standards without resorting to lawmaking. But if
the new standards limit what their devices can do, that makes the
established consumer-electronics companies vulnerable to competition from
an upstart company that produces a more capable machine. Better to have a
law in place that prevents that from happening.) 

But the philosophical war really runs deeper than mere resistance to
government control. One way to understand this is to look at how the
content industries talk about individuals as compared to how the IT
industries do. The content industries refer to "consumers". The IT
industries refer to "users". 

In general, if you see the world as one of "consumers," you think:  nobody
gets things to consume for free, but price it appropriately and consumers
will come. You control access to what you offer, 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. Allowing people
to take stuff for free is inconsistent with your business model. 

But you think of the world as one of "users", you see the market as one in
which you give people more features and powers at cheaper prices. The
impulse to empower users was at the heart of the microcomputer revolution
- -- Steve Jobs and Steve Wozniak, for example, wanted to put computing
power into ordinary people's hands, and that's why they founded Apple
Computer Inc.  If this is your philosophy -- one of empowering users to do
new things -- it's hard to wrap your mind around building in limitations.
Plus, at some basic level, moving bits around from hard drives to RAM to
screen and back again, with 100-percent accuracy in copying, is simply
what computers do. Building DRM into all of this -- limiting how computers
perform their basic functions -- seems to the Tech Faction almost to be an
effort to make a computer something other than a computer -- a digital
appliance, maybe, or something special-purpose like a toaster. It's an
approach that would have the effect of undoing the user-empowerment
philosophy that drove the PC revolution in the first place. 

It's important at this point not to overstate the differences between the
Tech Faction and the Content Faction. The IT companies are arguably just
as adamant about protecting intellectual property as the Content Faction
is. And, as Electronic Frontier Foundation technologist Seth David Schoen
remarks, "some of the IT folks can occasionally ally themselves with
particular parts of the content faction, often in order to try to deflect
something they see as worse." 

But because the Tech Faction's approach to their customer base is
different, they find the universal-DRM approach anathema. To them, the
digital world is one in which users are generally empowered to do whatever
they want with digital tools, except to the extent that copyrighted works
are walled off by DRM. But to the Content Faction, the digital world isn't
safe unless every digital tool also functions as a kind of copyright
policeman. 

Still, the Content Faction's approach to the issue shouldn't be easily
dismissed. They may be right to say that what individual citizens really
want is compelling content over broadband, and it may even be the case
that a majority of citizens would trade away the open, robust, relatively
simple digital tools they now have for a more constrained digital world in
which they have more content choices. But the important thing to note is
that, at least for now, few ordinary citizens have any voice in this
particular debate about the digital future -- few are even aware the
debate is going on. (It doesn't help, for example, that the Hollings
proposal is pitched as a "security standard" rather than as a new
copyright law.) 

The consequences of the outcome of the struggle between the Content
Faction and the Tech Faction fight are huge. At the heart of the fight are
two questions: whether computer users can continue to be allowed to have
the abilities that computers have had since their invention, and whether
the content companies can survive in a world in which users have that
power. What's been missing from the debate so far has been the users
themselves. It seems safe to say that most computer and Internet users
like to have choices -- choices both of the content they consume and of
the kinds of tools they should get to use. Still, maybe citizens would say
they're willing to give up "general-purpose" computers and willing to use,
instead, systems designed to prevent them from engaging in willynilly
copying, if that is the price you have to pay for compelling music and
movies and television over the Internet.. That is, maybe they'd say so if
you asked them. But right now, nobody's asking.
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